Resources

Ability-to-Repay (ATR)

ATR

A federal rule that usually requires a lender to make a reasonable, good-faith determination that a borrower can repay a covered mortgage.

Acceleration Clause

A loan term that may allow the lender to require the full unpaid balance to be paid after certain events, such as a serious default, subject to the loan documents and law.

Adjustable-Rate Mortgage (ARM)

ARM

A mortgage with an interest rate that can change after an initial period according to the loan's terms.

Adjustment Period

This is the amount of time between scheduled interest rate changes on an adjustable-rate mortgage.

Affordability

A general measure of whether housing costs fit within a household's income, debts, savings, and other financial needs.

Amortization

This is the process of paying off a loan over time through scheduled payments of principal and interest.

Amortization Schedule

A table showing scheduled loan payments and how each payment is divided between principal and interest.

Amount Financed

This federal disclosure shows the net amount of credit provided to the borrower after certain prepaid finance charges are accounted for. It is not always the same as the loan amount.

Annual Percentage Rate (APR)

APR

A broader measure of borrowing cost than the interest rate. It reflects the interest rate plus certain points, fees, and other charges, expressed as an annual percentage.

Application

A request for credit. For certain federal mortgage disclosure rules, an application is received after the lender has six specific pieces of information from the consumer.

Application Fee

This is a fee that may be charged in connection with processing a mortgage application.

Appraisal

This is a professional opinion of a property's value prepared by a qualified appraiser.

Appraisal Gap

The difference between a home's contract price and its appraised value when the appraisal is lower than the agreed purchase price.

Appraisal Waiver

A lender or loan program decision that a traditional appraisal is not required for a particular transaction, when eligibility rules allow it.

Appraised Value

The value of a property stated in an appraisal.

Appraiser

A licensed or certified professional who develops an independent opinion of a property's value.

Appreciation

An increase in a property's value over time.

ARM Cap

This is a limit on how much an adjustable mortgage rate can change at one adjustment or over the life of the loan.

ARM Index

This is a published financial measure used with a margin to help determine the interest rate on an adjustable-rate mortgage.

ARM Margin

A set number of percentage points added to an ARM index to help determine the adjusted interest rate.

Arrears

Money that is overdue and has not been paid by its required due date.

Assets

Things a borrower owns that have financial value, such as cash, bank accounts, investments, and certain real estate.

Assumable Mortgage

This is a mortgage that may allow a qualified new borrower to take over the existing loan, subject to the loan terms and required approval.

Automated Underwriting System (AUS)

AUS

Computer technology used to evaluate mortgage application data against loan program and underwriting rules.

Automated Valuation Model (AVM)

AVM

A computer-based estimate of property value using data, mathematical models, and information about properties and sales.

Average Prime Offer Rate (APOR)

APOR

A benchmark based on average rates, fees, and other terms offered to highly qualified borrowers. It is used in certain federal mortgage rules.

2-1 Buydown

A temporary buydown that reduces the effective interest rate by 2 percentage points in the first year and 1 percentage point in the second year, with the full note rate applying after that, if structured that way by the lender.

3-2-1 Buydown

A temporary buydown that may reduce the effective interest rate by 3 percentage points in year one, 2 points in year two, and 1 point in year three before the full note rate applies.

Balloon Mortgage

This is a mortgage that requires a large payment at the end because the regular payments do not fully repay the loan balance.

Balloon Payment

A large payment due at the end of certain loans.

Basis Point

One one-hundredth of one percentage point. One hundred basis points equal 1 percentage point.

Biweekly Payment

A payment plan in which a borrower pays every two weeks instead of once a month. Availability and treatment vary by servicer.

Borrower

This is a person who receives credit and is responsible for repaying the loan.

Borrower-Paid Compensation

Compensation or loan costs paid directly by the borrower rather than by another party.

Bridge Loan

Short-term financing often used to help cover a gap between buying a new property and selling or financing another property.

Broker Compensation

Compensation paid to a mortgage broker or loan originator, subject to applicable federal and state rules.

Buydown

An arrangement that lowers the borrower's effective mortgage rate or payment for a period of time or, in some cases, for the life of the loan.

Cash Reserves

Financial assets remaining after closing that may be available to cover future housing payments or other expenses.

