Mortgage Glossary: 344 Home Loan Terms Explained
Understand mortgage, real estate, credit, appraisal, closing, and home-loan terminology in plain English. Search by term, browse A–Z, or filter by topic.
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Mortgage language can feel unnecessarily complicated. This resource translates common lending terms into practical explanations and connects key definitions to Metropolitan Mortgage guides, calculators, loan programs, and rate resources.
Educational resource: Definitions are general and may vary by loan program, lender, investor, property, contract, and state law. Your Loan Estimate, Closing Disclosure, note, security instrument, and lender guidance control your transaction.
A Mortgage Terms
Ability-to-Repay Rule
A federal rule requiring lenders to make a reasonable, good-faith determination that a borrower can repay a covered mortgage.
Abstract of Title
A historical summary of recorded documents and proceedings affecting title to a property.
Acceleration Clause
A mortgage provision allowing the lender to require the full unpaid balance when specified defaults occur.
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that may change after an initial fixed period according to the note's index, margin, and adjustment limits.
Adjustment Cap
A limit on how much an adjustable-rate mortgage interest rate can change at one adjustment.
Adjustment Date
The scheduled date when an adjustable-rate mortgage interest rate may change.
Adverse Action Notice
A notice explaining a creditor's decision to deny or change requested credit and providing required information about the decision.
Affidavit
A written statement of facts sworn or affirmed to be true, sometimes required during mortgage or title processing.
Affordability
The relationship between a home's total monthly cost and a household's income, debts, savings, and financial goals.
Aggregate Adjustment
A calculation used to prevent an initial escrow deposit from exceeding permitted limits.
Alienation Clause
Another name for a due-on-sale clause restricting unapproved transfer of the property or loan.
Amortization
The gradual repayment of a loan through scheduled payments that include principal and interest.
Amortization Schedule
A table showing how each scheduled payment is divided between principal and interest and how the balance declines.
Annual Escrow Statement
A servicer statement summarizing escrow activity and projecting collections and payments for the coming year.
Annual Percentage Rate (APR)
A standardized measure of borrowing cost that combines the interest rate with certain finance charges and expresses them as a yearly rate.
Application Date
The date a lender receives the six pieces of information that generally constitute an application for Loan Estimate timing purposes.
Application Fee
A fee that may be charged to process a mortgage application; what it covers varies by lender.
Appraisal
An independent opinion of a property's market value prepared by a licensed or certified appraiser.
Appraisal Contingency
A purchase-contract condition that may protect the buyer when the property does not appraise at the agreed price.
Appraisal Gap
The difference between a property's purchase price and its appraised value when the appraisal is lower.
Appraisal Management Company (AMC)
A company that coordinates appraisal orders and communication between lenders and independent appraisers.
Appraised Value
The value assigned to a property by an appraiser for a specific purpose and effective date.
Appraiser
A qualified independent professional who develops an opinion of property value.
Appreciation
An increase in a property's market value over time.
ARM Disclosure
A disclosure describing an adjustable-rate mortgage's index, margin, caps, payment features, and adjustment schedule.
Assessed Value
A value assigned by a local taxing authority for property-tax purposes, which may differ from market value.
Asset
Something of financial value owned by a borrower, such as cash, investments, retirement funds, or real estate.
Asset Depletion
A qualifying method that converts eligible assets into an imputed monthly income amount under a loan program's rules.
Assignment
The transfer of rights or interests in a mortgage, note, contract, or other legal instrument from one party to another.
Assumable Mortgage
A mortgage that may be transferred to a qualified buyer under the loan's terms and the lender or servicer's approval requirements.
Automated Underwriting System (AUS)
Software that evaluates mortgage application data against program rules and returns an underwriting recommendation.
Automated Valuation Model (AVM)
A computerized estimate of property value using data and statistical modeling.
B Mortgage Terms
Back-End Ratio
Another name for the total debt-to-income ratio that includes housing and other qualifying monthly debts.
Balloon Mortgage
A loan structured with payments that do not fully repay the balance by maturity, leaving a large final payment.
Bankruptcy
A federal legal process for addressing debts that can affect mortgage eligibility and required waiting periods.
Bank Statement Loan
A nontraditional mortgage that may use eligible bank-deposit history to evaluate income instead of standard tax-return documentation.
Basis Point
One one-hundredth of one percentage point; 100 basis points equal 1.00%.
Beneficiary
A person or entity entitled to receive benefits, proceeds, or property under a legal instrument.
Binder
Temporary evidence of insurance coverage issued before the full insurance policy is delivered.
