Cryptic vocabulary makes interpreting mortgage forms difficult. You will find most of the terms mortgage lenders use right here. Refer back to this glossary whenever you need help determining the meaning of mortgage jargon.

1. Adjustable-rate mortgage, or ARM -- A home loan in which the interest rate changes periodically based on a standard financial index. Most ARMs have caps on how much an interest rate may increase. For help deciding between an ARM and a fixed-rate mortgage, read the Bankrate feature " ARM vs. fixed-rate mortgage."

2. Annual percentage rate, or APR -- A standardized method of calculating the cost of a mortgage, stated as a yearly rate, which includes such items as interest, mortgage insurance and certain points or credit costs. Because it includes these other items, it is higher than the interest rate a lender will quote.

3. Appraisal -- A written report by a qualified appraiser estimating the value of a property.

4. Balloon mortgage -- A loan that offers lower monthly payments for a specific period of time, which usually is anywhere from three years to 10 years. After that, a borrower must pay off the principal balance in a lump sum, or balloon payment. Under certain conditions, the mortgages can be converted to fixed-rate or adjustable-rate loans. Many borrowers either sell their homes before they get to their due dates or refinance their balances into new mortgages. Balloon loans can make sense for borrowers who don't intend to live in the home long. If plans change however, borrowers will have to pay off or refinance the balance.

5. Balloon payment -- A lump sum payment that is larger than the other, periodic payments. It pays off the remaining balance of a loan.

6. Closing costs -- Expenses incurred by buyers and sellers when transferring ownership of property. Closing costs normally include an origination fee, attorney's fee, taxes, escrow payments, title insurance and sometimes discount points. Lenders must provide good-faith estimates of closing costs to prospective home buyers.

7. Collateral -- Property pledged as security to a debt. If the borrower fails to repay the loan, the lender may gain ownership of the collateral and sell it to recover the money.

8. Down payment -- The amount of a property's purchase price that the buyer pays in cash and does not finance with a mortgage. Most mortgage lenders require a cash down payment of 5 percent, 10 percent or 20 percent of the sale price, though some lenders have zero-down mortgage programs. You can often lower your mortgage payment or afford a more expensive house by putting more money down. If you come up with less than 20 percent of the buying price, you may have to obtain private mortgage insurance, or PMI, to protect the lender before your loan is approved.