Effective Interest Rate
The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.

Encumbrance
A claim against a property by another party which usually affects the ability to transfer ownership of the property.

Equity
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.