---
title: 15 Mortgage Loan Terms MA First-time Home Buyers Should Know
description: Massachusetts first-time home buyers should know these 15 mortgage loan terms and acronyms, such as APR, PMI, ARM and more.
---

[Massachusetts Home Buyer Guide, First-time Homebuyer Tips, Advice MA ](https://info.buyersbrokersonly.com/blog)

# [15 Mortgage Loan Terms MA First-time Home Buyers Should Know](https://info.buyersbrokersonly.com/blog/bid/297330/15-mortgage-loan-terms-ma-first-time-home-buyers-should-know)

 Written by [Rich Rosa](https://info.buyersbrokersonly.com/blog/author/rich-rosa) | Nov 16, 2016 1:58:00 PM

[Massachusetts first-time home buyers](https://www.buyersbrokersonly.com/buying/first-time-home-buyer-programs) sometimes feel like they are listening to a foreign language when learning about the many lending terms related to a mortgage loan. There are many and several sound similar. The following are 15 loan terms first-time home buyers should definitely know.

1. **Adjustable-rate Mortgage (ARM)**: Frequently referred to by its acronym ARM, an adjustable-rate mortgage is a loan in which the interest rate is adjusted periodically based on a pre-selected index. An ARM is sometimes known as a variable-rate mortgage. An ARM typically isn't for first-time home buyers, mainly because rates may rise and monthly payments could become no longer affordable. 

2. **Annual Percentage Rate (APR)**: The annual percentage rate, commonly referred to as the APR, is the interest rate that reflects the true cost of borrowing. It takes into account all the costs associated with a loan. The APR allows home buyers in Massachusetts and around the country to compare different types of mortgages based on the annual cost of each loan. 

3. **Appraisal**: Appraisers, which are licensed in Massachusetts, provide appraisals, which are documents giving an estimate of a property's fair market value. Appraisals are generally required by lenders before approving a loan. 

4. **Assessment**: Municipalities in Massachusetts provide an assessed value for each property within the community. [Assessed value is not market value](https://info.buyersbrokersonly.com/blog/bid/356389/Assessed-Value-v-Market-Value-What-MA-Home-Buyers-Should-Know). The assessment is a local tax levied against a property.

5. **Commitment**: Most often referred to as the [loan commitment](https://info.buyersbrokersonly.com/blog/loan-committment-date-critical-for-massachusetts-home-buyers), the commitment is the written agreement between the lender and borrower to loan money at a future date subject to the completion of paperwork and compliance with stated conditions prior to and at the closing.

6. **Conventional Loan**: A conventional loan is a private sector loan that is not guaranteed or insured by the U.S. government.

7. **Debt-to-income Ratio**: A home buyers debt-to-income ratio is when the monthly payment obligation on long-term debt is divided by the home buyers gross monthly income. Lenders require that borrowers debt-to-income ratio, expressed as a percentage, be below a certain level. That level may vary based on the loan program. 

8. **Down Payment**: A down payment is the portion of a home's purchase price the home buyer pays in cash and not part of the mortgage loan. [A down payment should not be confused with the deposit](https://www.buyersbrokersonly.com/buying/massachusetts-home-purchase-deposit-versus-down-payment). 

9. **Earnest Money**: Also referred to as the earnest money deposit, earnest money is given by a home buyer as part of the purchase price to bind a real estate agreement. The earnest money deposit typically is held in an escrow account prior to closing. 

10. **FHA Loan**: A FHA loan is a loan insured by the Federal Housing Administration. Due to the high cost of fees currently involved with a FHA loan, home buyers with decent credit scores should consider [other loan options](https://info.buyersbrokersonly.com/blog/bid/242734/First-time-Home-Buyers-in-Massachusetts-Should-Consider-MassHousing). 

11. **Fixed-rate Mortgage**: A fixed-rate mortgage is a mortgage loan with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed. First-time home buyers should obtain a fixed-rate mortgage. 

12. **Lock In**: When a borrower is guaranteed a specific interest rate, [if the loan is closed within a specific time, he or she is has locked in](https://info.buyersbrokersonly.com/blog/what-is-a-mortgage-interest-rate-lock). In most cases, a lender will not lock in an interested rate more than 30, 45 or sometimes 60 days before the closing; therefore, shopping around to different lenders for the best interest rate before finding a home and putting it under agreement can be a waste of time. That doesn't mean home buyers shouldn't discuss other aspects of a loan prior to finding a home. 

13. **Private Mortgage Insurance (PMI)**: Private mortgage insurance, often referred to as PMI, is insurance paid by the borrower to protect the lender against losses that can occur when a borrower defaults on a mortgage loan. PMI is often required when a home buyer's down payment is less than 20 percent. Massachusetts first-time home buyers may be able to avoid the high cost of private mortgage insurance by considering a [MassHousing loan](https://info.buyersbrokersonly.com/blog/bid/242734/First-time-Home-Buyers-in-Massachusetts-Should-Consider-MassHousing) or other first-time home buyer loan program.  

14. **Truth In Lending**: Truth in lending refers to a federal law requiring lenders to disclose the annual percentage rate charged to home buyers. This should be done shortly after they apply for a loan. Since October 2015, lenders are required to provide borrowers with a [loan estimate](https://info.buyersbrokersonly.com/blog/what-do-homebuyers-have-to-provide-lenders-to-receive-a-loan-estimate) within three business days of receiving certain information and a [closing disclosure](https://info.buyersbrokersonly.com/blog/what-is-a-closing-disclosure) three business days before closing. 

15. **VA Loan**: A [VA loan](https://www.buyersbrokersonly.com/buying/veteran_loan_option.htm) is a long-term, low- or no-down payment loan to U.S. veterans guaranteed by the U.S. Department of Veteran Affairs. 

[View full post](https://info.buyersbrokersonly.com/blog/bid/297330/15-mortgage-loan-terms-ma-first-time-home-buyers-should-know)

```json
{
  "@context" : "http://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Rich Rosa"
  },
  "dateModified" : "2018-09-16T16:47:35.814Z",
  "datePublished" : "2016-11-16T13:58:00Z",
  "headline" : "15 Mortgage Loan Terms MA First-time Home Buyers Should Know",
  "image" : {
    "@type" : "ImageObject",
    "height" : 300,
    "url" : "http://cdn2.hubspot.net/hub/213639/file-29237196-jpg/images/benjamin_house_calculator.jpg",
    "width" : 400
  },
  "mainEntityOfPage" : "https://info.buyersbrokersonly.com/blog/bid/297330/15-mortgage-loan-terms-ma-first-time-home-buyers-should-know",
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "height" : 60.0,
      "url" : "https://info.buyersbrokersonly.com/hubfs/2023%20BBO%20Logo%202400x510.jpeg",
      "width" : 282.35294
    },
    "name" : "Massachusetts Home Buyer Guide"
  }
}
```