Biweekly Payment
A payment arrangement in which half of the monthly mortgage payment is made every two weeks, often resulting in 26 half-payments annually.
Blanket Mortgage
A single mortgage secured by more than one parcel of real estate.
Bona Fide Discount Point
A point paid to reduce the interest rate when the reduction is consistent with market pricing and applicable rules.
Borrower
A person who applies for and becomes legally obligated to repay a mortgage loan.
Borrower-Paid Mortgage Insurance (BPMI)
Mortgage insurance paid by the borrower, commonly as part of the monthly mortgage payment.
Bridge Loan
Short-term financing designed to bridge the gap between a current financial need and a future source of funds, such as the sale of another home.
Broker Price Opinion (BPO)
An estimate of property value prepared by a real estate broker or agent, often for servicing or portfolio purposes rather than a standard mortgage appraisal.
Buydown
An arrangement that reduces the borrower's interest rate or payment for a period, funded by the borrower, seller, lender, or another permitted party.
Buyer's Agent
A real estate professional who represents the buyer's interests in a property transaction.
C Mortgage Terms
Cap Rate
A real estate investment measure calculated by dividing a property's net operating income by its value or purchase price.
Cash Equivalent
An asset readily convertible to cash with minimal value fluctuation, subject to program treatment.
Cash Flow
The money remaining after income is reduced by expenses and debt payments.
Cash-Out Refinance
A refinance in which the new loan exceeds the existing liens and eligible costs, allowing the borrower to receive part of the equity as cash.
Cash-Out Seasoning
The minimum ownership or lien-history period that may apply before certain cash-out refinance transactions.
Cash Reserves
Eligible funds remaining after closing that may be measured in months of housing payments.
Cash to Close
The total amount a borrower must bring to closing after accounting for the down payment, closing costs, credits, deposits, and adjustments.
Certificate of Eligibility (COE)
A Department of Veterans Affairs document showing a service member's, veteran's, or eligible surviving spouse's VA home-loan entitlement status.
Certificate of Occupancy
A local government document confirming that a property may legally be occupied under applicable codes.
Chain of Title
The historical sequence of ownership transfers and recorded interests affecting a property.
Chattel
Personal property rather than real property; some manufactured homes may be financed as chattel instead of real estate.
Clear to Close
A lender status indicating that required underwriting conditions have been satisfied and the loan may proceed toward closing, subject to final closing steps.
Closing
The final stage of a real estate financing transaction when documents are signed, funds are disbursed, and ownership or liens are recorded as applicable.
Closing Agent
The neutral party that coordinates signing, funds, and documents at closing, such as a title company, escrow company, or attorney depending on location.
Closing Costs
Expenses associated with obtaining a mortgage and completing a real estate transaction, excluding the property's purchase price.
Closing Date
The scheduled date on which closing documents are signed and the transaction is consummated or completed under local practice.
Closing Disclosure (CD)
A standardized five-page form that provides final mortgage terms, projected payments, and closing costs before consummation for most covered loans.
Closing Protection Letter
A title underwriter's letter providing specified protection to a lender or other covered party for certain acts of an approved closing agent.
Co-Borrower
A person who applies jointly and shares legal responsibility for repayment of the mortgage.
Collateral
Property pledged as security for a debt.
Combined Loan-to-Value (CLTV)
The total balances of multiple loans secured by a property divided by the property's value.
Commission Income
Compensation based on sales or performance that may require additional history and documentation for mortgage qualification.
Community Property
A state-law system treating certain property acquired during marriage as jointly owned.
Comparable Sale (Comp)
A recently sold property used to help estimate the value of another property.
Compensating Factor
A positive element of a loan file that may offset another area of risk when program rules allow.
Concession
A contribution or benefit provided by an interested party, such as a seller credit toward eligible closing costs, subject to program limits.
Conditional Approval
An underwriting decision approving a loan subject to completion of listed conditions.
Condominium
A form of ownership in which a person owns an individual unit and shares ownership of common areas.
Conforming Loan
A conventional mortgage that meets applicable Fannie Mae or Freddie Mac eligibility and loan-limit requirements.
Conforming Loan Limit
The maximum original loan balance eligible for standard Fannie Mae or Freddie Mac acquisition in a given area and year.
Construction Loan
Financing used to fund the construction or major renovation of a property, often disbursed in stages.
Consumer Financial Protection Bureau (CFPB)
A federal agency that administers and enforces many consumer financial protection laws and provides mortgage disclosures and educational resources.
Consumer Reporting Agency
A company that assembles or evaluates consumer information for credit reports and other permitted purposes.
Contingency
A condition in a purchase contract that must be satisfied or waived for the transaction to proceed under the agreement.
