INDEX: A measure of interest rate changes used to determine changes in an ARM's interest rate over the term of the loan.

JOINT TENANCY: An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedent's interest in the property.

LIEN: A legal hold or claim on property as security for a debt or charge.

LOAN COMMITMENT: A written promise to make a loan for a specified amount on specified terms.

LOAN-TO-VALUE RATIO: The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.

MARGIN: The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

MORTGAGE LIFE INSURANCE: A type of term life insurance often bought by mortgagors. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds.

NEGATIVE AMORTIZATION: Negative amortization occurs when monthly payments fail to cover the interest cost. The interest that isn't covered is added to the unpaid balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren't high enough to cover the interest.

ORIGINATION FEE: A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent for FHA and VA loans.

PITI: Principal, interest, taxes and insurance.

PLANNED UNIT DEVELOPMENT (PUD): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Uses may be residential, commercial or industrial.

POINT: An amount equal to 1 percent of the principal amount of the investment or note. The lender assesses loan discount points at closing to increase the yield on the mortgage to a position competitive with other types of investments.

PAYMENT PENALTY: A fee charged to a mortgagor who pays a loan before it is due. Not allowed for FHA or VA loans.