Cash to Close

The estimated amount a borrower must bring to closing after accounting for the down payment, closing costs, deposits, credits, and other adjustments.

Cash-Out Refinance

A refinance in which the new mortgage is larger than the amount needed to pay off the existing mortgage and eligible costs, allowing the borrower to receive some equity as cash.

Certificate of Eligibility (COE)

COE

A VA document showing a person's home loan benefit eligibility. Lenders use it when evaluating eligibility for a VA-backed loan.

Clear to Close

An industry term usually meaning the lender has completed major underwriting requirements and the loan can move toward closing, subject to any remaining closing requirements.

Closing

The final stage of a mortgage transaction when required documents are signed, funds are handled, and the transaction is completed.

Closing Costs

Costs connected with obtaining a mortgage and completing a real estate transaction, including lender and third-party charges, taxes, insurance, and prepaid items.

Closing Date

The scheduled date when the transaction is expected to be completed. The exact meaning can vary by state and transaction.

Closing Disclosure (CD)

CD

This five-page federal form shows the final terms and costs of many mortgage loans. It usually must be provided at least three business days before closing.

Closing Funds

Money needed to complete a transaction, including any required down payment, closing costs, and other amounts due at closing.

Co-Borrower

This is a person who applies for and is responsible for repaying a loan along with another borrower.

Collateral

Property pledged to secure repayment of a debt. With a mortgage, the home usually serves as collateral.

Combined Loan-to-Value Ratio (CLTV)

CLTV

This percentage compares the total balances of loans secured by a property with the property's value used for the calculation.

Comparable Sale (Comp)

Comp

A recently sold property that is similar to the property being valued and may be used to help estimate market value.

Comparative Market Analysis (CMA)

CMA

An estimate of a property's likely market value prepared by a real estate professional using comparable properties. It is not the same as an appraisal.

Concession

Something of value provided by a seller or another interested party to help complete a transaction, subject to loan program rules.

Condominium (Condo)

Condo

A form of property ownership in which a person owns an individual unit and shares ownership or rights in common areas with other owners.

Conforming Loan

This is a mortgage that meets applicable requirements for purchase by Fannie Mae or Freddie Mac, including the applicable loan limit.

Conforming Loan Limit

The maximum loan amount usually eligible for purchase by Fannie Mae or Freddie Mac. For 2026, the baseline one-unit limit in most of the U.S. is $832,750 and the general high-cost ceiling is $1,249,125; special limits apply in certain areas.

Construction Loan

Financing used to pay for building or substantially renovating a property. Funds are often released in stages as work is completed.

Consumer Reporting Agency

This is a company that collects and provides consumer information, including credit reporting agencies that prepare credit reports.

Contingency

A condition in a purchase contract that must be met or resolved for the transaction to proceed under the contract's terms.

Conventional Loan

This is a mortgage that is not insured or guaranteed by a federal government agency such as FHA, VA, or USDA.

Correspondent Lender

A mortgage company that originates and often funds loans in its own name and may later sell them to another lender or investor.

Credit

The ability to borrow money or obtain goods or services with an agreement to repay later.

Credit Bureau

A consumer reporting agency that collects credit information and provides credit reports.

Credit Freeze

A restriction placed on a credit file that limits access by potential new creditors until the consumer lifts or removes the freeze.

Credit History

A record of how a person has used and repaid credit over time.

Credit Inquiry

A request to access a consumer's credit information. Some inquiries can affect credit scores while others usually do not.

Credit Monitoring

A service that watches a credit file for certain changes and alerts the consumer.

Credit Report

A record containing information about a person's credit accounts, balances, payment history, and other credit-related information.

Credit Score

This is a number produced by a credit-scoring model using information from a credit report. Lenders may use scores as one factor in evaluating credit risk.

Credit Utilization

The percentage of available revolving credit, such as credit card limits, that a consumer is using.

Debt

Money or another financial obligation owed to another person or company.

Debt-to-Income Ratio (DTI)

DTI

This percentage compares monthly debt obligations with the monthly income used to qualify for a mortgage.

Deed

This is a legal document used to transfer ownership of real property.

Deed of Trust

A security document used in some states to secure a home loan with real property. It serves a purpose similar to a mortgage.

Deed-in-Lieu of Foreclosure

This is an arrangement where a homeowner voluntarily transfers the property to the mortgage holder to resolve mortgage debt and avoid foreclosure, when approved.