Continuity of Obligation
A refinance concept concerning whether an existing obligated borrower remains responsible on the new loan, where applicable.
Conventional Loan
A mortgage that is not insured or guaranteed by a federal government housing agency.
Conversion Option
A feature that may allow an adjustable-rate mortgage to convert to a fixed rate under stated conditions.
Cooperative (Co-op)
A housing arrangement in which residents own shares in a corporation that owns the property and receive rights to occupy a unit.
Correspondent Lender
A lender that closes loans in its own name and then sells them to another investor or aggregator.
Co-Signer
A person who agrees to be legally responsible for the debt but may not have an ownership interest in the property.
Credit Inquiry
A request to review a consumer's credit file; mortgage applications typically involve a hard inquiry.
Credit Report
A record of credit accounts, balances, payment history, inquiries, and certain public information maintained by a credit reporting company.
Credit Score
A numerical representation of credit risk calculated from information in a credit report using a scoring model.
Credit Supplement
An update or verification added to a mortgage credit report to clarify specific account information.
Credit Utilization
The percentage of available revolving credit currently in use.
Curtailment
An additional payment applied directly to mortgage principal outside the regular amortization schedule.
D Mortgage Terms
Debt Consolidation Refinance
A refinance that uses home equity to pay eligible debts, resulting in those balances being secured by the property.
Debt Service Coverage Ratio (DSCR)
A measure comparing a property's qualifying rental income or net operating income with its debt obligation, depending on the program.
Debt-to-Income Ratio (DTI)
The percentage of gross monthly income used to pay qualifying monthly debts.
Deed
A legal instrument used to transfer ownership of real property.
Deed of Trust
A security instrument used in some states that places legal title with a trustee until the secured debt is repaid.
Default
Failure to meet a legal obligation under the loan documents, such as making required payments.
Deferred Maintenance
Needed property repairs or upkeep that have been postponed and may affect value, safety, marketability, or loan eligibility.
Delinquency
A mortgage payment that has not been made by its due date under the loan terms.
Department of Housing and Urban Development (HUD)
The federal department responsible for national housing policy and programs, including oversight related to FHA.
Department of Veterans Affairs (VA)
The federal department that administers the VA home-loan guaranty program for eligible borrowers.
Depreciation
A decrease in value or an accounting deduction that allocates an asset's cost over time.
Disbursement Date
The date loan or closing funds are released to the appropriate parties.
Discount Point
An upfront charge equal to 1% of the loan amount, often paid in exchange for a lower interest rate, though the exact pricing effect varies.
Documentary Stamp Tax
A transfer or mortgage tax imposed in certain jurisdictions on recorded documents or transaction value.
Document Preparation Fee
A fee for preparing closing or loan documents when permitted and disclosed.
Down Payment
The portion of a property's purchase price paid from the buyer's eligible funds rather than financed by the mortgage.
Down Payment Assistance (DPA)
A program providing eligible homebuyers with grants, forgivable loans, deferred loans, or other funds toward down payment or closing costs.
Due-on-Sale Clause
A loan provision allowing the lender to require repayment when the property is sold or transferred without an approved exception.
E Mortgage Terms
Early Payment Default
A loan that becomes seriously delinquent shortly after closing, as defined by an investor or contract.
Earnest Money
A buyer's good-faith deposit submitted with or after a purchase offer and handled according to the contract.
Easement
A legal right to use another person's land for a stated purpose, such as utilities or access.
Effective Interest Rate
The actual annualized borrowing cost after considering compounding or other relevant payment features, depending on context.
Encroachment
A structure or improvement that extends onto another property or beyond a legal boundary.
Encumbrance
A claim, lien, easement, restriction, or other interest affecting title to real property.
Energy-Efficient Mortgage
Financing that incorporates eligible energy improvements or recognizes energy-related savings under program rules.
Equal Credit Opportunity Act (ECOA)
A federal law prohibiting credit discrimination on specified protected bases and requiring certain notices.
Equity
The difference between a property's current value and the debts secured by it.
Escrow Account
An account maintained by a mortgage servicer to collect and pay property taxes, homeowners insurance, and other eligible charges.
Escrow Analysis
A periodic review comparing expected escrow collections with anticipated tax and insurance bills.
Escrow Holdback
Funds retained at closing for completion of approved repairs or other specified conditions after closing.
Escrow Shortage
A projected deficit in an escrow account when expected funds are insufficient to cover upcoming bills and required reserves.
Escrow Waiver
Approval allowing a borrower to pay certain taxes and insurance directly instead of through a lender-managed escrow account.
