Know the loan lingo

Mortgage Terms

As your guide through one of life’s most important purchases, we’re committed to keeping communication open and understandable. You’ll see and hear a lot of new terms over the course of this journey. Here’s a rundown of some mortgage terms you should know: 

Adjustable-rate mortgage (ARM)
A loan with an interest rate that will adjust at some time during the term of the loan

Annual percentage rate (APR)
The cost to borrow money expressed as a yearly percentage—includes the interest rate plus other charges or fees

Appraisal
A report that provides an estimate of a property’s value

Closing costs
Expenses above and beyond the price of the property (e.g., loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, etc.)

Closing Disclosure
A document that shows the actual terms and costs of your loan and your projected monthly payments

Debt-to-income ratio (DTI)
Your monthly debt divided by your gross monthly income

Discount points
Interest paid by the borrower to lower the interest rate on the loan

Earnest money
Money a buyer pays the seller to show good faith that they’re serious about purchasing the property

Escrow
An escrow or impound account lets you spread out the costs of taxes and insurance over the life of your loan as part of your monthly payment

Fixed-rate mortgage
A mortgage that has the same interest rate for the entire term of the loan

Home inspection
A visual examination of a property to determine its condition and to report any repairs needed for a mortgage

Loan estimate (LE)
A document that provides mortgage fee estimates for borrowers during the application process

Loan-to-value (LTV)
Indicates the ratio of the loan amount to the appraised value of the property

Mortgage insurance (MI, MIP, PMI)
Insurance typically required as part of the mortgage if your down payment was less than 20 percent of the home’s value

Pre-approval
A bank or lender has reviewed your credit and determined that they’re willing to lend you money

Recording
A formal record of ownership called “the deed,” which transfers title and ownership of the property to the purchaser

 

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.