Default

Failure to meet a requirement of a loan agreement, such as making required payments.

Delinquency

A loan payment that has not been made by its due date.

Desktop Appraisal

An appraisal completed primarily using property data and other information without a traditional interior and exterior inspection, when permitted.

Discount Point

An upfront charge measured as a percentage of the loan amount. Discount points are often paid in exchange for a lower interest rate, but the exact pricing effect varies.

Down Payment

The portion of a home's purchase price that the buyer pays without financing it through the primary mortgage.

Down Payment Assistance (DPA)

DPA

A program that may help eligible buyers with a down payment or closing costs through grants, loans, credits, or other assistance.

Down Payment Percentage

The down payment expressed as a percentage of the purchase price.

Due-on-Sale Clause

A loan provision that may allow the lender to require full repayment when ownership of the property is transferred, subject to applicable law.

Earnest Money

Money a buyer deposits to show serious intent to purchase a property. Its treatment depends on the contract and applicable law.

Effective Interest Rate

A general term for the actual borrowing rate after considering set costs or compounding. Its exact meaning depends on the context and should not be confused with APR.

Equal Credit Opportunity Act (ECOA)

ECOA

A federal law that prohibits creditors from discriminating in credit transactions based on protected characteristics and rights listed in the law.

Equal Housing Opportunity

A principle reflected in federal fair housing law that housing-related services may not discriminate based on protected characteristics covered by law.

Equity

The difference between a property's current value and the amounts owed on loans or liens secured by the property.

Escrow

This is an arrangement where money or documents are held by a third party until set conditions are met. The term also refers to accounts used for taxes and insurance.

Escrow Account

An account usually managed by a mortgage servicer that holds part of a homeowner's payment to pay expenses such as property taxes and homeowners insurance.

Escrow Analysis

A periodic review used to determine how much money should be collected for an escrow account based on expected expenses and federal rules.

Escrow Shortage

A situation in which the escrow account is expected to have less money than required under the applicable calculation.

Estimated Cash to Close

The amount shown on a Loan Estimate or Closing Disclosure that estimates how much money the borrower will need to provide at closing.

Estimated Total Monthly Payment

An estimate of the total monthly housing payment, which may include principal, interest, mortgage insurance, escrowed taxes and insurance, and other required amounts.

Fannie Mae

The Federal National Mortgage Association, a government-sponsored enterprise that purchases eligible mortgages and supports liquidity in the U.S. housing finance market.

Federal Housing Administration (FHA)

FHA

A federal agency within HUD that provides mortgage insurance on qualifying loans made by approved lenders.

FHA Loan

This is a mortgage made by an approved lender and insured by the Federal Housing Administration.

FHA Mortgage Insurance Premium (MIP)

MIP

Mortgage insurance charged on FHA-insured loans. It can include an upfront premium and an annual premium usually collected through monthly payments.

FICO Score

A credit score created using a FICO scoring model. Mortgage lenders may use specific versions of FICO scores as part of their credit evaluation.

Finance Charge

A federal disclosure of certain costs of consumer credit expressed as a dollar amount.

First Mortgage

This is a mortgage that usually has first lien priority against a property.

First-Time Homebuyer

A term used by mortgage and assistance programs for eligible buyers who meet the program's definition. The definition can vary and does not always mean someone who has never owned a home.

Fixed-Rate Mortgage

A mortgage with an interest rate that remains the same for the full loan term.

Float

Leaving a mortgage interest rate unlocked so the rate and pricing may change with market conditions before closing.

Float-Down

A rate-lock feature that may allow a borrower to receive lower pricing if market rates improve before closing, subject to the lender's terms and fees.

Flood Certification

A determination of whether a property is located in a designated flood hazard area.

Flood Insurance

Insurance covering certain losses caused by flooding. It may be required for properties in designated flood hazard areas.

Forbearance

A temporary arrangement that allows an eligible borrower experiencing hardship to pause or reduce mortgage payments. Missed amounts usually still must be resolved later.

Foreclosure

A legal process through which a lender or mortgage holder may enforce its security interest and sell a property after default, subject to applicable law.

Freddie Mac

The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise that purchases eligible mortgages and supports liquidity in the U.S. housing finance market.

