Glossary of Mortgage & Lending Terms

A document that outlines the breakdown of your monthly mortgage payments into principal and interest. It allows you to see how much principal will be repaid over the life of the loan, helping you to plan and budget for your mortgage.

The process of gradually paying off a loan over an extended period of time. The amortization term for a loan is the length of time needed to pay off the loan, usually expressed in months. For example, a 15-year fixed-rate mortgage has an amortization term of 180 months.

A maximum limit on the amount that the interest rate on a loan can change annually, either up or down.

The total cost of a mortgage loan to a borrower, expressed as a percentage. It includes not only the interest rate, but also fees and other costs such as mortgage insurance, closing costs, discount points and loan origination fees. The Federal Truth in Lending Act requires lenders to disclose the APR to borrowers so they can accurately compare the cost of similar loans. closing costs, discount points, and loan origination fees. The Federal Truth in Lending Act requires all consumer loan agreements to disclose the APR, so borrowers can use it as a basis for comparison when shopping around for a loan.

Non-refundable charges you pay when you submit your loan application. These fees can cover items such as a credit profile or property appraisal.

An estimation of a property’s worth, typically done by a professional appraiser in connection with an application for a mortgage loan secured by the property.

A requirement in which the loan for the purchase of the property will only be approved if the property appraises at a value that is equal to or greater than the buyer’s offering price.

The increase in the value of property over time. The location, condition, and selling price of similar homes in the area are all important components that may influence the amount of appreciation a home experiences. In turn, appreciation increases the amount of equity a homeowner has, which may increase the amount they can borrow for a home equity line of credit.

The length of time that the borrower agrees to pay off the loan. It is expressed in months and is used to calculate the payment amount, repayment schedule, and total interest paid over the loan’s lifetime. See also: Term

The length of time in months it will take a mortgage buyer to pay off their loan. It is used to calculate the monthly payments, the repayment schedule and total interest paid over the loan’s duration. See also: Term

The value of a property determined by a public tax assessor and used to determine the property taxes for a mortgage buyer.

The process of transferring the ownership or control of a loan, or other legal agreement, from one person to another.

A loan that can be taken over by another party, without altering the terms of the loan. This means that the interest rate, repayment schedule, and other conditions of the loan will remain the same. This type of loan may require a fee to be paid in order to transfer it to a new owner, particularly when selling a home. Not all loans are assumable, so it is important to check the loan agreement before assuming it can be transferred.

A type of loan that provides borrowers with lower monthly payments over a set period of time followed by a single payment that is larger than usual at the end of the loan period. This can help reduce the total amount of interest you pay over the life of the loan, but it also means you will have a larger payment due at the end of your loan term.

A reference point for determining the interest rate of variable-rate loans, such as adjustable-rate mortgages, auto loans and credit cards. It serves as an index to help lenders and mortgage buyers compare different loan options.

a unit of measure equal to 1/100th of a single percentage point. For instance, if a mortgage requires a fee of 50 basis points on a loan of $200,000, the fee would be 0.50%, resulting in a payment of $1,000.

An interest-bearing certificate of debt that is backed by a mortgage or a deed of trust and has a specific maturity date. It is a legally binding agreement between the borrower and lender that requires the borrower to repay the loan with interest by a predetermined date.

A calculation used to determine how long it will take to recoup any costs associated with purchasing discount points on a mortgage. It is found by comparing total income to total expenses, and is calculated by taking the amount paid for the discount points and dividing it by the amount of money saved each month due to the reduced interest rate. For example, if $3,600 is paid for the discount points and the reduced rate decreases the monthly mortgage payment by $100, it will take 3 years to break even.

A short-term loan used to finance the purchase of a new home before a current home is sold. This type of loan typically involves the borrower taking out a loan secured by their existing home, and using that loan to purchase the new home before the existing home is sold.

A person or business that acts as an intermediary between mortgage buyers and lenders, helping buyers secure the best loan terms possible.

Fees charged by a broker for services related to assisting in the process of obtaining a mortgage, such as arranging an application or negotiating the terms of the loan.

A lump-sum payment made by a lender or homebuilder to reduce a borrower’s monthly mortgage payments, typically for a period of 1-3 years.

A limit on the amount of an adjustable interest rate that can increase over time. This limit is usually set as an annual or semi-annual rate cap and a lifetime cap, which limits the amount of increase for each adjustment period and over the entire term of the loan.

