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Glossary of Terms

Mortgage Glossary

Because buying a home shouldn’t feel like

Cramming for a law exam…

A

Hidden in your loan paperwork is a little “gotcha” clause that says: if you stop paying, the lender can demand the entire loan balance right now. No payment plan, no slow fade — boom, full balance due. It’s basically the bank’s version of “don’t ghost me.” Good news? Stay current, and you’ll never have to think about this again.

The rollercoaster mortgage. Your interest rate starts low and fixed for a set period, then it can change every so often. Sometimes it goes up, sometimes it goes down. Great if you’re not planning to stick around for the full 30 years, but risky if you’re nesting long-term. Want to know if this wild ride makes sense for you? That’s what we’re here for.

A very official-sounding word that just means “slowly paying off your loan in chunks.” Each month, part of your payment goes to interest (lender’s cut) and part goes to principal (your actual loan balance). Over time, more of your payment eats away at the loan. Think of it like paying off a giant pizza — slice by slice until it’s gone.

This is when a professional tells you (and the lender) what your home is worth. It’s not always the same as what you paid or what Zillow thinks. Why? Because appraisers actually look at your property, recent sales, and condition. Appraisals keep everyone honest — and sometimes cause a little drama if the house sells for way more than it’s worth on paper. That’s when you call us to strategize.

B

The loan that looks small and cute at first — until it ends with one huge “balloon” payment at the end. Spoiler: not the fun party kind of balloon. Rare these days for residential loans, but if you ever see one in your paperwork, call us before you sign.

Instead of paying once a month, you pay half your payment every two weeks. Since there are 52 weeks in a year, you sneak in an extra full payment without noticing. It’s like tricking yourself into saving — but for your mortgage. Want to know if this would work for you? Ask us.

That’s you — the hero of this story. The one putting their name on the dotted line, taking the keys, and making all the payments. Everyone else in this process? Just supporting characters.

That awkward in-between loan that helps you buy your new home before your old one sells. Because sometimes the dream house pops up before you’ve sold your current one. Risky, but sometimes necessary. Want to know if a bridge loan makes sense? That’s what we’re here for.

C

The three sweetest words in real estate. This means underwriting is done, paperwork is signed off, and you’re on your way to the closing table. Translation: you’re about to get the keys.

The bill you pay at the finish line. These cover things like title fees, escrow, recording, lender charges, and more. People always ask: “How much should I expect?” Typically about 2% of the loan amount (give or take). So if you’re buying a $500,000 house, plan for around $10,000 in closing costs. The good news? Sometimes sellers can chip in, and we’ll always go over every penny with you.

Fancy word for “what the lender can take if you don’t pay.” In this case, your house. Pay = stay. Don’t pay = lender gets to sell it. But don’t worry — we’re here to keep you far, far away from that scenario.

Recently sold homes like yours, used to figure out value. Think of them as your house’s résumé references: “See, I’m worth this much because my neighbor sold for that much.”

The classic 30-year or 15-year loan. Not backed by the government. Solid, predictable, and great for folks with decent credit and a down payment.

D

The math lenders obsess over: your monthly debts ÷ your monthly income. Example: If you make $5,000/month and your debts are $2,000/month, your DTI is 40%. Lower is always better. Too high, and lenders get nervous. Don’t worry — we’ll help you figure out where you stand (and how to improve it if needed).

The legal document that says: “This home is yours — but the lender has dibs until you pay it off.”

Optional fees you can pay upfront to lower your interest rate. It’s like prepaying some of the interest — pay more now, save over time. Whether it makes sense depends on how long you plan to stay in the house. That’s where we crunch the numbers for you.

Your “skin in the game.” Usually ranges from 3%–20% of the purchase price. Bigger down payment = smaller loan + better terms. Can it be a gift from family? Sometimes. Can it come from a grant or down payment assistance program? Definitely. Want to see what options you qualify for? That’s what we do.

E

The deposit you put down with your offer to show you’re serious. Usually 1–3% of the purchase price. Held by escrow until closing. If the deal goes through, it counts toward your down payment. If you bail for no reason? Seller keeps it. (Ouch.)