Fully Indexed Rate

For an ARM, the rate calculated by adding the loan's margin to the applicable index value, subject to the loan terms and caps.

Funding

The stage when loan money is released for a mortgage transaction, subject to closing procedures and state law.

Gift Funds

Money given to a borrower by an eligible donor to help with a home purchase or certain costs, subject to program rules and documentation.

Gift Letter

A document stating that funds provided to a borrower are a gift and describing required information about the donor and funds under the loan program.

Good-Faith Deposit

Money provided to show serious intent in a transaction. Depending on context, it may refer to earnest money or another deposit.

Government-Backed Mortgage

A mortgage insured or guaranteed under a federal program, such as certain FHA, VA, or USDA loans.

Gross Monthly Income

Income before taxes and other deductions. Lenders may use eligible gross income when calculating mortgage qualification ratios.

Hazard Insurance

Insurance protecting a property against certain covered physical losses. It is usually part of a homeowners insurance policy.

High-Cost Mortgage

This is a mortgage that meets specific federal thresholds under HOEPA and is subject to additional consumer protections and restrictions.

Higher-Priced Mortgage Loan (HPML)

HPML

Certain mortgages with an APR above a set amount compared with APOR. Federal rules can require additional protections for these loans.

Home Equity

The portion of a property's value that is not offset by debt or liens secured by the property.

Home Equity Conversion Mortgage (HECM)

HECM

The FHA-insured reverse mortgage program for eligible older homeowners who meet program requirements.

Home Equity Line of Credit (HELOC)

HELOC

A revolving line of credit secured by a home that usually allows borrowing, repayment, and additional borrowing during a draw period, subject to the account terms.

Home Equity Loan

This is a loan secured by a home, usually for a set amount with scheduled repayment terms.

Home Inspection

An examination of a home's condition by a home inspector. A home inspection is different from an appraisal.

Homeowners Association (HOA)

HOA

An organization that manages certain common areas, services, and rules in a community. Owners may be required to pay dues or assessments.

Homeowners Insurance

Insurance that can cover a home, certain personal property, liability, and set losses. Mortgage lenders usually require adequate property coverage.

Homeowners Insurance Premium

The amount charged by an insurance company for homeowners insurance coverage.

Housing Expense

The monthly cost of housing used in mortgage calculations, which can include principal, interest, taxes, insurance, mortgage insurance, HOA dues, and other required expenses.

Impound Account

Another name sometimes used for a mortgage escrow account that collects money for expenses such as property taxes and insurance.

Index

This is a published financial measure used to help determine the rate on an adjustable-rate mortgage.

Initial Escrow Payment at Closing

Money collected at closing to establish the escrow account for future payment of items such as property taxes and insurance.

Initial Escrow Statement

A statement showing estimated escrow payments and disbursements for the first year of a covered mortgage escrow account.

Initial Interest Rate

The interest rate charged when a loan begins.

Interest

The amount charged for borrowing money.

Interest Rate

The percentage charged for borrowing the principal amount of a loan. It does not include all fees and is different from APR.

Interest Rate Cap

This is a limit on how much an adjustable interest rate can change.

Interest Rate Lock

An agreement to protect set mortgage rate and pricing terms for a stated period, subject to the lock's conditions.

Interest-Only Mortgage

This is a mortgage that allows or requires payments covering only interest for a set period. Principal may not decrease during that period, and payments can rise later.

Interested Party Contribution (IPC)

IPC

A contribution toward a borrower's costs from a party with an interest in the transaction, such as a seller, subject to loan program limits and rules.

Investment Property

Real estate owned mainly to produce income, earn a profit, or both rather than serving as the borrower's primary home.

Joint Credit

Credit extended to two or more people who are responsible for repayment.

Joint Tenancy

A form of property ownership in which two or more people own property together. Rights vary by state law and the form of title.

Jumbo Loan

A mortgage with a loan amount above the applicable conforming loan limit and therefore outside standard Fannie Mae and Freddie Mac conforming limits.

Late Fee

A charge that may be assessed when a required payment is not made within the time allowed by the loan agreement and applicable law.

Lender

A bank, credit union, mortgage company, or other creditor that provides mortgage financing.

Lender Credit

Money credited by a lender toward a borrower's closing costs. The credit may be connected with the interest rate or other loan pricing.