The amount of money that a borrower has available to put towards their down payment and closing costs when purchasing a home. This money does not include cash reserves that are required by the lender or funds from any specified sources that may be listed in the lending guidelines.

At the closing of a mortgage loan, the homebuyer must have the necessary cash to cover both the down payment and closing costs.

A type of refinance transaction where the new loan amount is higher than the total balance of the existing mortgage plus any other liens and closing costs associated with the new loan. The difference between the amount of the new loan and the existing loan is then given to the borrower in cash, which can be used for debt consolidation, home improvement, or any other purpose.

The highest interest rate that can be charged on a variable rate loan or adjustable-rate mortgage (ARM).

A document issued by the federal government which verifies that a veteran is qualified to receive a VA loan from the Department of Veterans Affairs.

A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA loan. This value is based on an appraisal that has been approved by the VA.

A document issued by an abstract company, title company, or attorney that outlines who holds the legal rights to a piece of real estate, as indicated on the public record.

A chronological record of all deeds, mortgages, liens, and other legal documents that have been filed with the county recorder’s office in relation to a particular parcel of real estate. The chain starts with the earliest existing document and ends with the most recent. This document trail provides an understanding of the history of ownership and the current status of the title.

A legal title to a property that is free from any claims, restrictions, or legal disputes that could impair the property’s ownership. This title is considered to be marketable and legally sound by all parties involved.

The date you will sign and execute your new loan documents. 

All paperwork, documents, and funds have been exchanged and the sale is complete. No further action is required on the part of the buyer or seller.

At the closing, you will meet with your mortgage lender to sign all paperwork for your loan, including the loan documents, which must be dated and notarized. See also: settlement

All the fees incurred when obtaining a mortgage loan, also known as settlement costs. This can include attorney’s fees, preparation and title search fees, discount points, appraisal fees, title insurance, and credit report charges. Typically, closing costs are around 3% of the loan amount and are typically paid at the closing of the loan or just before. Items such as homeowners insurance, property taxes, and escrow impound accounts are not included in the closing costs and are considered separate, so you should be prepared to pay these costs before the loan closes.

The date on which you will finalize the loan agreement and sign the loan documents.

A mandated document for mortgage buyers that provides essential information about their loan, such as the interest rate, monthly payments, and costs associated with closing the loan. Consumers must receive this form at least 3 business days prior to the closing date of their loan.

An accounting of all funds exchanged between the buyer and seller prior to the sale of the real estate. This statement will provide a detailed breakdown of the payments and credits that are being made in order to complete the sale.

An individual who is jointly responsible for repayment of the loan, has the same rights to the loan’s proceeds, and is bound to the loan’s terms in the same manner as the original borrower.

Requires employers with more than 20 employees to provide group health care coverage for 18 months to employees who resign or are terminated, other than for gross misconduct, and at the employee’s expense.

An arrangement between a mortgage buyer and an insurer whereby the buyer agrees to share insurance risk with the insurer. The amount of coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.

An asset that is used to guarantee the repayment of a loan. If the loan is not repaid, the borrower could forfeit the asset. Examples of collateral include a car, a home, or any other valuable item.

The process of attempting to bring a delinquent loan up to date, and if necessary, initiating the legal steps necessary to proceed with foreclosure.

A mortgage solution for buyers that allows them to finance up to 80% of the property’s value with a single application and one down payment. It consists of a conforming first mortgage combined with a home equity second mortgage, which may help to avoid the higher rates of a jumbo first mortgage. Specifically, the combination loan is made up of a 70% first mortgage, a 10% home equity second mortgage, and a 20% down payment.

The total amount of money owed on a property from all mortgages held on the property. This amount can be used to calculate the amount of equity a property has by subtracting it from the appraised value of the property.

A measure (expressed as a percentage) of the total amount of loans (including the unpaid principal amount of your first mortgage and any credit limit associated with a home equity line of credit) compared to the appraised value of your home.

The sum of all mortgages held on a property, which is used to calculate the total equity of the property when appraised value is subtracted from the total combined liens.

A legally binding document issued by a lender to a loan applicant which confirms that the lender is extending a loan to the applicant and outlines the exact terms and conditions of the loan, including the rate of interest.

Properties that are similar in size, location, and amenities to the property being considered for a mortgage. These properties must have recently been sold in order to be useful in helping an appraiser determine the fair market value of the property.

