Mortgage jargon,
plain English.

A mortgage where the interest rate adjusts periodically after an initial fixed period (e.g. 5/1, 7/1). Lower starting rate, more long-term uncertainty.

The process of paying down a loan with regular payments, where each payment is split between interest and principal, early payments are mostly interest.

Your interest rate plus most of the upfront fees, expressed as a single yearly number. Always higher than the note rate.

A licensed appraiser's independent estimate of a home's market value. The lender uses it to confirm the loan amount makes sense for the collateral.

A loan a buyer can take over from the seller under its original terms. Common with VA and FHA loans; rare with conventional.

A large, lump-sum payment due at the end of certain loans (e.g. 5-year balloon). Most modern residential mortgages don't have one.

A short-term loan that "bridges" the gap when you're buying a new home before selling the current one.

A refinance where you borrow more than you owe on your current loan and take the difference as cash, using built-up equity.

All the fees due at closing, typically 2-5% of the home price. Includes origination, title, taxes, insurance, prepaids.

A 5-page document you receive 3 business days before closing, finalizing all loan terms and costs.

A loan that meets Fannie Mae / Freddie Mac size and credit guidelines. 2024 conforming limit: ~$766k in most areas, more in high-cost markets.

Any mortgage not backed by a government agency. Allows as little as 3% down for qualifying buyers.

A 300-850 number representing your credit risk. Affects whether you qualify and at what rate. FICO is the standard.

Your monthly debt payments divided by gross monthly income. Most lenders cap total DTI at 43-50%.

The cash you put toward the home price at closing. Lower down payments are possible but usually trigger PMI.

Debt-Service Coverage Ratio loan. Investor program that qualifies you based on the property's rental income, not your personal income.

Cash deposited when your offer is accepted, showing the seller you're serious. Typically 1-3% of price. Applied to your closing costs or refunded under contingencies.

The portion of the home you actually own, market value minus what you owe. Builds through payments + appreciation.

Two meanings: (1) a neutral 3rd party holding money during the transaction, (2) the lender's account that collects taxes + insurance with your monthly payment.

A federally insured mortgage requiring as little as 3.5% down with credit scores of 580+. Friendly to first-time buyers.

A mortgage where the interest rate stays the same for the entire loan term. The standard 30-year product.

The legal process where a lender takes back the home after you stop paying. Always call your servicer before missing a payment.

Cash given to you (typically by family) for your down payment. Must be documented with a gift letter and source of funds.

Home Equity Line of Credit. A revolving credit line secured by your home equity. Variable rate, draw-as-you-need.

Property + liability coverage for your home. Required by lenders. Premium is typically escrowed with your payment.

The "note rate" you're charged annually on your loan balance. Different from APR (which includes fees).

VA Interest Rate Reduction Refinance Loan. A streamlined VA-to-VA refinance with reduced docs, no appraisal, no income check.

A loan above the conforming limit. Stricter credit, income, and reserve requirements; competitive rates if you qualify.

A standardized 3-page document delivered within 3 days of application, estimating your loan terms and costs. Use it to compare lenders.

Loan amount divided by home value. 80% LTV = 20% equity. PMI usually drops off at 78-80% LTV on conventional loans.

FHA's version of mortgage insurance. Unlike PMI, FHA MIP usually stays for the life of the loan unless you put 10%+ down.

A licensed professional who shops multiple lenders on your behalf, unlike a bank, who only sells their own products.

Nationwide Multistate Licensing System and Registry. Every legitimate mortgage broker and loan originator has an NMLS ID, verify it.

The lender's fee for processing the loan. Typically 0.5-1% of the loan amount. Sometimes negotiable, sometimes baked into the rate.

Principal, Interest, Taxes, Insurance. Your full monthly housing payment, not just the loan piece.

Private Mortgage Insurance. Required on conventional loans with less than 20% down. Drops off automatically at 78% LTV.

Upfront fees paid to lower your interest rate. 1 point = 1% of the loan. Math out the break-even before paying for points.

A conditional written commitment from a lender after they verify your income, assets, and credit. What sellers want to see.

An informal estimate based on what you tell a lender. Much weaker than pre-approval. Often not taken seriously by sellers.

The portion of your payment that pays down your loan balance (the rest is interest, taxes, insurance, and PMI).

A commitment from a lender to give you a specific rate for a set window (30, 45, 60 days). Once locked, your rate doesn't move.

Replacing your current mortgage with a new one, usually for a better rate, different term, or cash-out.

The length of your loan in years. 30, 20, 15, and 10 are common. Shorter term = higher payment, less total interest.

Insurance protecting against defects in the home's legal ownership history. One-time fee at closing, lasts forever.

The lender's deep review of your application, income, assets, credit, property, to approve or decline the loan.

A USDA-backed loan for eligible rural and suburban homes. $0 down. Income limits apply.

A VA-guaranteed loan for active-duty, veterans, and eligible surviving spouses. $0 down, no PMI, competitive rates.

Seller financing where a new loan "wraps around" the existing one. Rare, risky, and usually requires lender approval, get legal advice first.