Lender-Paid Mortgage Insurance (LPMI)

LPMI

Mortgage insurance paid by the lender rather than through a separate borrower-paid monthly charge. Its cost may be reflected in the loan's rate or pricing.

Liability

A financial debt or obligation owed by a person or business.

Lien

A legal claim or security interest against property that helps secure payment of a debt or obligation.

Loan Amount

The face amount of money the borrower agrees to repay under the note.

Loan Estimate (LE)

LE

This three-page federal form shows important estimated mortgage terms and costs. For covered loans, it usually must be provided within three business days after the lender receives an application.

Loan Modification

A permanent agreed change to one or more terms of an existing mortgage, such as the rate, payment, balance treatment, or term.

Loan Officer

A mortgage professional who works with consumers on mortgage financing. Depending on the person's role, licensing or federal registration requirements may apply.

Loan Origination

This is the process of creating a mortgage loan, from application and processing through underwriting and closing.

Loan Origination Fee

This is a fee charged in connection with originating a mortgage.

Loan Program

A set of mortgage features and eligibility rules, such as conventional, FHA, VA, USDA, jumbo, fixed-rate, or adjustable-rate financing.

Loan Purpose

The reason for the mortgage, such as purchase, refinance, construction, or home equity financing.

Loan Term

This is the length of time scheduled for a loan to be repaid, such as 15, 20, or 30 years.

Loan-Level Price Adjustment (LLPA)

LLPA

A pricing adjustment used by Fannie Mae or Freddie Mac for certain loan characteristics. It can affect the price a lender receives and may influence borrower pricing.

Loan-to-Value Ratio (LTV)

LTV

This percentage compares the mortgage amount with the property's value used for the loan calculation.

Lock Period

This is the length of time covered by a mortgage rate lock.

Manufactured Home

A home built in a factory under federal manufactured housing standards and transported to its site. Financing rules can differ from site-built homes.

Margin

For an ARM, a set number of percentage points added to the index to help determine the adjusted rate.

Maturity Date

This is the date when the remaining balance of a loan is scheduled to be fully due.

Mortgage

A loan and security arrangement involving real property. The property usually secures repayment of the debt.

Mortgage Broker

A person or company that helps borrowers find or arrange mortgage financing with lenders. A broker usually does not fund the mortgage with its own money.

Mortgage Credit Certificate (MCC)

MCC

A certificate issued through certain state or local programs that may allow eligible homeowners to claim a federal tax credit for part of mortgage interest paid, subject to tax rules.

Mortgage Insurance

Insurance that protects a lender or other mortgage holder against certain losses if a borrower defaults. It is different from homeowners insurance.

Mortgage Insurance Cancellation

The ending of mortgage insurance when applicable requirements are met. Rules differ by loan type and insurance program.

Mortgage Insurance Premium (MIP)

MIP

The term often used for mortgage insurance premiums on FHA-insured mortgages.

Mortgage Loan Originator (MLO)

MLO

An individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates residential mortgage loan terms, as defined by applicable law.

Mortgage Note

The legal document containing the borrower's promise to repay the loan under stated terms.

Mortgage Payment

A scheduled payment on a mortgage. The total payment may include principal, interest, taxes, insurance, mortgage insurance, and other required amounts.

Mortgage Rate

The interest rate charged on a mortgage loan.

Mortgage Servicer

The company responsible for day-to-day administration of a mortgage, such as collecting payments, managing escrow, and providing account information.

Mortgage-Backed Security (MBS)

MBS

An investment backed by a pool of mortgage loans, with cash flows tied to payments on the underlying mortgages.

Mortgagee

The lender or holder of a mortgage interest.

Mortgagor

The borrower who grants a mortgage interest in property as security for a debt.

Multiple Listing Service (MLS)

MLS

A database used by participating real estate professionals to share property listing information.

Negative Amortization

A situation in which a loan balance grows because scheduled payments are not enough to cover interest and unpaid interest is added to principal.

Net Worth

The value of a person's assets minus liabilities.

NMLS

The Nationwide Multistate Licensing System, which maintains licensing and registration information for mortgage companies and mortgage professionals, among other financial service providers.

NMLS ID

A unique identification number assigned through NMLS to a company or individual.

Non-Conforming Loan

This is a mortgage that does not meet the requirements for standard purchase by Fannie Mae or Freddie Mac. Jumbo loans are one common type.