The interest that is calculated and paid on both the principal balance and any interest that has already been accrued but has yet to be paid.

A mortgage loan that meets the requirements of Fannie Mae and Freddie Mac, two government-sponsored enterprises that buy and securitize mortgages. These loans are typically standard loans with features such as a fixed interest rate, loan amount, and loan term.

A temporary loan used to finance the cost of building a home. The lender provides payments to the builder in regular intervals as the construction progresses, and the loan is paid off once the project is completed.

A mortgage sale is a requirement that must be fulfilled before the sale can be completed. Common contingencies for homebuyers include ensuring that the house passes an inspection and that the borrower is approved for a loan.

The amount due each month, as agreed upon by the buyer and lender in the loan contract. This payment includes the principal, interest, and any applicable taxes and insurance payments. The total contractual payment may also include a portion of funds to cover homeowners insurance and mortgage insurance, if applicable.

Here’s how it works: Principal + interest + mortgage insurance (if applicable) + homeowners insurance and tax (if applicable) = full contractual payment.

For a home equity line of credit (HELOC), a contractual payment is a monthly obligation that can change depending on the balance of the line of credit and the terms of the loan. The payment can consist of interest only, interest and principal, or any other combination set out in the loan agreement.

A type of home loan that is not insured or guaranteed by the federal government. This type of loan is often available in a variety of loan amounts, including conforming and non-conforming amounts.

A provision included in some adjustable-rate mortgages (ARMs) that gives the borrower the option to switch from an ARM to a fixed-rate loan at predetermined moments throughout the duration of the loan.

An adjustable-rate mortgage that gives mortgage buyers the option to switch to a fixed-rate loan if certain conditions are met.

The transfer of title to property from one to another through a deed or contract. In such a process, any items that become a part of the transfer of title are also conveyed with the property.

An individual who agrees to accept equal responsibility for the repayment of a loan but does not receive any of the loan proceeds. This individual’s signature is required in addition to the borrower’s signature in order to secure the loan. By co-signing, the individual agrees to be liable for the loan if the borrower fails to make the payments.

An index used to calculate changes in interest rates for certain adjustable-rate mortgages (ARMs). It is based on the weighted-average cost of savings, borrowings and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. COFI provides a benchmark to measure the cost of funds for mortgage buyers.

A mortgage or deed is a binding promise that sets certain limits on how a property can be used; if these limits are not followed, the property may be subject to foreclosure.

An organization that collects, maintains, updates and stores financial and public records for individuals who have obtained credit. This information is then provided to lenders, and other authorized parties, for a fee. The three major Credit Bureaus, Equifax, Experian and TransUnion, allow for individuals to obtain a free credit report annually from each bureau.

The maximum amount of money that can be loaned to an individual for the purpose of buying a home.

A service that provides early warning of suspicious activity, allowing individuals to swiftly take action to minimize the potential financial losses caused by identity theft.

A detailed document of an individual’s past and present financial activity. It provides a lender with important information about a potential borrower’s financial history, helping them to decide whether they are a good candidate for a mortgage loan. The three major credit bureaus that provide these reports are Equifax, Experian and TransUnion. By law, you are entitled to receive one free credit report from each agency every year.

The potential that a borrower may not be able to meet their financial obligations as agreed. This could lead to a loss for the lender if the borrower is unable to make payments. Lenders seek to minimize their credit risk by assessing the borrower’s ability to pay and taking steps to reduce the risk, such as requiring higher down payments or more collateral.

A numerical rating that is used to assess an individual’s creditworthiness. It is based on an evaluation of their credit history and is used to predict the probability that they will repay a mortgage loan. Generally, the higher a person’s credit score, the more likely they are to be accepted for a loan and to receive a lower interest rate.

Someone or an entity that provides a loan and to whom the borrower owes money.

A measure of the borrower’s capacity to fulfill their debt obligations.

the total amount of interest that has been accumulated over the course of the mortgage loan.

A payment that reduces the outstanding principal balance of a loan.

The estimated price that a home would sell for in an open market between a willing buyer and a willing seller, with neither party under duress or undue influence. This amount is typically determined by a professional appraisal, which takes into account a range of factors such as the home’s age, condition, size, location, and recent comparable sales.

A government-backed enterprise that purchases mortgages from lenders and packages them into securities for sale to investors on the secondary market.

