Conforming Loans - conventional loans that follow the guidelines set by Freddie Mac and Fannie Mae. Current loan limits for 2006 is $417,000 for single family homes.

Fixed Rate Mortgage - the interest rate and principal payments stay fixed for the duration of the loan. For example, a 30-year fixed loan will have the same payment every month for 30 years.

Adjustable Rate Mortgage - also known as an ARM, the interest rate fluctuates over the period of the loan. Periodic changes to the interest rate are made based on changes to a defined index. Common Adjustable Rate Mortgages:

7/1 ARM ----------fixed for 84 months, then adjusts yearly

5/1 ARM-----------fixed for 60 months, then adjusts yearly

3/1 ARM-----------fixed for 36 months, then adjusts yearly

Interest Only-------requires only interest payments for a term

Balloon Payment - Short term, fixed-rate mortgage that has monthly payments usually based on a 30-year amortization schedule and a lump sum payment due at the end of loan term.

Piggyback Loan - A second mortgage that closes with the first. Usually, the first mortgage is for 80% of the purchase price and the "piggyback" is for remainder minus the down payment. For example, if you put a down payment of 5%, your first loan will be for 80% and your second (or piggyback loan) will be for 15%.

Jumbo and Non-Conforming Loans - Loans above the maximum amount established by the guidelines of Fannie Mae and Freddie Mac. The interest rate for a jumbo or non-conforming loan is higher than that of a conforming loan ($417,000)

FHA Loans - The Federal Housing Authority (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders.

VA Loans - VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

Why should you get pre-approved before you start house shopping?

Experienced home buyers know that one of the first-steps in beginning a successful search for a new house is taking a hard, objective look at finances. Determining how much money you can put towards the purchase of your new house affects almost every aspect of the buying process. You will know exactly how much house you can afford and have a much stronger position when dealing with home sellers. In a highly competitive market place most seller's agents will want to see some kind of approval prior to even looking at an offer. Additionally, getting pre-approved will allow you more time to pick the best mortgage for you.

Pre-Qualification VS Pre-Approval?

Pre-qualification does not typically include an analysis of your credit report or an in-depth look at your true ability to buy a home. Pre-approval means a lender has looked closely at both your credit report and your income. The lender will tell you the maximum amount of loan it will make, which loan programs you qualify for, and will discuss the interest rates it will offer for different types of loans.