F Mortgage Terms
Fair Credit Reporting Act (FCRA)
A federal law governing the collection, use, accuracy, and disclosure of consumer report information.
Fair Housing Act
A federal law prohibiting housing discrimination on specified protected bases.
Federal Funds Rate
The target rate set by the Federal Reserve for overnight lending between depository institutions; it does not directly set mortgage rates.
Federal Housing Administration (FHA)
The HUD agency that insures approved FHA mortgages.
Fee Simple
The broadest common form of private real-property ownership, subject to laws, taxes, liens, and restrictions.
FHA Loan
A mortgage insured by the Federal Housing Administration and originated by an approved lender.
FHA Mortgage Insurance Premium (MIP)
The upfront and/or annual mortgage insurance charges associated with FHA-insured loans.
FHA Streamline Refinance
A simplified refinance option for eligible existing FHA borrowers, subject to program requirements.
Final Approval
The lender's approval after required underwriting conditions are satisfied, before or alongside final closing controls.
Finance Charge
The dollar cost of consumer credit as defined by applicable disclosure rules, including certain interest and fees.
First Mortgage
The lien with first priority against a property.
First Payment Date
The date the first scheduled mortgage payment is due after closing.
First-Time Home Buyer
A buyer who meets a program's definition of first-time status, which often includes someone who has not owned a principal residence during a stated period.
Fixed-Rate Mortgage
A mortgage whose note interest rate remains unchanged for the loan term.
Float-Down Option
A rate-lock feature that may allow improved pricing if market rates fall, subject to defined terms and fees.
Flood Certification
A determination of whether a property lies in a designated flood hazard area for federal flood-insurance requirements.
Flood Insurance
Insurance covering specified flood-related losses, which may be required for properties in designated high-risk flood zones.
Forbearance
A temporary agreement allowing reduced or paused mortgage payments, with missed amounts still owed and resolved under a repayment option.
Foreclosure
The legal process through which a lender or lienholder may enforce its security interest after default.
Freddie Mac
A government-sponsored enterprise that purchases eligible mortgages, issues mortgage-backed securities, and publishes underwriting standards and market data.
Fully Indexed Rate
An ARM rate calculated by adding the loan's index and margin, subject to caps.
Funding Date
The date the lender provides loan proceeds, which may differ from signing or recording dates.
Funding Fee
An upfront program charge, such as the VA funding fee, that may be financed when permitted.
G Mortgage Terms
Gift Funds
Money given by an eligible donor for a mortgage transaction without an expectation of repayment, documented under program rules.
Good Faith Estimate (GFE)
A former mortgage disclosure replaced for most consumer mortgages by the Loan Estimate in 2015.
Graduated-Payment Mortgage
A mortgage with scheduled payments that begin lower and increase over time according to the loan terms.
Gross Monthly Income
Income before taxes and other deductions, generally used in debt-to-income calculations.
Ground Rent
A payment for use of land when a person owns or occupies improvements but the land is subject to a leasehold interest.
H Mortgage Terms
Hazard Insurance
Property insurance covering specified hazards; the term is often used within broader homeowners insurance requirements.
Home Equity
The portion of a property's value not offset by liens secured by the property.
Home Equity Conversion Mortgage (HECM)
The FHA-insured reverse mortgage program for eligible older homeowners.
Home Equity Line of Credit (HELOC)
A revolving line of credit secured by home equity, usually with a variable rate and draw period.
Home Equity Loan
A closed-end loan secured by home equity, commonly repaid in fixed installments.
Home Inspection
A buyer-ordered evaluation of a property's visible condition and systems; it is different from a lender appraisal.
Homeowners Association (HOA)
An organization that manages common property, enforces community rules, and collects dues in a planned community or condominium.
Homeowners Insurance
Property and liability insurance generally required by mortgage lenders to protect the home against covered losses.
Home Possible
A Freddie Mac conventional mortgage option for eligible low- and moderate-income borrowers.
HomeReady
A Fannie Mae conventional mortgage option for eligible low- and moderate-income borrowers.
Homestead Exemption
A state or local property-tax benefit that may reduce taxable value for an eligible primary residence.
Housing Expense Ratio
The percentage of gross monthly income used for the proposed housing payment, sometimes called the front-end ratio.
Housing Payment
The recurring cost of housing, often including principal, interest, property taxes, insurance, mortgage insurance, and association dues.
HUD-1 Settlement Statement
A settlement form still used for certain transactions not covered by the modern Closing Disclosure, such as some reverse mortgages.
I Mortgage Terms
Impound Account
Another term for an escrow account used to collect property taxes and insurance.
