Mortgage Glossary

A mortgage with an interest rate that can change periodically based on changes in a corresponding financial index.

The process of spreading out a loan into a series of fixed payments over the loan’s term.

An appraisal is a professional evaluation or assessment of something's value or quality. *Do not confuse this with an Inspection* Often used in real estate to determine a property's market value, it involves examining various factors like location, condition, and comparable sales. Appraisals are also common in finance for assets or antiques, providing a monetary value based on condition and rarity.

The final step in executing a real estate transaction.

Fees and other expenses required to finalize a mortgage beyond the price of the property itself.

A form that provides final details about the mortgage loan. It includes the loan terms, projected monthly payments, and how much the borrower will pay in fees and other costs to get the mortgage.

A numerical expression based on a level analysis of a person's credit files, representing the creditworthiness of an individual.

A personal finance measure that compares an individual’s debt payment to his or her overall income.

A legal document that represents the ownership of property, transferring the rights of ownership from the seller to the buyer.

An initial payment made when purchasing a property, typically a percentage of the total purchase price.

The difference between the value of the property and the amount still owed on the mortgage.

A financial arrangement where a third party holds and regulates the payment of funds required for two parties in a given transaction.

A mortgage with an interest rate that remains the same for the entirety of the loan term.

The legal process by which a lender takes control of a property, evicts the homeowner, and sells the home after the homeowner fails to make full principal and interest payments on their mortgage.

A line of credit secured by the equity in the homeowner's property, allowing the homeowner to borrow against it.

The cost of borrowing money, usually a percentage of the principal.

A lending risk assessment ratio that financial institutions and other lenders examine before approving a mortgage, calculated as the mortgage amount divided by the appraised value of the property.

A loan used to purchase a home, where the property serves as collateral.

A fee charged by a lender on entering into a loan agreement to cover the cost of processing the loan.

Fees paid directly to the lender at closing in exchange for a reduced interest rate or specific risk qualities. Be aware! Sometimes there are points based on your situation that can't be avoided. There isn't alwasy a par rate..

A lender’s conditional agreement to lend a specific amount based on a borrower's creditworthiness and financial situation.

An evaluation by a lender that determines if the borrower qualifies for a loan, and if so, the amount that the lender would be willing to lend.

The amount of money borrowed on a loan that must be repaid.

Insurance that a borrower must buy for the lender if the down payment is less than 20% of the home's value. Does not apply to VA or Jumbo loans.

An agreement between a borrower and a lender that allows the borrower to lock in an interest rate on a mortgage for a specified time period.

Replacing an existing mortgage with a new loan, typically to get a better interest rate, change the loan term, or consolidate your personal debts.

The process by which lenders assess the risk of lending money to home buyers, involving the evaluation of the borrower's creditworthiness, the property value, and other factors.