Getting a home equity loan is a bit different than applying for a first mortgage. Before you start the application process, it's a good idea to familiarize yourself with the following terms.

• Appraisal: A written analysis of the estimated value of a property, as prepared by a qualified appraiser. The lender uses this in determining your qualification for a loan.
• Appreciation: The increase in home value as a result of market conditions. The appreciated value of your home is the amount it is currently worth.
• Break-even point: The point at which a homeowner will begin realizing savings after refinancing a mortgage. This is when it makes since to refinance.
• Cash-out refinancing: Refinancing a mortgage for more than you currently owe and using the cash for another purpose. The money is often used for paying off debt or financing home renovations.
• Closing costs: The money paid to the lender at closing. It includes a loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge, and other costs assessed at settlement. The closing costs are usually about 2 to 6 percent of the mortgage amount.
• Credit report: A report of your credit history that a lender uses to determine your creditworthiness. It shows your history of borrowing and repaying money.
• Equity: The difference between the fair market value of your home and the current amount left on your mortgage. It is also referred to as the owner's interest.
• Home equity loan: A second mortgage secured against the equity in your home. It allows you to tap into your built-up equity and obtain a lower interest rate than you would normally get on an unsecured loan.
• Home equity line of credit: A revolving line of credit that is secured against the equity in your home. Similar to a credit card, it enables you to withdraw money as you need it. Because it's secured against your home, you can get a lower interest rate than you would normally get on an unsecured credit line.
• Interest rate: The annual interest on a loan, based on a percentage of 100. The lower your interest rate, the lower your monthly payment.
• Lock-in: A guarantee from a lender that you will be granted a certain interest rate for a specific time period, such as 30 days prior to closing.
• Mortgage refinancing: When you pay off one mortgage with the proceeds from another, you are refinancing. You may do this to get a better interest rate, change your mortgage product, change the terms of your mortgage, finance a home renovation, or pay off debt.
• Origination fee: The fee charged by a lender for processing a loan.
• Pre-approval: Getting pre-approved for a mortgage requires that you complete a mortgage application and supply a lender with all the necessary documentation to check your financial background and credit rating. You will then be told the exact mortgage amount for which you are approved.
• Pre-qualification: Occurs when a lender estimates what size loan, usually a mortgage, you can afford. A pre-qualification estimate is nonbinding.
• Principal: The amount of debt, not counting interest, left on a loan.
• Term: The time period for your loan.
• Title: The document that shows ownnership of the property.