An agency of the Department of Housing and Urban Development, offers mortgage insurance in order to protect residential mortgage buyers from any potential losses during the loan process. Additionally, the FHA establishes standards for the underwriting of these mortgages as well as for the construction of homes that are secured by these mortgages.

An unrestricted form of ownership of a piece of property, giving the owner full and absolute rights to use it in any way they choose – such as building on it, selling it, or leasing it – without any limitations or conditions imposed by a mortgage buyer.

A mortgage loan that is insured by the US Federal Housing Administration and backed by an FHA-approved lender. This type of loan provides borrowers with protection, as the FHA mortgage insurance protects lenders from potential losses.

A mortgage that is backed by the Federal Housing Administration (FHA) and is designed to help buyers who may not be able to secure conventional financing. This loan is also known as a government loan and provides more flexible terms and options than conventional loans. FHA mortgage insurance protects the lender if the borrower defaults on the loan and is what makes FHA loans attractive to many buyers. This insurance allows lenders to provide more attractive loan options and benefits than those available through conventional financing.

An acronym for Fair Isaac Corporation, a company that creates mathematical formulas to determine credit scores, which range from 300 to 850. The higher the FICO score, the lower the level of credit risk for consumers. More information about FICO scores can be found online.

The total cost of borrowing money for a mortgage, expressed as a dollar amount. It includes the interest due over the loan’s lifetime, origination points (a fee charged by the lender for processing the loan) and other items. Certain closing costs, such as title fees, are not considered part of the finance charge.

A loan secured by a property, with the borrower‘s promise to repay the loan being the primary legal claim against the property. This claim is senior to all other claims against the property and takes precedence in the event of foreclosure.

A home loan in which the interest rate remains the same throughout the entire duration of the loan, regardless of changes in the market.

An option available on certain home equity lines of credit that gives borrowers the ability to lock in a specific interest rate and payment amount for a designated period of time on a portion of their principal balance. This privilege may be accompanied by a fee.

Mortgages in which the interest rate is not “locked” or committed to any particular amount. This means that the interest rate and any associated discount points are subject to change based on the market conditions at the time the loan is locked. As such, the borrower’s actual interest rate and discount points may differ from what was initially expected.

A process of verifying whether a property is situated in a special flood hazard area as determined by a reliable source.

A type of insurance designed to protect mortgage buyers from financial losses caused by floods. It is legally required for properties located within special flood hazard zones.

A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue.

A legal process in which a lender sells a property that was used to secure a loan that has not been paid back by the borrower. The proceeds from this sale are used to repay the loan, but may not be enough to cover the full amount. If this is the case, the borrower may still owe the lender the remaining balance.

The act of being deprived of money, property, rights or privileges due to a failure to adhere to contract terms or other legal obligations.

A legal tax document that reports the total amount of interest and points paid on a mortgage during the previous year.

A government-sponsored enterprise that acquires mortgages from lenders and packages them into securities for sale on the secondary market.

The date when the loan money is made available to the borrowers or is used to their benefit.

A loan that is insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veterans Affairs (VA) or guaranteed by the Rural Housing Service (RHS). This insurance provides protection to the lender, not the borrower, in the event the borrower fails to meet their repayment obligations. This insurance allows lenders to offer more loan options, benefits and flexibility than what is typically offered through traditional loan financing.

A loan provided by the government that helps protect lenders from potential losses due to borrowers defaulting on payments. This type of loan allows lenders to offer lower interest rates to potential borrowers, making it easier for them to get approved. The most common type of Government-Backed Mortgage is a Federal Direct Loan.

A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Established by an act of Congress on September 1, 1968, GNMA was assigned the responsibility of overseeing the special assistance loan programs formerly managed by the Federal National Mortgage Association (Fannie Mae).

A type of insurance that provides financial protection against damage or loss to a home from fire, hurricanes, theft, vandalism, and other catastrophes. It also covers personal liability if someone is injured on your property. When you take out a mortgage, your lender may require you to name them as a payee on the insurance policy; this type of insurance is also known as hazard insurance.

HUD stands for the U.S. Department of Housing and Urban Development. This government agency is responsible for developing and implementing housing and urban development programs. HUD administers the Federal Housing Administration, enforces Real Estate Settlement Procedures Act (RESPA) regulations, and oversees the government-sponsored enterprises Fannie Mae and Freddie Mac. HUD’s role is to ensure safe, quality, and affordable housing for all Americans.

The process of a lender setting aside money in an account to cover a borrower’s property taxes and insurance when they become due.