Non-Occupant Co-Borrower

A borrower responsible for the mortgage who does not plan to occupy the property as a primary residence.

Non-QM Mortgage

This is a mortgage that does not meet the federal definition of a Qualified Mortgage. Non-QM does not mean the loan is illegal; applicable ability-to-repay and other laws still apply.

Note

A legal promise to repay borrowed money according to stated terms.

Note Rate

The interest rate stated in the promissory note. It is different from APR, which includes certain additional borrowing costs.

Occupancy

How a borrower will use a property, such as a primary residence, second home, or investment property.

Occupancy Type

The classification of a property's intended use for mortgage purposes, often primary residence, second home, or investment property.

Origination Charges

Charges from a lender or mortgage originator for making a mortgage loan, shown in Section A of the Loan Estimate and Closing Disclosure for covered transactions.

Origination Fee

This is a fee charged by a lender or mortgage originator for services involved in creating the loan.

Owner's Title Insurance

A title insurance policy that usually protects the property owner against certain covered title problems, subject to the policy terms.

Owner-Occupied

This is a property in which the borrower intends to live, usually as a primary residence under the applicable loan rules.

P&I

Short for principal and interest, the two basic parts of a mortgage loan payment.

Payment Cap

For certain adjustable-rate loans, a limit on how much the required payment can change at an adjustment.

Payoff Amount

The amount required to fully pay a loan on a specific date. It can include principal, accrued interest, and other amounts due.

Per Diem Interest

Interest charged for each day, often used to calculate prepaid interest between closing and the start of the first regular payment period.

Piggyback Loan

A second mortgage used together with a first mortgage, often as part of financing a home purchase.

PITI

An abbreviation for principal, interest, taxes, and insurance, often used to describe major parts of a housing payment.

Points

Charges measured as a percentage of the loan amount. One point equals 1% of the loan amount.

Pre-Approval

This is a lender's preliminary evaluation indicating that a borrower may qualify for a mortgage, subject to conditions, verification, property review, and final underwriting.

Pre-Closing

The period shortly before closing when final documents, conditions, funds, insurance, title, and other requirements are being completed.

Pre-Foreclosure

A general term for the period after serious mortgage delinquency or default but before a foreclosure sale is completed.

Pre-Qualification

An early estimate of how much a person may be able to borrow based on information provided. The review level varies and it is not final loan approval.

Prepaid Finance Charge

Certain finance charges paid separately before or at closing that are included in federal calculations such as the amount financed and APR.

Prepaid Interest

Interest collected at closing for the period between the closing date and the start of the first regular payment period.

Prepaids

Expenses paid in advance at closing, such as homeowners insurance premiums, property taxes, and prepaid interest.

Prepayment

Paying some or all of a loan balance before it is scheduled to be due.

Prepayment Penalty

This is a fee that may be charged under certain loan agreements for paying off some or all of a mortgage early. Federal law restricts these penalties on many mortgages.

Primary Residence

The home a borrower uses as their main residence.

Principal

The amount borrowed or the remaining unpaid portion of the original loan amount, excluding future interest.

Private Mortgage Insurance (PMI)

PMI

Mortgage insurance often used on certain conventional loans. It protects the lender, not the borrower, against certain losses from default.

Processing

The stage of mortgage origination in which information and documents are collected, reviewed, verified, and prepared for underwriting.

Promissory Note

The legal document in which the borrower promises to repay a loan according to stated terms, including rate, payment, and maturity provisions.

Property Taxes

Taxes charged by a government authority based on real property.

Property Type

The classification of real estate, such as single-family home, condominium, two- to four-unit property, manufactured home, or planned unit development.

Purchase Agreement

A contract between a buyer and seller stating the terms and conditions for the sale of a property.

Purchase Price

The price a buyer and seller agree to for the sale of a property.

Qualified Mortgage (QM)

QM

A category of mortgage that meets federal requirements related to ability to repay and limits or restrictions on certain loan features and costs.

Qualifying Income

Income a lender determines is eligible to use when evaluating whether a borrower qualifies for a mortgage.

Qualifying Rate

The interest rate used by a lender to calculate the payment for qualification. It may differ from the initial note rate for some products.

Rate

The interest percentage charged on borrowed money.

Rate Adjustment

A scheduled change to the interest rate of an adjustable-rate mortgage according to the loan terms.

