iTerm

iTerm2 is an open source replacement for Apple's Terminal. It's highly customizable and comes with features like Split panes, hotkey window, Autocomplete and lot more.

Installation

You can download the app from iTerm2 downloads page. Drag and drop the iTerm application file into your Applications folder.

It gives you option to set key mappings under iTerm2 preferences (⌘,) -> Profiles -> Keys

When you open a new window, if you want it to open in current directory instead of HOME directory, you can config it as:

iTerm Preferences » Profiles » General » Working Directory to “Reuse previous session’s directory”.