A consistent stream of funds from salaries, commissions, returns on investments, rent payments, or other sources.

Real estate that has been developed or improved with the purpose of generating income.

A reference rate used to determine the annual percentage rate (APR) on a mortgage note or credit agreement. The index, plus or minus a margin, typically equates to the new rate charged to the borrower, given any applicable caps. Common financial index rates used by lenders include the Secured Overnight Financing Rate (SOFR) and Treasury-Indexed ARMs (T-Bills).

Real estate that has been developed or improved with the purpose of generating income.

The measure of the change in prices of consumer goods over a certain period of time, typically expressed as a percentage.

The act of obtaining a loan or amount of money against one’s available line of credit.

The total amount that the borrower can request from the proceeds of their home equity line of credit or construction loan at closing.

The starting interest rate of the loan, sometimes referred to as the “teaser rate”. This rate offers low interest and low monthly payments at the beginning of the loan, but may increase at the next adjustment period even if the index does not raise, as it is usually lower than the index plus margin for the initial period.

The process of asking for a copy of one’s credit report from either oneself or from a lender that is considering offering credit.

A type of loan where the borrower makes regular, equal payments to repay the loan over a set period of time. These payments are referred to as installments and are usually made monthly, but may also be made quarterly, semi-annually, or annually depending on the agreement between the borrower and lender.

A contractual agreement between an individual and an insurance provider that offers financial protection against certain losses in exchange for a regularly paid premium. This individual contract is known as an insurance policy, and the regular payment is referred to as an insurance premium.

A temporary document that provides proof of insurance coverage until a permanent policy can be obtained by a specified date. The Insurance Binder serves as a guarantee that the buyer will have valid insurance in place before the expiration date.

A loan secured by a lender that is covered by an insurance policy in the event the borrower fails to pay. The insurer will cover the lender’s losses, but not the borrower, in the event of default.

The percentage rate at which interest accumulates on the mortgage loan. This rate is typically used to compute the monthly payments on the loan.

A type of mortgage loan in which borrowers pay only the interest owed for a predetermined period of time. This lowers the periodic payment but does not reduce the principal balance of the loan. When the interest-only period ends, larger payments will be due to cover the principal balance that was not paid down during the earlier period. See also: Balloon loan

the annual cost of a loan to a borrower, expressed as a percentage. This cost does not include any fees associated with the loan, and should not be confused with the Annual Percentage Rate (APR).

A strategy in which a borrower pays a one-time fee at closing in exchange for a lower interest rate on their mortgage loan. This fee, known as discount points, reduces the interest rate on the loan and can be used to pay down the principal balance of the loan.

A limit on how much the variable interest rate can increase at any one time. This limit is typically expressed as a percentage over the starting interest rate. Many home loans will have both annual or semiannual caps, allowing for an increase of up to 2-5% over the starting rate in a given adjustment period, and a lifetime cap of 6% over the life of the loan. This means that for a loan with a starting rate of 5%, the interest rate could potentially increase to as much as 10% in an adjustment period, and up to 11% over the lifetime of the loan.

Real estate that is purchased with the intent of generating rental income or to be sold at a later date for a profit when the value of the property has increased.

A nonconforming loan, is a mortgage loan that exceeds the limits set by Fannie Mae and Freddie Mac. In certain geographical areas, temporary conforming loan limits may be higher than the typical conforming limits. As a result of the large loan amounts, lenders may charge additional fees and place certain restrictions on the loan.

A form of insurance which offers coverage against legal claims arising from injuries and/or damages to other people or property. This protection can be especially beneficial for mortgage buyers, as it helps them to protect their finances in the event of a legal dispute.

A legal right granted to a creditor that allows them to secure a debt against a borrower’s property as collateral.

A person or organization that has a legal right to take possession of a property if the mortgage is not paid back in full. The lien holder will receive the money owed on the loan from the sale of the property.

A restriction on the maximum amount by which the variable interest rate can go up during the period of the loan.

A type of secured loan in which a lender agrees to provide a borrower with a maximum amount of credit for a set period of time, secured by the borrower’s home. This type of loan provides homeowners with access to funds to be used for a variety of needs, such as home improvements, repairs, tuition, or debt consolidation. With a home equity line of credit, a borrower can use the funds as needed and pay them back over time, with interest. This can be a great option for those looking to borrow a large amount of money while still maintaining their home as collateral.

