GLOSSARY

  • A type of home loan where the interest rate changes periodically based on an external index, potentially leading to lower initial payments but fluctuating costs over time.

  • A comprehensive measure of a loan's total cost, including the interest rate and fees, expressed as an annual percentage to help borrowers compare loans.

  • The process of ensuring loan payments are properly allocated between reducing the principal and covering interest charges.

  • A licensed real estate professional representing the buyer’s interests, helping negotiate the best price and terms during a property purchase.

  • A refinancing option where borrowers replace their current mortgage with a larger loan, using the extra amount for personal needs like home improvements or debt consolidation.

  • The total amount a buyer must bring to the closing table, including the down payment, closing costs, and any prepaid expenses.

  • Expenses paid by buyers and sellers at closing, including lender fees, title insurance, escrow costs, and taxes.

  • Recently sold properties with similar characteristics to the subject property, used to determine its market value for appraisal purposes.

  • A loan that adheres to the limits and guidelines set by Fannie Mae and Freddie Mac for easy resale in the secondary mortgage market.

  • Private mortgage loans not insured or guaranteed by government programs like FHA, VA, or USDA.

  • A calculation showing the percentage of a borrower’s gross monthly income that goes toward paying debts, used to determine loan eligibility.

  • A portion of the home’s purchase price paid upfront by the buyer, reducing the loan amount needed.

  • A special account managed by the lender to hold funds for property taxes, homeowner’s insurance, and other expenses, ensuring timely payment.

  • A government-backed loan insured by the Federal Housing Administration, ideal for buyers with lower credit scores or smaller down payments.

  • A mortgage with an interest rate that remains the same throughout the loan term, providing predictable monthly payments.

  • A revolving credit line secured by a home’s equity, allowing homeowners to borrow as needed for various expenses.

  • The percentage charged by a lender for borrowing money, influencing monthly payments and total loan costs.

  • A legal claim on a property used as collateral to secure debt, which must be resolved before selling or refinancing.

  • A process allowing borrowers to reduce their monthly payment by making a large, one-time principal payment, without refinancing.

  • A type of loan that doesn’t meet traditional lending standards but provides flexibility for unique borrower situations.

  • A conditional approval from a lender indicating how much a borrower may qualify to borrow, based on a review of financial documents

  • The four components of a typical monthly mortgage payment, covering loan repayment and property-related costs.

  • Insurance required for conventional loans with less than 20% down, protecting the lender in case of default.

  • Contributions from the seller to help cover the buyer’s closing costs, reducing the amount the buyer needs at closing

  • The evaluation process where lenders assess a borrower’s financial information and determine loan approval.

  • A lending model where loans are offered through intermediaries like mortgage brokers rather than directly to borrowers.