Plain-English Definitions
Mortgage Glossary
The mortgage world is full of acronyms. Here’s a clear glossary of the terms you’ll hear most — type a word to filter.
The mortgage world is full of acronyms. Here’s a clear glossary of the terms you’ll hear most — type a word to filter.
The total annual cost of borrowing, expressed as a percentage. Includes interest plus certain fees. Use it to compare loan offers apples-to-apples.
An independent professional estimate of a property’s market value. Lenders require it to confirm the home’s value supports the loan.
Fees paid at closing, including loan fees, title, taxes, and prepaid items. Typically 2%–5% of the home price.
Your total monthly debt payments divided by your gross monthly income. Lenders use it to evaluate affordability.
A good-faith deposit made when you submit an offer. It shows the seller you’re serious and goes toward your down payment at closing.
A neutral third-party account that holds funds or documents. Often used to collect and pay property taxes and insurance.
The percentage your lender charges to borrow money, expressed annually. APR is a broader, more comparable number.
The number of years to repay your loan. Common terms are 15, 20, and 30 years.
The ratio of your loan amount to the home’s value or price. Lower LTV usually means less risk and better terms.
Insurance that protects the lender if a borrower stops paying. Required on certain loans depending on down payment and program.
A type of mortgage insurance on conventional loans, typically required when LTV is above 80%.
A more thorough review of your finances that results in a letter showing how much you may be able to borrow. Stronger than pre-qualification.
The lender’s detailed review of your application, credit, income, and the property to make a final loan decision.