Income Documentation
Records used to verify qualifying income, such as pay stubs, W-2s, tax returns, benefit statements, or business records.
Index
A published benchmark used with a margin to determine an adjustable-rate mortgage's fully indexed rate.
Ineligible Property
A property that does not meet a loan program's occupancy, condition, type, title, or other collateral requirements.
Initial Adjustment Cap
The maximum amount an ARM rate may change at the first adjustment.
Initial Rate
The starting note rate on a mortgage, including the fixed introductory rate on an ARM.
Installment Debt
Debt repaid through scheduled payments over a defined period, such as an auto or student loan.
Interest
The charge paid for borrowing money.
Interested Party Contribution
A contribution from a party with a financial interest in the transaction toward eligible borrower costs, subject to loan-program limits.
Interest-Only Mortgage
A mortgage allowing payments of interest without scheduled principal reduction for a stated period, followed by different payment requirements.
Interest Rate
The percentage charged on the unpaid principal balance, not including all fees reflected in APR.
Interim Interest
Another term for prepaid or per diem interest collected from funding through the start of the first payment period.
Investment Property
Real estate owned primarily to produce rental income, appreciation, or other investment return rather than as a principal residence.
J Mortgage Terms
Joint Tenancy
A form of co-ownership that may include a right of survivorship, depending on state law and the deed.
Judgment Lien
A lien that may attach to property after a court judgment, depending on state law and recording.
Jumbo Loan
A mortgage amount above applicable conforming loan limits or otherwise outside standard conforming eligibility.
K Mortgage Terms
No glossary terms currently begin with this letter.
L Mortgage Terms
Land Contract
An arrangement in which a buyer makes payments to a seller while legal title remains with the seller until contract terms are satisfied.
Late Charge
A fee permitted by the loan documents when a payment is received after the stated grace period.
Leasehold Estate
The right to use and occupy land or property for a specified lease term rather than owning the land in fee simple.
Lender Credit
A credit from the lender applied toward eligible closing costs, typically associated with the selected interest-rate pricing.
Lender-Paid Mortgage Insurance (LPMI)
Mortgage insurance paid by the lender, generally reflected through the loan's rate or pricing rather than a separate monthly borrower charge.
Lender's Title Insurance
A title policy protecting the mortgage lender's lien interest against covered title defects.
Letter of Explanation
A borrower's written explanation of a credit, income, employment, asset, address, or other underwriting issue.
Liability
A financial obligation or debt owed by a borrower.
Lien
A legal claim or security interest against property to secure payment of a debt or obligation.
Lifetime Adjustment Cap
The maximum total amount an ARM rate may increase or decrease over the life of the loan from its initial rate, as stated in the documents.
Liquid Asset
An asset that can generally be converted to cash readily, subject to documentation and program rules.
Loan Estimate (LE)
A standardized three-page disclosure describing estimated loan terms, projected payments, and closing costs for most covered mortgage applications.
Loan-Level Price Adjustment (LLPA)
A conventional loan pricing adjustment based on risk and transaction features such as credit score, LTV, occupancy, or property type.
Loan Modification
A permanent change to one or more existing loan terms agreed to by the borrower and servicer, often as a loss-mitigation option.
Loan Officer
A mortgage professional who helps applicants understand options, collect information, and move a loan through origination.
Loan Origination
The process of taking, evaluating, processing, underwriting, and closing a new mortgage loan.
Loan Processor
A professional who organizes documentation, coordinates verifications, and prepares a mortgage file for underwriting and closing.
Loan Servicer
The company that collects payments, manages escrow, sends statements, and handles other account administration after closing.
Loan Term
The scheduled length of time over which a mortgage is to be repaid.
Loan-to-Value Ratio (LTV)
The mortgage amount divided by the property's value used for underwriting, expressed as a percentage.
Lock Extension
An approved extension of a mortgage rate-lock expiration date, which may involve a fee or pricing adjustment.
Lock Period
The number of days during which approved mortgage pricing is protected under a rate-lock agreement.
M Mortgage Terms
Manufactured Home
A factory-built home constructed to federal manufactured-housing standards and transported to its site.
Margin
A fixed percentage added to an ARM index to calculate the fully indexed interest rate, subject to caps and loan terms.
Market Value
The most probable price a property should bring in a competitive and open market under normal conditions.
Maturity Date
The date when the remaining mortgage balance becomes due under the note.
Merged Credit Report
A mortgage credit report combining information from multiple nationwide credit reporting companies.
Mortgage
A loan secured by real property or the security instrument creating that lien, depending on context and state law.
Mortgage-Backed Security (MBS)
An investment backed by pools of mortgage cash flows.
