Additional borrowing – When you take out extra funds and increase the total amount of your mortgage loan. You can use this additional money for home improvements or other expenses.
Annual Percentage Rate (APR) – Reflects the total cost of the mortgage, including interest and fees, expressed as an annual percentage rate over the life of the loan.
Bankruptcy search – The title company or closing agent will check if the buyer or seller has a current or past bankruptcy filing.
Prime rate – The base interest rate that banks use as a reference point for lending rates, often influenced by the Federal Reserve’s rate decisions.
Application fee – A fee charged by the lender to process your mortgage application.
Principal and interest payment – Your monthly mortgage payment that includes repayment of the loan amount (principal) plus interest charged on the loan.
Closing – The final step in the home purchase process when ownership is legally transferred from seller to buyer, and all documents are signed and funds are disbursed. After closing, the buyer receives the keys to the property.
Closing fee – A fee that covers the costs related to processing and disbursing the mortgage funds during closing.
Consent to lease – Permission from your lender allowing you to rent out your property, often needed if you plan to lease your primary residence or move temporarily.
Purchase agreement – A written, legally binding contract between buyer and seller that outlines the terms and conditions of the property sale.
Title agent – A professional or company that handles the legal paperwork involved in transferring ownership of the property, including title searches and issuing title insurance.
Pre-approval – A lender’s preliminary approval indicating how much they are willing to lend you based on your income, debts, and credit report. This shows sellers you are a serious buyer.
Down payment – The upfront cash payment made by the buyer, usually expressed as a percentage of the home’s purchase price.
Loan disbursement – When the mortgage funds are released to the seller or escrow agent, and the mortgage officially starts.
Prepayment penalty – A fee that some lenders charge if you pay off your mortgage loan early, refinance, or pay extra principal during a certain period.
Appraised value – The estimated market value of the property as determined by a licensed appraiser.
Contract signing – The stage where both buyer and seller sign the purchase contract, making the agreement legally binding.
Mortgage payoff fee – A fee charged by some lenders to process the payoff of your mortgage loan. Many lenders do not charge this fee.
No-fee mortgage option – Some mortgage products may waive certain fees like application fees or appraisal fees, but other closing costs may still apply.
Financial crime – This refers to illegal activities such as money laundering, terrorist financing, bribery, corruption, tax evasion, fraud, and violations of economic or trade sanctions.
First mortgage lien – When you take out a mortgage to purchase a property, the lender places a first lien on the property. This lien gives the lender the primary legal claim to the property if you default on the loan.
First lien deed of trust – A legal document used in certain states that secures the lender’s interest in the property and allows the lender to foreclose if the borrower fails to meet loan obligations.
Fixed-rate mortgage – A mortgage where the interest rate and monthly payments remain the same for a specified period or the entire loan term, unaffected by changes in market interest rates.
Fixed-rate period – The length of time the mortgage’s interest rate remains fixed before it adjusts or converts to a variable rate.
Replacement cost value – The estimated cost to rebuild the home from scratch in case of damage or loss, used for insurance purposes.
County Recorder or Registry of Deeds – The local government office where property records, including deeds and liens, are officially recorded and maintained.
Illustrative example – An example provided for explanation purposes only; figures may vary in actual cases.
Daily interest calculation – Interest is calculated on the outstanding loan balance every day rather than monthly or annually, which affects how interest accrues.
Interest-only mortgage – A mortgage where monthly payments cover only the interest on the loan for a set period. After that, the borrower must begin repaying principal or pay the entire loan balance.
Interest rate type – Indicates whether the mortgage interest rate is fixed (unchanging) or adjustable (variable) over the life of the loan or a specific period.
Security instrument (Mortgage or Deed of Trust) – The legal document signed by the borrower that secures the loan with the property and is recorded with the local county.
Consent letter – A written agreement signed by individuals living in the property who are not borrowers but have an interest or right to occupy the home, acknowledging the lender’s rights.
Loan-to-Value ratio (LTV) – The ratio of the mortgage loan amount to the appraised value or purchase price of the property.
Lump sum payment – A one-time payment made to reduce the outstanding principal balance on your mortgage.
Monthly payment – The amount you must pay each month, which typically includes principal, interest, taxes, and insurance (PITI).
Mortgage balance – The remaining amount you owe on your mortgage loan.
Mortgage note – The legally binding promissory note you sign when agreeing to the mortgage loan, outlining the terms and your promise to repay.
Loan estimate – A standardized document lenders provide early in the application process that details estimated interest rates, monthly payments, and closing costs to help you compare loan offers.
Loan term – The length of time over which the mortgage must be repaid.
Underwater mortgage / Negative equity – When the outstanding mortgage balance is higher than the current market value of the property.
Loan commitment (or loan approval) – A formal document from the lender confirming their offer to lend you money under specific terms and conditions.
Remaining loan balance – The current outstanding amount you owe on your mortgage.
Additional principal payments – Payments made beyond your required monthly mortgage payment to reduce your loan principal faster.
Payment due date – The specific date each month when your mortgage payment is due.
Personally identifiable information (PII) – Data that can be used to identify an individual.
Mortgage porting – The process of transferring your existing mortgage terms from your current property to a new property.
Introductory rate period – The length of time a particular interest rate applies to your mortgage.
Property chain – A sequence of linked property sales where the purchase of one home depends on the sale of another.
Refinance – The process of replacing your existing mortgage with a new loan.
Residential mortgage – A mortgage loan used to purchase or refinance a primary residence.
Right to cancel – Under certain circumstances, borrowers have a limited period to cancel the loan agreement without penalty.
Title searches and property inspections – Checks performed to verify property ownership and any issues affecting the property.
Mortgage securitization – The process where mortgage loans are bundled together and sold as mortgage-backed securities.
Collateral – The property pledged as security for the loan.
Soft inquiry (soft credit pull) – A credit check performed without impacting your credit score.
Real estate attorney – A real estate attorney handles the legal aspects of a property purchase.
Transfer taxes / Real estate transfer tax – A tax paid when purchasing real estate, amount varies by state or locality.
Standard contract terms – Standardized legal terms included in real estate agreements.
Appraisal – An independent estimate of a property's market value conducted by a licensed appraiser.
Rate modification / Loan program change – The act of changing your current mortgage to a different interest rate or term.
Loan Estimate (LE) or Closing Disclosure (CD) – A document listing all the fees and charges associated with your mortgage.
Tax authorities – Refers to governmental agencies responsible for tax collection.
Tax information – Documentation about your tax status.
Adjustable-rate mortgage (ARM) – A loan where the interest rate may change periodically based on a benchmark index.
Deed / Grant deed / Warranty deed – The legal document that transfers ownership of real property.
Underwriting – The lender’s process of evaluating your mortgage application.