An official communication from a lender confirming that a borrower’s loan has been provisionally accepted, and outlining the conditions under which the lender is willing to provide the loan.

An industry-standard form that lenders are legally required to provide to consumers after they submit six key elements of information: name, income, social security number, property address, estimated property value, and desired loan amount. This disclosure is designed to help inform consumers about the key terms and estimated costs of a mortgage before they make a full application, making it easier to compare and shop for the best deal.

The alteration of one or more of the terms of a loan agreement between a lender and a borrower. It may include changes to interest rate, principal, or other loan elements.

The procedure used by a mortgage lender to create a home loan and register a mortgage on the borrower’s real estate as a guarantee for repaying the loan.

The duration of time over which a mortgage loan is repaid. It is usually expressed in years and determines the length of time a borrower will be obligated to make payments.

A percentage that compares the unpaid principal amount of the loan or the credit limit of a line of credit to the appraised value of the collateral. For example, if the unpaid principal of a loan is $80,000 and the appraised value of the collateral is $100,000, the LTV would be 80% ($80,000 / $100,000 = 80%).

A set amount of time before a mortgage loan closing in which the buyer can secure a specific interest rate. This period usually lasts between 30 and 90 days, and the longer the lock period is, the higher the fees or interest rate the buyer must pay.

The fixed amount of percentage points that the lender adds to or subtracts from the index rate to calculate the interest rate adjustments. This amount remains unchanged throughout the loan’s duration, and is stipulated in the promissory note.

The date on which the full amount of the loan, including the principal, interest, and fees, must be paid in full.

Payments that will be allocated in accordance with the terms and conditions of your loan, which may include fees, principal, unapplied funds, and/or other categories. Any Miscellaneous Payment made will be applied to the account, provided it is not less than the current contractual payment due.

A type of residence that is built on a wheeled frame and can be moved from one location to another.

A factory-built home that’s erected on-site, with the appearance and characteristics of a site-built residence.

A loan agreement that allows a lender to place a lien on a borrower’s real estate in order to secure repayment of the loan. Mortgage loans typically last between 10 and 30 years and must be paid off at the end of that period. It is also known as a deed of trust or security deed.

A type of insurance that protects lenders if you fail to make payments on a conventional loan. If you make a down payment of less than 20%, most lenders will require you to pay for mortgage insurance, also referred to as private mortgage insurance (PMI).

Pre-paid interest or fees that can be acquired by mortgage borrowers in order to reduce the amount of interest they pay on their monthly payments, thus making their payments more affordable in the long run. These points are tax deductible and can be seen as an investment in order to decrease future home loan expenses.

Generally categorized into three types: Federal Housing Administration (FHA) loans, Department of Veterans Affairs (VA) loans, and conventional mortgage loans. FHA loans are available to all qualifying borrowers and are insured/guaranteed by the federal government, protecting the lender should the borrower default. VA loans, on the other hand, are only offered to qualifying veterans and surviving spouses, and are also backed by the federal government. Lastly, conventional loans are available to all qualifying borrowers, but are not insured or guaranteed by the federal government.

A residential property that consists of two, three, or four individual housing units within the same building, such as a duplex, triplex, or quadplex.

The total of the existing credit line and the amount of additional credit being sought.

A loan in which the borrower does not need to pay any cash upfront for the regular closing expenses. Instead, the lender may include the closing costs in the principal balance, or they may charge a higher interest rate than a loan that includes closing costs to cover the cost of the closing costs.

A mortgage loan that does not meet the criteria established by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. These criteria include a maximum loan amount, acceptable properties, down payment requirements, credit requirements, and other relevant factors. As a result, such loans cannot be sold to GSEs.

A property where the owner does not reside in the home, but may rent or lease the property to others.

A legally binding document in which a borrower agrees to pay a certain amount to a lender on an agreed-upon date or upon request.

The interest rate stated in a mortgage contract or agreement.

A formal written document that informs a borrower that they have failed to meet the terms of the mortgage agreement and that legal action may be taken as a result.

The date when the loan funds are released to the borrower.

The day when the loan is officially given out or provided to the borrower.

A fee charged by a lender to cover the costs associated with creating a mortgage loan. It is usually calculated as a percentage of the amount loaned and is expressed in points. Typically, the origination fee is 1%.

A property purchase transaction where the seller provides either some or all of the necessary financing.

A property in which the buyer lives as their primary residence.