Mortgage Broker
A licensed intermediary who arranges mortgage financing with one or more lenders rather than funding the loan from its own balance sheet.
Mortgagee
The lender or holder of the mortgage interest.
Mortgage Fraud
A material misstatement, omission, or scheme intended to obtain mortgage financing or proceeds improperly.
Mortgage Insurance
Insurance protecting a lender or guarantor against specified losses when a borrower defaults; it does not insure the borrower against payment difficulty.
Mortgage Insurance Certificate
Evidence that mortgage insurance coverage has been issued for a loan.
Mortgage Insurance Premium
A charge paid for mortgage insurance coverage, such as FHA MIP or conventional PMI.
Mortgage Note
The borrower's written promise to repay the loan under stated terms.
Mortgage Recast
A recalculation of the payment based on a significant principal reduction while generally retaining the existing rate and remaining term, when the servicer permits it.
Mortgage Seasoning
A required or preferred period of ownership, payment history, or time since a prior transaction.
Mortgagor
The borrower who grants the mortgage or security interest in the property.
N Mortgage Terms
Negative Amortization
An increase in loan principal that occurs when scheduled payments are insufficient to cover accrued interest and the unpaid interest is added to the balance.
Net Tangible Benefit
A measurable benefit required for certain refinance transactions, evaluated under the applicable program or law.
Non-Occupant Co-Borrower
A co-borrower who shares repayment responsibility but will not occupy the property as a principal residence.
Non-QM Loan
A mortgage that does not meet the federal Qualified Mortgage definition but may still comply with applicable ability-to-repay requirements.
Non-Warrantable Condo
A condominium project that does not meet standard agency or investor eligibility requirements.
Note Rate
The interest rate stated in the mortgage note and used to calculate scheduled principal-and-interest payments.
Notice of Right to Cancel
A disclosure explaining a consumer's rescission rights for certain credit transactions secured by a principal dwelling.
O Mortgage Terms
Occupancy
How a borrower will use the property, commonly as a primary residence, second home, or investment property.
Occupancy Fraud
A material misrepresentation about how a borrower intends to use a financed property.
Option Fee
A fee used in some real estate contracts to secure a defined option period or contractual right, depending on local practice.
Origination Charge
A lender charge for originating, processing, or underwriting a mortgage, disclosed on the Loan Estimate and Closing Disclosure.
Owner-Occupied Property
A property used by the borrower as a principal residence.
Owner's Title Insurance
An optional or locally customary policy protecting the property owner against covered title defects, subject to policy terms.
P Mortgage Terms
Payment Shock
A significant increase between a borrower's current housing payment and proposed new housing payment considered during risk evaluation.
Payoff Statement
A statement showing the amount required to fully satisfy a loan through a specified date.
Per Diem Interest
Daily mortgage interest collected for the period between closing and the start of the first regular payment cycle.
Periodic Adjustment Cap
The maximum rate change allowed at each ARM adjustment after the initial adjustment.
Piggyback Loan
A second mortgage closed with a first mortgage, often used to supplement the down payment or financing structure.
PITI
Principal, interest, property taxes, and homeowners insurance, often used as a shorthand for core housing-payment components.
Planned Unit Development (PUD)
A property in a planned community where owners may hold title to their lot and share ownership or obligations for common areas.
Point
One percent of the loan amount; points may refer to discount points or certain origination charges depending on context.
Portfolio Loan
A mortgage retained by the lender or investor rather than sold under standard agency guidelines.
Power of Attorney
A legal document authorizing one person to act for another within stated limits; lender and title approval may be required for mortgage use.
Pre-Approval
A lender's conditional evaluation of a borrower's ability to qualify based on reviewed financial information, subject to property and final underwriting requirements.
Prepaid Interest
Interest collected at closing for the days between funding and the start of the regular payment period.
Prepaids
Amounts collected in advance at closing for items such as interest, insurance, taxes, and initial escrow funding.
Prepayment
Payment of mortgage principal earlier than required by the amortization schedule.
Prepayment Penalty
A charge for paying off some or all of a loan early when permitted and stated in the loan terms.
Pre-Qualification
A preliminary estimate of borrowing potential based largely on information supplied by the consumer and generally less comprehensive than pre-approval.
Primary Residence
The home a borrower occupies as their main residence.
Principal
The unpaid amount borrowed, excluding interest and most charges.
Principal and Interest (P&I)
The portion of a mortgage payment applied to loan principal and interest, excluding taxes, insurance, and other charges.
Private Mortgage Insurance (PMI)
Mortgage insurance generally required on certain conventional loans with higher loan-to-value ratios.