Rate Cap

This is a limit on how much an adjustable mortgage rate may change.

Rate Lock

This is an agreement that protects set mortgage rate and pricing terms for a set period, subject to stated conditions.

Rate Lock Extension

An extension of a mortgage rate lock beyond its original expiration date. A fee or pricing change may apply depending on lender policy and circumstances.

Rate Sheet

This is a lender's pricing information showing available rates and related prices or adjustments for mortgage products. Rate sheets can change with market conditions.

Rate-and-Term Refinance

A refinance mainly used to change the rate, term, loan type, or related terms without primarily taking equity out as cash.

Real Estate Owned (REO)

REO

Property owned by a lender, investor, or government entity after foreclosure or another transfer of ownership.

Real Estate Settlement Procedures Act (RESPA)

RESPA

A federal law providing protections related to certain mortgage settlement practices, disclosures, escrow accounts, servicing, and referral arrangements.

Recording Fee

This is a fee charged by a government office to officially record documents such as deeds and mortgages or deeds of trust.

Recurring Closing Costs

Costs that can continue after closing, such as property taxes, homeowners insurance, HOA dues, and mortgage insurance when applicable.

Refinance

Replacing an existing mortgage with a new mortgage.

Rescission

A legal right to cancel certain credit transactions within a set period. A federal three-business-day right usually applies to certain non-purchase loans secured by a principal dwelling.

Reserves

Financial assets available after closing. Some loan programs require a certain amount, often measured in months of housing payments.

Reverse Mortgage

A mortgage designed mainly for eligible older homeowners that allows conversion of home equity into loan proceeds under special repayment rules.

Right of Rescission

The federal right to cancel certain mortgage transactions secured by a principal dwelling within the allowed period. It usually does not apply to a mortgage used to purchase the home.

Second Home

This is a property occupied by the borrower for part of the year in addition to a primary residence and meeting applicable loan requirements.

Second Mortgage

This is a loan secured by property that usually has a lien position behind a first mortgage.

Section A - Origination Charges

The Loan Estimate and Closing Disclosure section showing charges from the lender or mortgage originator for making the loan, including points and other origination charges.

Section B - Services You Cannot Shop For

The Loan Estimate section listing certain required services for which the borrower does not select the provider, such as some appraisal or credit-related charges.

Section C - Services You Can Shop For

The Loan Estimate section listing certain required services for which the borrower may be allowed to choose the provider, such as some title or settlement services.

Section E - Taxes and Other Government Fees

The Loan Estimate and Closing Disclosure section showing certain government charges, such as recording fees and transfer taxes when applicable.

Seller Concession

Money or value provided by the seller toward eligible buyer costs, subject to the purchase agreement and mortgage program limits.

Seller Credit

An amount the seller agrees to contribute toward eligible buyer closing costs or other permitted expenses, subject to program rules.

Servicing

The administration of a mortgage after closing, including collecting payments, maintaining records, managing escrow, and handling certain borrower requests.

Servicing Transfer

The transfer of mortgage servicing duties from one servicer to another. The owner of the loan may or may not change.

Settlement

Another term often used for the completion or closing of a real estate transaction.

Settlement Agent

The person or company responsible for certain closing or settlement duties. The role and title vary by state.

Short Sale

This is a property sale in which the mortgage holder agrees to accept less than the full amount owed, subject to approval and transaction terms.

Single-Family Home

A residential property designed primarily for one household. Mortgage programs may use broader definitions that include certain one- to four-unit properties.

SOFR

The Secured Overnight Financing Rate, a benchmark based on transactions in the U.S. Treasury repurchase market and used as an index for some adjustable-rate products.

Subject Property

The property being financed, appraised, or evaluated in a mortgage transaction.

Subordinate Financing

This is a loan secured by property that has lower lien priority than another mortgage on the same property.

Survey

This is a professional measurement or drawing that can identify property boundaries, improvements, easements, and other property features.

Tax Assessment

A value assigned to property by a government authority for tax purposes. It is not necessarily the same as market or appraised value.

Temporary Buydown

An arrangement that lowers the borrower's effective payment for a limited period using funds set aside to cover part of scheduled payments.

Term

This is the length of time over which a loan is scheduled to be repaid.

Title

The legal rights of ownership in real property.

