Glossary
Home loan words, in plain English.
Every term our guides use, explained the way Laurie would explain it on a call. One sentence first, the longer version one click away.
A
- Appraisal
- An independent estimate of what a home is worth, ordered for the lender before it agrees to the loan.Buying a home
B
- Break even point
- The moment a refinance has saved you as much as it cost you to get it.Refinancing
C
- Cash out refinance
- A new, larger mortgage that pays off your current one and hands you the difference in cash.Home equity
- Clear to close
- The underwriter's final sign off: every condition is met and the loan can move to closing.Mortgage basics
- Closing costs
- The fees and prepaid items you pay to finish a mortgage, on top of the down payment.Buying a home
- Closing Disclosure
- The final statement of your loan's terms and costs, which you receive a few days before you sign.Buying a home
- Conventional loan
- A mortgage that is not insured or backed by a government agency, usually following the rules of Fannie Mae or Freddie Mac.Buying a home
- Credit score
- A number that sums up your credit history, which lenders use to judge risk and price your loan.Mortgage basics
- Credit utilization
- How much of your available credit card limits you are using, one of the biggest drivers of your credit score.Mortgage basics
D
- Debt to income ratio
- Your monthly debt payments compared with your gross monthly income, a key test lenders use.Mortgage basics
- Down payment
- The part of the purchase price you pay yourself, upfront, instead of borrowing it.Buying a home
- Draw period
- The first phase of a HELOC, when you can borrow from the line as you need it.Home equity
- DSCR loan
- An investment property loan that qualifies on the rent the property earns instead of your personal income.Investment property
E
- Earnest money
- A deposit you make when your offer is accepted, to show the seller you are serious.Buying a home
- Escrow
- Money held by a neutral party: at closing for the purchase, and in your loan to pay property taxes and insurance.Buying a home
F
- FHA loan
- A mortgage insured by the Federal Housing Administration, with more flexible credit and down payment rules.Buying a home
G
- Gift letter
- A signed note from a relative confirming that money they gave you for the home is a gift, not a loan.Buying a home
H
- Hard inquiry
- A credit check made when you apply for credit, which can lower your score a little for a while.Mortgage basics
- HELOC
- A line of credit secured by your home that you can draw from as needed, while you keep your first mortgage.Home equity
- Home equity
- The part of your home you own outright: its value minus what you still owe on it.Home equity
- Homeowners insurance
- Insurance that covers damage to your home and your liability, which every mortgage lender requires.Buying a home
L
- Loan Estimate
- A standard form a lender must give you soon after you apply, showing the loan's terms and estimated costs.Buying a home
- Loan processor
- The person who gathers your documents, checks the file and moves it through underwriting to closing.For brokers
- Loan to value ratio
- The loan amount compared with the home's value, which shapes your options and costs.Mortgage basics
M
- Mortgage broker
- A licensed professional who compares loans from several lenders and arranges the one that fits you.For brokers
- Mortgage insurance
- Insurance that protects the lender when your down payment is small; you pay for it, it does not cover you.Buying a home
- Mortgage lender
- The company that provides the money for your loan and sets its terms.Mortgage basics
- Mortgage loan originator
- The licensed person who takes your application and guides you through the loan options.Mortgage basics
N
- NMLS
- The national registry where every mortgage company and loan originator is licensed and can be looked up.Mortgage basics
P
- Preapproval
- A lender's written estimate of how much you can borrow, based on a review of your credit, income and assets.Buying a home
R
- Reserves
- Money you still have after closing, which some loans require as a cushion.Mortgage basics
T
- Title insurance
- Insurance that protects against old claims on a property's ownership that surface after you buy.Buying a home
U
- Underwriting
- The lender's review of your file, which decides whether the loan is approved and on what conditions.Mortgage basics
- USDA loan
- A mortgage backed by the US Department of Agriculture for homes in eligible rural and suburban areas.Buying a home
V
- VA loan
- A mortgage for eligible veterans, service members and some surviving spouses, backed by the Department of Veterans Affairs.Buying a home
No term matches yet. Ask Laurie on your free call, or browse the guides.