Processing Fee
A disclosed fee that may cover administrative work associated with processing a mortgage application.
Promissory Note
A written promise to repay debt; in mortgages, commonly called the mortgage note.
Property Condition Report
A report describing observed property condition, which is not necessarily a full appraisal or home inspection.
Property Tax
A tax imposed by a local government based on a property's taxable value and applicable rate.
Purchase Agreement
The contract setting the price, terms, contingencies, and obligations for a real estate sale.
Purchase-Money Mortgage
A mortgage used to finance acquisition of the property securing the loan.
Q Mortgage Terms
Qualified Mortgage (QM)
A category of mortgage meeting federal product-feature, underwriting, and points-and-fees standards that may receive specified legal protections.
Qualifying Income
Income that meets a loan program's standards for stability, documentation, likelihood of continuance, and calculation.
Quiet Title Action
A court proceeding used to resolve competing ownership claims or title defects.
R Mortgage Terms
Rate-and-Term Refinance
A refinance primarily used to change the interest rate, payment, or loan term without taking substantial cash out.
Rate Cap
A contractual limit on how much an adjustable interest rate may change.
Rate Lock
An agreement protecting specified mortgage pricing for a stated period, subject to conditions and changes in the application.
Rate Reset
The point when an adjustable-rate loan's rate changes according to its terms.
Rate Sheet
A lender's pricing schedule showing available rates, points, credits, and adjustments for different loan scenarios.
Real Estate Settlement Procedures Act (RESPA)
A federal law governing settlement-service disclosures, referral-fee restrictions, servicing practices, and escrow requirements for covered loans.
Realtor
A real estate professional who is a member of the National Association of REALTORS; not every licensed agent is a Realtor.
Recapture
A requirement to repay or recover a prior benefit, subsidy, or tax amount when stated conditions occur.
Recording Fee
A government fee for entering deeds, mortgages, releases, and other documents into public land records.
Refinance
Replacing an existing mortgage with a new loan, often to change the rate, term, payment, loan type, or equity position.
Reinstatement
Bringing a delinquent mortgage current by paying required past-due amounts and permitted costs.
Release of Liability
Approval removing a person from legal responsibility for a mortgage obligation.
Remaining Term
The time left before the mortgage's scheduled maturity.
Repayment Plan
A servicing arrangement that adds portions of past-due amounts to future scheduled payments for a limited period.
Rescission
The legal right to cancel certain refinance or home-equity transactions within a specified period; it generally does not apply to a home purchase mortgage.
Reserves
Verified assets remaining after closing, often measured as a number of months of the total housing payment.
Reverse Mortgage
A loan allowing eligible homeowners to convert part of their home equity into proceeds without required monthly principal-and-interest payments, while continuing to meet property-related obligations.
Revolving Debt
Credit that may be borrowed, repaid, and borrowed again up to a limit, such as a credit card or line of credit.
Right of First Refusal
A contractual right allowing a party to match or accept an offer before property is sold to someone else.
S Mortgage Terms
Sale-Leaseback
A transaction in which an owner sells property and then leases it from the buyer.
Satisfaction of Mortgage
A recorded document showing that a mortgage lien has been paid and released.
Seasoned Funds
Funds held or documented for a required period, reducing the need to source recent deposits under applicable rules.
Second Home
A property occupied by the borrower for part of the year that meets a program's second-home requirements and is not primarily a rental property.
Second Mortgage
A loan secured by a property in a lien position behind the first mortgage.
Self-Employed Borrower
A borrower whose qualifying income comes from ownership of a business or independent work and is evaluated under applicable documentation rules.
Seller Credit
An agreed seller contribution toward eligible buyer closing costs, subject to contract terms and loan-program limits.
Seller-Paid Points
Discount points or eligible financing costs paid by the seller for the buyer, subject to interested-party contribution rules.
Servicing Transfer
The transfer of responsibility for collecting and administering mortgage payments from one servicer to another.
Settlement
Another term for closing, when transaction documents and funds are finalized.
Short Sale
A property sale for less than the total debt secured by it, requiring approval from affected lienholders.
Simple Interest
Interest calculated only on the outstanding principal for the relevant period.
Single-Family Residence
A residential property designed primarily for one household, including certain detached and attached homes.
Special Assessment
A charge imposed by a government or association for a specific improvement, repair, or shared expense.
Subordinate Financing
Any loan or lien secured by the property that has lower priority than the first mortgage.
Subordination Agreement
An agreement changing lien priority so one lien remains behind another.
Survey
A professional measurement and depiction of property boundaries, improvements, easements, and possible encroachments.