Title Company

This is a company that may research property records, provide title insurance, and perform settlement or closing services.

Title Insurance

Insurance against certain covered losses caused by defects or problems with ownership rights or title to real property.

Title Search

A review of public records to identify ownership interests, liens, claims, and other matters affecting a property's title.

Total Closing Costs

The total of set loan costs and other costs shown on the Loan Estimate or Closing Disclosure, after applicable lender credits as presented on the form.

Total Interest Percentage (TIP)

TIP

This federal disclosure shows the total scheduled interest over the loan term as a percentage of the loan amount, assuming payments are made as scheduled.

Total Loan Costs

The total of the Loan Costs sections on the Loan Estimate or Closing Disclosure, usually including origination charges and certain services.

Total of Payments

This federal disclosure shows the total amount the borrower will have paid after making all scheduled payments of principal, interest, mortgage insurance, and certain loan costs as disclosed.

Transfer Taxes

Taxes or government charges that may apply when ownership of real property is transferred. Responsibility varies by location and contract.

TRID

A common name for the TILA-RESPA Integrated Disclosure rules, including requirements for the Loan Estimate and Closing Disclosure used with many mortgages.

Truth in Lending Act (TILA)

TILA

A federal consumer credit law requiring important disclosures and providing other protections. Regulation Z implements TILA.

1003 / Uniform Residential Loan Application (URLA)

URLA

The standard mortgage application used by many lenders to collect information about a borrower, the property, income, assets, debts, and the requested loan.

Underwater Mortgage

A situation in which the amount owed on a home is greater than the home's current market value.

Underwriting

The lender's process of reviewing borrower, property, credit, income, asset, and loan information to determine whether the mortgage meets applicable requirements.

Underwriting Approval

This is a lender's decision that a loan meets underwriting requirements, often subject to any remaining conditions before closing.

Underwriting Conditions

Items or requirements that must be satisfied before an underwriter can give final approval or the loan can close.

Underwriting Fee

This is a fee that may be charged for evaluating a mortgage application and determining whether it meets underwriting requirements.

Unpaid Principal Balance (UPB)

UPB

This is the amount of loan principal that remains unpaid.

Upfront Mortgage Insurance Premium (UFMIP)

UFMIP

An upfront mortgage insurance charge required on many FHA-insured mortgages. It may usually be paid at closing or financed into the loan, subject to FHA rules.

USDA Loan

This is a mortgage made or guaranteed under an eligible U.S. Department of Agriculture rural housing program, subject to location, income, property, and other requirements.

VA Entitlement

This is the amount of VA home loan guaranty benefit available to an eligible borrower. It can affect the amount of guaranty available for a VA-backed loan.

VA Funding Fee

This is a one-time fee charged on many VA-backed home loans. The amount varies based on the transaction and borrower circumstances, and some borrowers are exempt.

VA Interest Rate Reduction Refinance Loan (IRRRL)

IRRRL

A VA refinance program, sometimes called a streamline refinance, for eligible existing VA-backed mortgages.

VA Loan

This is a mortgage made by a private lender and guaranteed in part by the U.S. Department of Veterans Affairs for eligible borrowers.

Variable Rate

An interest rate that can change over time according to the loan terms.

Verification of Assets

This is the process of confirming financial assets used in mortgage qualification or closing.

Verification of Employment (VOE)

VOE

This is the process of confirming a borrower's employment information.

Verification of Income

This is the process of confirming income used to qualify for a mortgage through documents, data, or other acceptable sources.

Vesting

This is the way legal ownership of real property is held and shown on title, subject to state law.

Walk-Through

This is a buyer's inspection shortly before closing to check the property's condition and whether agreed items have been addressed.

Wholesale Lender

A lender that offers mortgage products through approved mortgage brokers or other third-party originators rather than primarily through its own retail loan officers.

Wire Transfer

An electronic transfer of money between financial institutions or accounts. Wires are often used for large closing transactions and require careful fraud prevention.

Yield

The return earned on an investment or loan, usually expressed as a percentage.

Yield Spread

The difference between two interest rates or yields. In mortgage finance, the term can describe differences between mortgage pricing and another rate or benchmark.

Zero-Down Mortgage

A mortgage program that does not require a down payment from the borrower. Eligibility, closing costs, fees, and other expenses may still apply.