The portion of your home you actually own (value minus your loan). Over time, as you pay down the loan and values rise, equity grows. Think of it as your built-in savings account — but cooler.

The neutral third party that handles the paperwork, money, and signatures. They keep everyone honest and make sure funds only change hands when the deal is 100% ready.

A tax that gets charged whenever property changes hands. Typically paid by the seller, but it’s part of the overall math at closing.

F

A government-backed loan with a low down payment (3.5%), more flexible credit guidelines, and mortgage insurance. Great for first-time buyers.

The last lap before the finish line. You walk through the property to make sure it’s in the agreed condition. Translation: “Is the house still standing and did the sellers leave the fridge?”

Steady. Predictable. Boring in the best way. Your interest rate stays the same for the entire loan term.

What happens if you stop paying your mortgage. The lender takes the house back and sells it. You never want to end up here, and our job is to help you stay miles away from it.

G

Money from family (or other allowed donors) that you can use toward your down payment or closing costs. Must be an actual gift, not a secret loan. Lenders will want a signed “gift letter” — and yes, we’ll help you write it.

H

Another name for homeowners insurance. Protects against things like fire, theft, and certain types of damage. Lenders require it.

A revolving line of credit secured by your home. Works like a credit card, but with your house on the line. Handy for remodels, college tuition, or emergencies.

Not required by lenders but highly, highly recommended. A professional looks at the structure, systems, and condition of the home. It’s like a doctor’s check-up — better to find the problems before you move in.

I

The part of your monthly payment that covers property taxes and homeowners insurance. Your lender collects it, then pays those bills on your behalf.

The percentage you pay to borrow money. It’s the “rent” on your loan balance.

J

A loan too big for standard “conforming” limits. Think high-price homes. Bigger loan = stricter rules.

L

A legal claim on your property. If you don’t pay debts like property taxes or contractor bills, a lien can be filed against your home.

A three-page disclosure that lays out your estimated loan terms and costs. Required by law.

Loan amount ÷ home value. The lower the ratio, the happier the lender.

Freezing your interest rate for a set period (usually 30–60 days) while your loan closes. Important in a moving market.

M

The loan that gets you into your house. Secured by the property. You pay it monthly until it’s gone.

Insurance that protects the lender if you default. Required if you put less than 20% down. The silver lining? It’s often temporary and can be removed later.

P

Principal, Interest, Taxes, Insurance. The four big parts of your monthly mortgage payment.

A lender’s commitment that you qualify for a certain loan amount. Sellers love it, because it shows you’re serious. Don’t house-hunt without it.

The amount you actually borrowed. Pay this down, and you build equity.

Collected by your county to fund schools, fire departments, parks, and more. Usually paid through your escrow account.

R

A promise from the lender that your interest rate won’t change for a set period while your loan closes. Protects you from market swings.

Fees charged by the county to officially record your property deed and mortgage documents.

Swapping your current mortgage for a new one — maybe with a lower rate, better terms, or cash out.

S

When the seller agrees to help cover your closing costs. Always negotiable — and we’ll help you ask for it.

A professional measurement of your property’s boundaries. Less common in city neighborhoods, but often ordered for rural or unique properties.

T

Insurance that protects against ownership disputes, liens, or “surprise” heirs who show up claiming your house. (Yes, it happens.)

Taxes charged when property changes hands. Paid at closing.

U

The behind-the-scenes loan review where the lender checks your income, credit, assets, and property details. Feels intense, but don’t stress — we’ll guide you through every step.

V

A zero-down loan for veterans, active-duty service members, and eligible spouses. Amazing benefits — no PMI, competitive rates.

W

Your last chance to make sure the house is in agreed-upon condition before signing. Aka: “Did they really leave me the washer and dryer?”

A deed guaranteeing the seller owns the property and has the right to sell. Standard in most home sales.

Z

Local rules about what you can do with your property. Can you run a business from your garage? Build a tiny house out back? Zoning has the answers.