Mortgage & Homebuying Glossary

A provision in a mortgage contract that allows the lender to demand immediate payment of the entire remaining loan balance if certain conditions are violated, such as missing payments or selling the property without lender approval.

A mortgage where the interest rate changes periodically after an initial fixed-rate period.

The process of gradually paying off a loan through scheduled payments that cover both principal and interest over time.

A table showing every payment over the life of a loan, broken down into how much goes to principal and how much goes to interest.

The total yearly cost of borrowing, expressed as a percentage, which includes the interest rate plus lender fees and other charges.

A professional assessment of a property's market value conducted by a licensed appraiser.

The dollar value assigned to a property by a local tax assessor for the purpose of calculating property taxes.

A mortgage with low monthly payments for a set period, typically five to seven years, after which the entire remaining balance becomes due in one large lump-sum payment.

A unit of measurement equal to one-hundredth of a percentage point (0.

The person or people who take out a mortgage loan and are legally responsible for repaying it.

A short-term loan that helps homeowners finance the purchase of a new home before selling their current one.

An arrangement where the seller, builder, or buyer pays an upfront fee to temporarily reduce the mortgage interest rate for the first one to three years of the loan.

A licensed real estate agent who represents the homebuyer's interests throughout the purchasing process.

A limit on how much the interest rate on an adjustable-rate mortgage can change during a specific period or over the life of the loan.

The amount of money a borrower has left in savings after paying the down payment and closing costs.

The total amount of money you need to bring to the closing table, which includes your down payment, closing costs, and prepaid items like property taxes and homeowners insurance.

A document issued by a local government that certifies a building meets building codes and is safe to inhabit.

The final step of a real estate transaction where ownership of the property is officially transferred from seller to buyer.

Fees and expenses you pay when finalizing a mortgage, typically ranging from 2% to 5% of the home's purchase price.

A five-page document your lender must provide at least three business days before closing that details your final loan terms, monthly payment, and all closing costs.

An asset pledged as security for a loan, which the lender can seize if the borrower fails to repay.

A report prepared by a real estate agent that estimates a home's value by comparing it to similar properties that have recently sold, are currently listed, or were listed but did not sell in the same area.

A mortgage that meets the size limits and underwriting guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy most U.

A short-term loan used to finance the building of a new home.

A condition written into a purchase agreement that must be met before the sale can close.

A mortgage that is not insured or guaranteed by a government agency like FHA, VA, or USDA.

A three-digit number, typically between 300 and 850, that represents your creditworthiness based on your borrowing history.

A ratio used primarily in investment property lending that compares the property's rental income to its total debt obligations.

The percentage of your gross monthly income that goes toward paying debts, including your future mortgage payment, car loans, student loans, and minimum credit card payments.

A legal document that transfers ownership of real property from one party to another.

A legal document used in many states instead of a traditional mortgage that involves three parties: the borrower, the lender, and a neutral trustee who holds the property title until the loan is paid off.

Failure to meet the legal obligations of a mortgage, most commonly by missing payments.

The upfront cash payment you make toward the purchase of a home, expressed as a percentage of the price.

The research and investigation a buyer performs before finalizing a home purchase.

A deposit made by the buyer when submitting an offer on a home, typically 1% to 3% of the purchase price, to show the seller you are serious about buying.

A legal right to use or access someone else's property for a specific purpose without owning it.

The difference between your home's current market value and the amount you still owe on your mortgage.

A neutral third-party arrangement where money or documents are held until certain conditions are met.

An account managed by your mortgage servicer that collects a portion of your property taxes and homeowners insurance premiums as part of your monthly mortgage payment.

The price a property would sell for on the open market, assuming a willing buyer and seller, both with reasonable knowledge of the facts, and neither under pressure to act.

The Federal National Mortgage Association, a government-sponsored enterprise that buys mortgages from lenders and packages them into mortgage-backed securities.

A mortgage insured by the Federal Housing Administration that allows down payments as low as 3.

Recurring costs that remain relatively constant each month, such as your mortgage payment, property taxes, HOA fees, and insurance premiums.

A mortgage with an interest rate that stays the same for the entire loan term, giving you a predictable monthly payment.

A temporary agreement with your lender to reduce or pause mortgage payments during a period of financial hardship.

The legal process through which a lender takes ownership of a property when the borrower fails to make mortgage payments.

The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise similar to Fannie Mae that buys mortgages from lenders to keep the housing market liquid.

The percentage of your gross monthly income that goes toward housing costs alone — specifically your mortgage payment, property taxes, homeowners insurance, and any HOA fees (also known as PITI).

A signed statement confirming that money received from a family member or other approved source for your down payment is a gift and not a loan that must be repaid.

