Adjustable Rate Mortgage (ARM): A mortgage with an interest rate that adjusts based on a preselected index, causing interest rates to rise and fall with the market. As a result or interest rates changing, payments also change and are not constant through the term of the loan.

Annual Percentage Rate (APR): The annual cost of a loan expressed as a yearly rate. APR takes into account interest, discount points, lender fees, and mortgage insurance. As a result, APR is slightly higher than the interest rate on the loan.

Amortization: A monthly repayment schedule, where a loan is repaid in fixed payments of principal and interest throughout the term of the loan.

Appraisal: A written estimate of a property’s current market value, conducted by a professional appraiser, which is based on recent sales of similar properties (comps), the condition of the property, and how the neighborhood might affect future property value.

Closing Costs: The costs charged by the lender and other third-parties that the borrower must pay during the closing of the mortgage process. These can include attorney fees, recording fees, and other costs associated with the mortgage closing.

Debt-to-Income Ratio: This ratio is expressed as a percentage, and is calculated by taking a borrower’s monthly payment obligation on long-term debts plus the new mortgage payment and dividing it by their monthly gross income. Lenders used debt-to-income ratios to approve a borrower for a certain loan amount.

Down Payment: The amount of the home purchase price that the buyer is paying out-of-pocket. Depending on the home loan option, lenders generally require a specific down payment in order to qualify for the mortgage.

Equity: The difference between the value of the home and the amount borrowed on the mortgage loan. Over time, the value of the home generally increases, while the amount of the loan decreases, this causes the equity of the home to increase.

Escrow: The following amounts may be included in your monthly payment for the future disbursement of items such as, but not limited to, homeowner’s insurance, flood insurance, mortgage insurance and property taxes. On loans where monthly escrows are not collected, please be aware that the borrower is responsible for all tax and insurance payments. These costs can be substantial and need to be planned for in your budgeting process. When considering a mortgage loan, please ask about the escrow requirements.

Fixed Rate Mortgage: A mortgage where the interest rate and the term of the loan is set for the life of the loan. The most popular fixed rate mortgage terms are 15-years and 30-years.

Loan-to-Value Ratio: A financial calculation that is done by dividing the amount of the mortgage by the value of the home. This calculation is used by lenders to measure risk when qualifying a consumer for a home mortgage. Depending on the loan-to-value and the loan type, you may be required to obtain mortgage insurance.

Principal: The amount of money that is borrowed for the mortgage, excluding interest.

Private Mortgage Insurance: A form of additional insurance used to protect lenders from the possibility of you defaulting on your mortgage loan.

Settlement Costs: The costs associated with the mortgage loan that are determined prior to closing. These costs are given to all the parties before closing, so they are prepared to pay the agreed upon costs.

Title Insurance: A borrower paid, lender requirement, which ensures the home being purchased is free and clear of any liens that could jeopardize the mortgage.


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1st Mariner Bank - NMLS: 408251
3301 Boston Street
Baltimore, Maryland 21224
Phone: (888) 561-2265


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Certain restrictions apply. Loan approval subject to borrower qualification, completion of application and verification of homeownership. Rates and programs are subject to change without notice. Satisfaction of credit qualifications and occupancy. Loan pricing can only be locked through a home mortgage consultant. This collateral piece is provided as a convenience, does not serve as a substitute for a borrower's actual loan documents, and is not a commitment to lend. Borrowers should become fully informed by reviewing all of the loan and disclosure documentation provided. While we believe these products could be beneficial to you, there may be other mortgage products we can offer you for which you may qualify. We would also be happy to discuss those options with you. For more helpful information about residential mortgage products, please visit