T Mortgage Terms
Tax Lien
A legal claim against property for unpaid taxes.
Tax Proration
An allocation of property taxes between buyer and seller based on ownership periods and local closing practice.
Temporary Buydown
A financing arrangement that reduces the borrower's payment for an initial period through funds placed in a subsidy account.
Tenancy by the Entirety
A form of property ownership available to married couples in some states, with rights defined by state law.
Tenancy in Common
A form of co-ownership in which each owner holds a separate share that may be unequal and generally has no automatic right of survivorship.
Termite Inspection
An inspection for wood-destroying insects or organisms that may be required by contract, lender, program, or local practice.
Third-Party Origination
A mortgage originated through a party such as a broker or correspondent and funded or purchased by another lender.
Title
Legal ownership of real property and the rights associated with it.
Title Commitment
A title insurer's preliminary statement of the conditions under which it is willing to issue a title policy.
Title Insurance
Insurance protecting an owner or lender against covered losses from specified title defects existing before the policy date.
Title Search
A review of public records to identify ownership, liens, judgments, easements, and other matters affecting title.
Tolerance Cure
A lender credit provided when certain disclosed closing costs exceed permitted tolerance thresholds.
Total Interest Percentage (TIP)
The total amount of interest scheduled over the loan term expressed as a percentage of the loan amount, shown on applicable disclosures.
Trailing Documents
Documents completed or recorded after closing and later delivered to the lender or investor.
Transfer Tax
A state or local tax imposed on the transfer of real property, depending on jurisdiction.
Treasury Yield
The market yield on U.S. Treasury securities, commonly watched because longer-term yields can influence mortgage pricing.
Truth in Lending Act (TILA)
A federal law requiring standardized disclosure of credit costs and terms and establishing other consumer protections.
U Mortgage Terms
Underwriter
A professional who evaluates the borrower, property, documentation, and loan terms against program and investor requirements.
Underwriting
The lender's risk-review process used to determine whether a mortgage meets applicable eligibility requirements.
Underwriting Condition
A requirement that must be documented, explained, corrected, or completed before final loan approval or closing.
Underwriting Overlay
A lender requirement that is more restrictive than the minimum rule of the underlying loan program or investor.
Uniform Residential Appraisal Report (URAR)
A commonly used appraisal form for certain one-unit residential properties.
Uniform Residential Loan Application (URLA)
The standardized mortgage application form used to collect borrower, income, asset, liability, property, and loan information.
Unpaid Principal Balance (UPB)
The amount of loan principal still owed, excluding most accrued interest and fees.
Unrecorded Lien
A claim against property that has not been entered in public records but may still affect ownership or risk.
USDA Loan
A mortgage guaranteed or made through an eligible U.S. Department of Agriculture rural housing program.
V Mortgage Terms
VA Entitlement
The amount of VA loan guaranty available to an eligible borrower, as reflected through program rules and the Certificate of Eligibility.
VA Funding Fee
A program charge on many VA loans that helps support the VA home-loan benefit; exemptions apply for certain eligible borrowers.
VA Interest Rate Reduction Refinance Loan (IRRRL)
A streamlined refinance option for eligible existing VA loans, subject to VA requirements.
VA Loan
A mortgage made by an approved lender and partially guaranteed by the Department of Veterans Affairs for eligible borrowers.
Variable Rate
An interest rate that may change according to the loan agreement.
Verification of Deposit (VOD)
Documentation from a financial institution confirming account ownership, balances, and possibly history.
Verification of Employment (VOE)
Documentation confirming employment status, dates, position, and sometimes income.
Verification of Mortgage (VOM)
Documentation of a borrower's mortgage payment history and account status.
Vesting
The manner in which legal title to property is held.
W Mortgage Terms
Walk-Through
A buyer's final inspection shortly before closing to confirm property condition and agreed repairs.
Warehouse Line
A short-term credit facility mortgage lenders use to fund loans before selling them to investors.
Warrantable Condo
A condominium project meeting applicable agency or investor eligibility standards.
Warranty Deed
A deed containing specified assurances from the grantor regarding title, as defined by state law.
Wire Fraud
A crime in which someone uses deceptive electronic instructions to steal transaction funds; closing instructions should be independently verified.
X Mortgage Terms
No glossary terms currently begin with this letter.
Y Mortgage Terms
Yield Spread
The difference between yields on two debt instruments or benchmarks; mortgage-market spreads influence consumer pricing.
Z Mortgage Terms
Zero-Down Mortgage
A mortgage program that may finance 100% of an eligible property's value or purchase price, subject to program requirements.
Zoning
Local laws governing how land and buildings may be used and developed.
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