A document that was once required by lenders to estimate closing costs and loan terms.

A Home Equity Line of Credit is a revolving credit line secured by your home that lets you borrow against your equity as needed, similar to a credit card.

The portion of your home's value that you truly own — the market value minus any outstanding mortgage balance.

A thorough examination of a property's condition conducted by a licensed inspector, typically arranged and paid for by the buyer.

A service contract that covers the repair or replacement of major home systems and appliances, such as HVAC, plumbing, electrical, and kitchen appliances, for a set period, usually one year.

An organization in a planned community, condominium, or subdivision that sets and enforces rules and collects monthly or annual fees from homeowners.

A policy that protects your home and belongings against damage from events like fire, storms, theft, and liability claims.

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The percentage a lender charges you to borrow money, expressed as an annual rate.

A loan where you pay only the interest for an initial period, typically five to ten years, without paying down any principal.

A mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac, currently $806,500 in most areas for 2026.

The financial institution — such as a bank, credit union, or mortgage company — that provides the money for your home loan.

A legal claim on a property that must be satisfied before the property can be sold with a clear title.

A standardized three-page document that a lender must provide within three business days of receiving your mortgage application.

A permanent change to one or more terms of your existing mortgage to make payments more manageable.

A professional at a bank or mortgage company who helps you apply for a mortgage, evaluates your financial situation, and guides you through the lending process.

A fee charged by the lender for processing and underwriting your mortgage application, typically 0.

The ratio of your mortgage amount to the appraised value of the property, expressed as a percentage.

An agreement with your lender to hold a specific interest rate for a set period — typically 30 to 60 days — while your loan is processed.

A loan used to buy real estate, where the property itself serves as collateral.

An independent professional who shops your mortgage application across multiple lenders to find you the best rate and terms.

Insurance required on FHA loans that protects the lender if you default.

The interest rate charged on a home loan, which determines how much you pay in interest over the life of the mortgage.

The company that handles the day-to-day management of your mortgage after closing, including collecting payments, managing your escrow account, and providing customer service.

The process of creating a new mortgage loan, from application through funding.

A strategy where you take out two loans simultaneously to avoid paying private mortgage insurance.

An acronym for Principal, Interest, Taxes, and Insurance — the four components that make up your total monthly mortgage payment.

Private Mortgage Insurance — see the full entry under Private Mortgage Insurance.

An upfront fee paid to the lender at closing to lower your mortgage interest rate, where one point equals 1% of the loan amount.

A legal document that authorizes someone else to act on your behalf in financial or legal matters, including signing mortgage documents.

A written commitment from a lender stating how much they are willing to lend you, based on a review of your credit, income, assets, and debts.

An informal estimate from a lender of how much you might be able to borrow, based on self-reported financial information.

A fee some lenders charge if you pay off your mortgage early, make extra payments above a certain amount, or refinance within a specified period.

The amount of money you borrow to buy a home, not including interest.

Insurance that protects the lender (not you) if you default on a conventional mortgage with less than 20% down.

A legal document you sign at closing that is your personal promise to repay the mortgage loan according to the agreed-upon terms.

An annual tax levied by local governments based on the assessed value of your property, used to fund schools, roads, emergency services, and other public services.

A category of mortgage defined by the Consumer Financial Protection Bureau (CFPB) that meets specific requirements designed to ensure borrowers can reasonably afford the loan.

A guarantee from your lender that your mortgage interest rate will not change for a specified period, typically 30 to 60 days, while your loan is processed.

A licensed professional who helps buyers or sellers navigate real estate transactions.

Property that has been acquired by a lender through foreclosure after the borrower defaulted on the mortgage.

Replacing your existing mortgage with a new loan, usually to get a lower interest rate, change the loan term, or cash out some of your home equity.

The Real Estate Settlement Procedures Act, a federal law that requires lenders to disclose settlement costs, prohibits kickbacks between service providers, and limits escrow account deposits.

A loan taken out against a property that already has a first mortgage.

Another term for closing — the final meeting where all documents are signed, funds are transferred, and ownership of the property passes to the buyer.

A professional measurement and mapping of a property's boundaries, structures, and features.

The legal right to own, use, and transfer a property.

A one-time insurance policy that protects against financial loss from defects in the property's title that were not discovered during the title search.

A tax imposed by state or local governments when real estate changes hands.

A federal law that requires lenders to clearly disclose the terms and costs of a mortgage, including the APR, total interest charges, and payment schedule, so borrowers can make informed comparisons.

The process a lender uses to evaluate whether to approve your mortgage application.

A mortgage program backed by the U.

A mortgage program guaranteed by the U.