Without a proper grasp of mortgage lingo, the home-buying process can leave your head spinning. But fear not, for help has arrived. The 42 definitions that follow will give you a solid understanding of mortgage loans and lenders.

Amortization -- The monthly reduction of a mortgage loan brought about by making regular mortgage payments.

Annual Percentage Rate (APR) -- Shows the monthly cost of the mortgage (including interest, points and mortgage insurance), expressed as a percentage.

Application -- First step in getting approved for the loan. The application provides information about the borrower that the lender will use to justify the loan.

Appraisal -- A formal assessment of a home's fair market value, generally required by the mortgage lender to ensure the home is worth the loan amount.

Adjustable Rate Mortgage (ARM) -- A type of loan that starts out with a lower interest rate for an introductory period (3 years, for example) and later adjusts to whatever the current interest rate is at the time of adjustment.

Balloon Mortgage -- A mortgage that offers low rates for an initial period (generally 5, 7 or 10) years. After this period, the owner must pay the full balance or refinance the loan.

Cap -- A limit to how much a monthly payment or interest rate can increase or decrease. Caps are commonly used on adjustable rate mortgages.

Cash Reserves -- Money often required to be held in addition to the down payment and closing costs. Lenders have their own requirements as to the amount.

Closing -- The process through which property ownership is transferred from the seller to the buyer. Also known as settlement.

Closing Costs -- Expenses above and beyond the sale price of the home. Closing costs vary from state to state, but they often include such items as title searches and lawyer's fees.

Conventional Loan -- A loan made from the private sector and not guaranteed by the U.S. government.

Credit Report -- A record of your credit history, including previous debts, payments and other financial details. Used by lenders to determine your credit score.

Credit Score -- a number derived from your credit report. Used by mortgage lenders to determine your level of qualification for a loan.

Debt-to-Income Ratio -- A ratio calculated by dividing your overall monthly debt by your gross monthly income. Mortgage lenders use this to help determine your "credit worthiness."

Deed -- Official document that shows ownership of a property. It transfers from seller to buyer during the closing process.

Default -- This is what happens when a homeowner is unable to make mortgage payments. Defaulting on a loan could lead to foreclosure (defined below).

Discount Point -- Equal to 1% of the loan amount. Points can be paid by the buyer at closing to reduce the interest rate on the loan.

Down Payment -- Portion of the home's purchase price that is paid in cash and is not part of the mortgage loan.

Earnest Money -- Money the buyer puts down to show sincerity in buying the home. If the offer is accepted, the money becomes part of the down payment. If the offer is rejected, the money is returned. If the buyer pulls out of the deal, the money is forfeited.

Fixed-Rate Mortgage -- A mortgage with payments that stay the same throughout the life of the loan. In other words, the interest rate and other terms of the loan remain fixed.

Foreclosure -- Process through which the home is sold to repay the loan of the defaulting homeowner. See definition of default above.

Good Faith Estimate -- An estimate of all fees and charges that will be due at closing. Must be given to the borrower within three days of a loan application submission.

HUD-1 Statement -- A list of all closing costs. This document must be given to the buyer prior to closing. Also referred to as a settlement statement.

Interest -- A fee charged for borrowing money, expressed as a percentage of the amount borrowed.

Lien -- A legal claim on a property. Must be resolved before the property can be sold.

Lock-in -- Offered by some lenders to guarantee a certain interest rate if the loan is closed within a certain time.

Mortgage Broker -- Individual or company that originates and processes loans for a number of different lenders.

Mortgage Lender -- Bank or lending institution that loans you money for a home.

Mortgage Insurance -- Insurance purchased by the buyer to protect the lender in the event of default. Usually required on loans with less than 20 percent down payment. Also known as Private Mortgage Insurance or PMI.

Origination -- Process of preparing and submitting a loan application. Usually involves a credit check, a property appraisal, and other forms of financial review.

Origination Fee -- Charges associated with origination, defined above.

PITI -- Principal, Interest, Taxes, and Insurance. These are the four elements that will make up your overall monthly mortgage payment.

PMI -- Private Mortgage Insurance. See "Mortgage Insurance" above.

Pre-Approval -- When a lender commits to loaning you a certain amount (as long as you still meet their qualification requirements at time of purchase).

Pre-Qualification -- When a mortgage lender informally reviews your finances to determine the maximum amount they're willing to lend you.

Principal -- The "core" amount borrowed from a lender, excluding interest and additional fees.

RESPA -- The Real Estate Settlement Procedures Act is a law that protects consumers during the home buying and loan application process. Among other things, it requires lenders to make full discloses about settlement costs and conditions.

Settlement -- See previous definition under "closing."

Title Insurance -- Protects the mortgage lender against claims that come from a dispute about property ownership. Similar coverage for home buyers is also available.

Title Search -- A review of public records to ensure the seller is the legal owner of the property and that there are no unsettled liens or claims.