Explore Common Mortgage Terms
Click any term to expand its definition.
A
The process of paying off a loan over time through regular monthly payments that include both principal and interest.
A broader measure of the cost of borrowing than the interest rate alone because it may include certain fees and finance charges.
A professional estimate of a property’s market value used by lenders to help confirm the home supports the requested loan amount.
C
The total amount a borrower needs to bring at closing, which may include the down payment, lender fees, prepaid costs, and other charges.
Expenses paid to finalize a mortgage transaction, such as lender fees, title charges, prepaid taxes, and insurance.
A final document that outlines the loan terms, projected payments, and total closing costs before the mortgage is completed.
D
The percentage of your gross monthly income that goes toward monthly debt obligations. Lenders use this to evaluate affordability.
The upfront portion of the home’s purchase price that the buyer pays out of pocket.
The legal document that transfers ownership of a property from one party to another.
E
A deposit submitted with an offer to show serious intent to purchase a property.
The difference between your home’s market value and the amount you still owe on the mortgage.
An account used to collect and hold funds for property taxes, homeowners insurance, and other related housing expenses.
F
A mortgage insured by the Federal Housing Administration that may offer more flexible qualification guidelines for eligible borrowers.
A home loan with an interest rate that remains the same for the full loan term.
H
An evaluation of a home's condition that may identify repairs, safety concerns, or maintenance issues before purchase.
Insurance coverage that helps protect your property and belongings against covered losses or damage.
I
The percentage charged by a lender for borrowing money.
L
A document lenders provide early in the process showing estimated loan terms, monthly payments, and closing costs.
The loan amount compared to the appraised value or purchase price of the property, expressed as a percentage.
M
Insurance that protects the lender if the borrower stops making payments. It may be required depending on the loan program and down payment.
P
A lender’s preliminary review of your financial profile to estimate how much you may be eligible to borrow.
The original amount borrowed, not including interest or fees.
A type of mortgage insurance often required on conventional loans when the borrower puts down less than 20%.
R
Replacing an existing mortgage with a new one, often to change the rate, term, payment, or access home equity.
T
The legal right of ownership to a property.
Insurance that helps protect against financial loss related to title defects, liens, or ownership disputes.
U
The lender’s process of reviewing income, credit, assets, debts, and property details to make a final loan decision.
V
A mortgage program for eligible veterans, active-duty service members, and certain surviving spouses, backed by the U.S. Department of Veterans Affairs.
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