A

Adjustable-Rate Mortgage (ARM)

A loan with an interest rate that starts fixed for a set period, then adjusts periodically based on market conditions.

Amortization

The schedule that shows how each payment is split between interest and principal over the life of your loan. It shows how early payments lean more toward interest and later ones lean more toward principal.

Annual Percentage Rate (APR)

Your interest rate plus certain fees and costs, expressed as a yearly percentage. It gives you a more complete picture of what a loan actually costs, which makes it useful for comparing offers.

Appraisal

A licensed professional's estimate of a home's market value, required by lenders to confirm the property is worth what you're paying for it.

C

Closing Costs

Fees and expenses that are due at closing. Things like lender fees (appraisal, credit report, underwriting, etc.), title insurance, recording fees, real estate fees, and prepaids (homeowner’s insurance, property taxes, etc.).

Closing Disclosure

A document you'll receive a few days before closing. It spells out your final loan terms, monthly payment, and closing costs so there are no surprises.

Conforming Loan

The most common type of mortgage. It’s regulated by the Federal Housing Finance Agency (FHFA). Underwriters use FHFA strict guidelines regarding loan amount, credit score limits, down payment requirements, and debt-to-income ratios to determine eligibility.

Conventional Loan

A mortgage not backed by a government agency (FHA, VA, or USDA). This type of loan is backed by private investors. Approximately 70% of all home loans are conventional conforming loans.  

Credit Score

A number underwriters use to gauge your repayment history of other loans. It looks at credit history (how long have you been paying back debts), payment history (how often do you pay on time), and borrowing ability (how likely are you to rack up additional debt).

D

Debt-to-Income Ratio (DTI)

A comparison of your monthly debt payments to your monthly income, used to help determine how much you can comfortably borrow.

Down Payment

The portion of the home's price you pay upfront, at the closing, rather than financing. There are some benefits to putting a higher percentage down to improve your interest rate or eliminate the need for mortgage insurance. Some loan programs allow you to put nothing down (0% down).

E

Earnest Money

A good-faith deposit you put down when making an offer on a home, showing the seller you're serious. It's typically credited back toward your down payment or closing costs.

Equity

The difference between what your home is worth and what you still owe on it. For example, your home is worth $500,000 and you owe $450,000 on your mortgage – you have $50,000 in home equity.

Escrow

An account, managed by your lender or a third party, that holds funds for things like property taxes and homeowners insurance, or that holds funds/documents during the home-buying process itself.

F

FHA Loan

A loan backed by the Federal Housing Administration, known for more flexible credit requirements and lower down payment options.

Fixed-Rate Mortgage

A loan where your interest rate stays the same for the entire term, so your principal and interest payment never changes.

I

Interest Rate

The percentage you're charged to borrow the money, which determines your monthly principal and interest payment. Different from APR, which includes additional costs.

J

Jumbo Loan

A mortgage that exceeds standard conventional loan limits, typically used to finance higher-value homes.

L

Loan Estimate

A standardized document you'll receive early in the process, outlining your estimated rate, monthly payment, and closing costs.

Loan Officer

The person who guides you through your mortgage process, reviews your documents, and helps match you to the right loan program. Our loan officers go by the title of Mortgage Advisor.

Lock (Rate Lock)

An agreement that guarantees your interest rate for a set period of time, protecting you from rate changes while your loan is being processed.

M

Mortgage Broker

A licensed professional who works with multiple lenders on your behalf to find the loan that fits your situation. Brokers have more flexible options and have access to wholesale interest rates, which can be lower than retail rates.

Mortgage Insurance (PMI / MIP)

Insurance that protects the lender if a borrower defaults, typically required when a down payment is below a certain threshold. PMI applies to conventional loans; MIP applies to FHA loans.

O

Origination Fee

A fee charged by a lender that can be paid at closing or rolled into the loan. This fee covers the cost of services rendered by the lender.

P

Points (Discount Points)

Optional upfront fees you can pay at closing to lower your interest rate over the life of the loan.

Pre-Approval

A written confirmation, based on verified income, credit, and financial documents, of how much you're qualified to borrow. Stronger than a pre-qualification.

Pre-Qualification

An informal, early estimate of what you might be able to borrow, based on unverified information you provide.

Principal

The original amount you borrow, not counting interest. Your payments each month go toward paying down both principal and interest.

R

Refinance

Replacing your current mortgage with a new one, typically to get a better rate, change your loan term, or access home equity.

T

Title Insurance

A one-time policy that protects you and your lender against issues with the property's ownership history, such as unpaid liens or ownership disputes.

U

Underwriting

The behind-the-scenes review process where a lender verifies your financial documents and assesses risk before giving final loan approval.

USDA Loan

A loan backed by the U.S. Department of Agriculture, offering zero-down financing for eligible buyers in qualifying rural and suburban areas.

V

VA Loan

A loan backed by the Department of Veterans Affairs, available to eligible veterans, active-duty service members, and military families, often with no down payment required.

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