Glossary

A loan where the interest rate adjusts periodically based on market conditions. Initially, the rate may be lower than fixed-rate mortgages, but it can increase or decrease over time, which may result in higher monthly payments.

The process of gradually paying off a loan with regular payments that include both principal and interest, spreading the cost over time.

The yearly cost of your mortgage, including interest and fees, helping you compare different loan offers.

An estimate of a property’s value, done by a professional appraiser to ensure the loan amount is appropriate.

When a property increases in value over time, often due to market conditions or improvements made to the home.

A value placed on a property for tax purposes, determined by the local government.

Any valuable property or possession, such as savings, real estate, or investments, that can be used to secure a loan.

A mortgage that may be transferred from the seller to the buyer, subject to lender approval. Not all mortgages are assumable, and buyers should verify terms and eligibility with the lender.

A mortgage with small payments for a set period, followed by a large payment to pay off the balance.

A short-term loan used to bridge the gap between buying a new home and selling your old one.

A licensed professional who arranges the transaction between the buyer and seller, typically charging a commission.

When there are more homes for sale than buyers, often leading to lower prices and more negotiation power for buyers.

A limit on how much the interest rate can change on an ARM, protecting you from large increases.

Money saved to cover mortgage payments if needed, providing a financial cushion.

The final step in buying a home where the property is transferred to the buyer, and all paperwork is signed.

Fees paid at the closing, including loan fees, title insurance, and taxes, typically 2-5% of the home’s purchase price.

A building owned by a corporation where residents buy shares, rather than owning their individual units.

A report comparing similar homes to determine a property’s value, helping you make an informed offer.

A condition that must be met for the sale to go through, like a home inspection or financing approval.

A standard loan not insured by the government, often requiring a higher credit score and down payment.

An adjustable-rate mortgage that can be changed to a fixed-rate mortgage, offering flexibility.

A new offer made in response to an initial offer, often with different terms or price.

The percentage of your income that goes toward debt payments, used by lenders to determine your ability to repay the loan.

A legal document that transfers property ownership from the seller to the buyer.

An agreement that involves a borrower voluntarily transferring their property to the lender to avoid foreclosure. While sometimes perceived as a less severe option, it still results in a substantial negative impact on your credit history, comparable to that of a foreclosure. This can affect your future loan eligibility and credit status.

Failing to make mortgage payments as agreed, potentially leading to foreclosure.

Fees paid to reduce your mortgage interest rate, often lowering your monthly payment.

The initial cash payment made when buying a home, typically 3-20% of the purchase price.

The time period for the buyer to inspect the property and finalize the purchase, ensuring there are no surprises.

A deposit made to show the buyer’s commitment to the purchase, often applied to the down payment or closing costs.

A deposit made to show the buyer’s commitment to the purchase, often applied to the down payment or closing costs.

The right to use someone else’s property for a specific purpose, like a driveway or utilities.

The right to use someone else’s property for a specific purpose, like a driveway or utilities.

A claim or lien on a property, which can affect ownership and use.

The difference between what you owe on your mortgage and your home’s value, representing your ownership stake.

An account where money is held by a third party until certain conditions are met, often used for taxes and insurance.

An agreement where only one real estate agent can sell the property, usually for a specified period.

The price a property would sell for in an open market, based on comparable sales and market conditions.

A government-sponsored enterprise that buys and guarantees mortgages, helping to make home loans more available.

A loan insured by the FHA, often for first-time buyers with lower down payments and credit scores.

A mortgage with an interest rate that stays the same for the entire loan term, providing predictable payments.

The process where a lender takes back a property due to missed payments, often resulting in the sale of the home.

A government-sponsored enterprise that buys and guarantees mortgages, similar to Fannie Mae.

An estimate of closing costs provided by the lender, helping you understand the total cost of your loan.

An estimate of closing costs provided by the lender, helping you understand the total cost of your loan.

Insurance that protects against property damage from fire, storms, etc., often required by lenders.

A line of credit based on the equity in your home, allowing you to borrow as needed.

An examination of a property’s condition by a professional inspector, identifying any issues or repairs needed.

An organization that manages a community and enforces rules, often charging fees for maintenance and amenities.

Insurance that covers damage to your home and belongings, often required by lenders.

The percentage of your income that goes toward housing costs, used by lenders to determine affordability.

The cost of borrowing money, expressed as a percentage of the loan amount, affecting your monthly payment.

A loan where you only pay the interest for a set period, with principal payments beginning later.

A large loan that exceeds conforming loan limits, often with stricter requirements and higher interest rates.

A legal claim against a property for unpaid debts, which must be paid off before selling the property.

A document from the lender detailing the loan terms and closing costs, helping you compare offers.

The percentage of the home’s value that you’re borrowing, used by lenders to assess risk.

The time during which the interest rate on a loan is fixed, protecting you from rate increases before closing.

A database of properties for sale used by real estate agents to find and list homes.

Insurance required for FHA loans to protect the lender in case of default, usually part of your monthly payment.

A document that outlines the terms of your mortgage, including the amount, interest rate, and repayment schedule.

The person who evaluates and approves or denies your loan application based on your financial information.

The amount of money the seller receives after all costs are paid, including the mortgage balance and closing costs.

A type of loan that requires minimal proof of income, is not available to all borrowers, and carries higher interest rates and stringent approval conditions. These loans are less common and generally riskier, potentially leading to higher long-term costs. Borrowers should carefully consider whether this type of loan aligns with their financial situation.

A fee charged by the lender for processing the loan, usually a percentage of the loan amount.

The components of a monthly mortgage payment, covering the loan and other costs.

Insurance required for conventional loans with low down payments, protecting the lender if you default.

Fees paid to the lender to reduce the interest rate on a loan, often lowering your monthly payment.

A legal document allowing one person to act on behalf of another, often used in real estate transactions.

A lender’s conditional approval for a loan based on your financial information, giving you a better idea of your budget.

An initial assessment of how much you can borrow based on your income and debts, often less detailed than pre-approval.

A fee charged for paying off a loan early, sometimes included in loan terms to protect the lender’s interest.

The original loan amount, not including interest, represents the debt you owe.

An agreement to keep the interest rate the same for a set period, protecting you from rate increases before closing.

A licensed professional who helps buy and sell properties, guiding you through the process.

Property owned by a lender after foreclosure.

A fee for officially recording the property sale with the local government.

Replacing your current loan with a new one, usually with better terms.

A loan option available to homeowners aged 62 and older, allowing them to convert part of their home equity into cash. This loan requires repayment when the homeowner passes away or moves out permanently. It is essential to note that a reverse mortgage can significantly reduce the value of the estate left to heirs. Potential borrowers should discuss with a financial advisor to fully understand the long-term implications.

The right to buy a property before it’s offered to others.

An additional loan taken against your home’s equity.

When there are more buyers than homes for sale, often leading to higher prices.

Selling a property for less than the mortgage owed, with lender approval.

A legal document proving property ownership.

Insurance that protects against property ownership disputes.

A check of public records to ensure the seller legally owns the property.

A law requiring lenders to disclose all loan terms and costs.

The process of evaluating and approving a loan application.

A loan program for veterans, guaranteed by the Department of Veterans Affairs.

A final inspection of the property before closing.

A document that guarantees the seller has clear title to the property.

A payment to the mortgage broker for selling a higher interest rate.

Local laws regulating land use and property development.