Ever felt as though mortgage lenders have created their own dialect of English just to confuse you. The industry has terminology so thick, most universities offer entire classes covering real estate definitions. So before you sign on the dotted line, have the certainty you understand all your options. Here are a few common terms:

Stated-Income Loans - With these loans, the lender does not verify your reported income. According to Ameriquest Mortgage Company, traditionally the mortgage company does a background check on you, but with stated-income loans, they are trusting your word. Careful: When the mortgage is sold to investors, they often perform an audit and can go over your tax records. Lying on a mortgage application is a crime with costly penalties.

Interest-Only Financing - A mortgage where the upfront payments, usually lasting three to ten years, can be very small. Ameriquest says have caution, payments can jump by hundreds of dollars when you start paying down principal.

Negative Amortization - Some ARMs allow 'negative amortization'. The term describes a situation when the monthly payments do not cover all costs, so your mortgage balance will get bigger, not smaller, over time. This will leave you with more debt to pay off in the future.

Prepayment Penalties - Conditions may call for you to pay down your loan early. But some mortgages carry a clause that can force you to pay thousands of dollars in prepayment penalties. Talk to your broker and see if this applies to you.

For more information on mortgages, visit www.ameriquest.com, www.bankrate.com, or www.fool.com.

Eddie Daroza, is a personal investor and stock market junkie. Besides contributing content to efinancedirectory, he works on the consumer watch program '7 On Your Side', broadcast daily on San Francisco's ABC 7. Eddie is also a reporter for PBS's Update News.