Florida Mortgage Glossary
This Florida mortgage glossary defines 250 essential terms — from amortization to VA entitlement — so you can walk into any lender conversation fully informed. Each term links to a full explanation with a Florida example. Written by our licensed team at Mortgage Capital (NMLS# 1859012).
A
Amortization
Amortization is the process of paying off a mortgage in equal monthly payments that gradually shift from mostly interest to mostly principal over the loan term.
Read full definition →Annual Percentage Rate (APR)
Annual Percentage Rate (APR) is the yearly cost of a mortgage expressed as a percentage that folds in the interest rate plus lender fees and points.
Read full definition →Appraisal
An appraisal is a licensed expert's estimate of a home's value. Lenders use it to set the loan amount.
Read full definition →Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage (ARM) is a home loan whose interest rate is fixed for an initial period, then adjusts periodically based on a market index plus a margin.
Read full definition →Assumable Mortgage
An assumable mortgage lets a buyer take over the seller's existing loan, inheriting its interest rate, balance, and remaining term.
Read full definition →Adjustment Period
The adjustment period is how often an adjustable-rate mortgage's rate can change after the initial fixed period ends.
Read full definition →Application Fee
An application fee is an upfront charge some lenders collect to start your loan. It may cover credit checks or processing. Not every lender charges one.
Read full definition →Appraisal Contingency
An appraisal contingency lets you renegotiate or back out if the home appraises low. It protects your deposit. It is a common contract clause.
Read full definition →Assets
Assets are the funds and property a borrower owns, such as bank balances, investments, and retirement accounts, used to qualify for a loan.
Read full definition →Automated Underwriting System
An automated underwriting system is software lenders use to review a loan. It checks your credit, income, and debt fast.
Read full definition →Acceleration Clause
An acceleration clause lets a lender demand the full balance if you break the terms. Missing payments is the usual trigger. It is standard in mortgages.
Read full definition →Adjustable Payment Mortgage
An adjustable payment mortgage lets your monthly payment change over time. Some versions offer payment choices. These loans can be complex.
Read full definition →Amortization Schedule
An amortization schedule is a table of every payment over your loan's life. It splits each payment into principal and interest. It shows how the balance falls.
Read full definition →Annual Percentage Yield
Annual percentage yield, or APY, is the real rate of return on a deposit or investment over a year, accounting for compound interest.
Read full definition →Appraised Value
Appraised value is a licensed appraiser's professional opinion of a home's market value, used by lenders to set the maximum loan amount.
Read full definition →Appreciation
Appreciation is the rise in a home's value over time. It builds your equity with no extra payment from you. It is a core way owning grows wealth.
Read full definition →As-Is Condition
As-is condition means the seller will not make repairs, and the buyer accepts the property in its current state.
Read full definition →Assignment of Mortgage
An assignment of mortgage is the legal transfer of a mortgage from one lender or servicer to another, recorded in public records.
Read full definition →Assumability
Assumability is a loan feature that lets a qualified buyer take over the seller's existing mortgage, including its interest rate and balance.
Read full definition →B
Balloon Payment
A balloon payment is a large lump-sum payoff due at the end of a short-term loan whose monthly payments were too small to retire the full balance.
Read full definition →Bank Statement Loan
A bank statement loan qualifies you on deposits, not tax returns. Lenders review 12 to 24 months of bank statements. They use the deposits to gauge income.
Read full definition →Bridge Loan
A bridge loan is short-term financing that lets you buy a new home before selling your current one, bridging the timing gap.
Read full definition →Buydown
A buydown is paying money upfront to lower a mortgage's interest rate, either permanently with discount points or temporarily for the first few years.
Read full definition →Bankruptcy
Bankruptcy is a legal process for discharging or reorganizing debts that creates a waiting period before a new mortgage.
Read full definition →Bona Fide Discount Points
Bona fide discount points are legitimate points that buy down the rate by a reasonable amount and are excluded from certain QM fee caps.
Read full definition →Balloon Mortgage
A balloon mortgage has low or interest-only payments for a set term, then requires one large lump-sum payment of the remaining balance at the end.
Read full definition →Blanket Mortgage
A blanket mortgage is a single loan that covers multiple properties under one financing arrangement.
Read full definition →Bridge Financing
Bridge financing is a short-term loan that lets a buyer purchase a new home before selling the current one, bridging the gap between the two transactions.
Read full definition →Buyer's Agent
A buyer's agent is a licensed real estate professional who represents the homebuyer's interests in a transaction.
Read full definition →C
Cash-Out Refinance
A cash-out refinance replaces your mortgage with a larger loan and gives you the difference in cash, tapping your home equity.
Read full definition →Closing Costs
Closing costs are the fees and prepaid expenses, beyond your down payment, that you pay to finalize a mortgage.
Read full definition →Closing Disclosure
A Closing Disclosure (CD) is a five-page federal form itemizing your final loan terms, rate, monthly payment, and all closing costs.
Read full definition →Co-Borrower
A co-borrower is a second person who applies for the mortgage with you, sharing ownership, income, and full responsibility for the debt.
Read full definition →Co-Signer
A co-signer guarantees repayment of a mortgage and lends their credit and income to the application, but typically takes no ownership stake.
Read full definition →Collateral
Collateral is the property pledged to secure a loan, which the lender can seize through foreclosure if the borrower defaults.
Read full definition →Conforming Loan
A conforming loan is a conventional mortgage that meets Fannie Mae and Freddie Mac guidelines, including the annual loan limit.
Read full definition →Construction Loan
A construction loan is short-term financing that funds the building of a home in stages, converting to or being replaced by a permanent mortgage when complete.
Read full definition →Conventional Loan
A conventional loan is a mortgage not insured by a government agency, typically requiring a 620+ credit score and 3–20% down.
Read full definition →Credit Report
A credit report is a detailed record of your borrowing history compiled by the credit bureaus, showing accounts, balances, payment history, and inquiries.
Read full definition →Credit Score
A credit score is a three-digit number, usually FICO, that summarizes your creditworthiness from 300 to 850.
Read full definition →Cap
A cap is a limit on how much an adjustable-rate mortgage's interest rate can increase, per adjustment or over the loan's life.
Read full definition →Cash Reserves
Cash reserves are liquid savings left after closing, measured in months of mortgage payments, that lenders may require.
Read full definition →Chain of Title
Chain of title is the chronological record of every owner of a property from the earliest record to the present.
Read full definition →Closing
Closing is the final step of a real estate transaction, where ownership transfers and the loan funds.
Read full definition →Compensating Factors
Compensating factors are strengths that offset a weak spot in your file. Big savings or a long job history count. They help borderline files get approved.
Read full definition →Conditional Approval
A conditional approval means the lender will fund your loan once you meet a short list of items. It is a strong sign.
Read full definition →Conforming Loan Limit
The conforming loan limit is the maximum loan amount Fannie Mae and Freddie Mac will buy, set annually and varying by county.
Read full definition →Conventional 97
Conventional 97 is a Fannie Mae and Freddie Mac program allowing a 3% down payment on a primary residence.
Read full definition →Cash to Close
Cash to close is the total amount a buyer must bring to the closing table, including the down payment, closing costs, and prepaids, minus any credits and earnest money.
Read full definition →Certificate of Eligibility
A certificate of eligibility proves you qualify for a VA loan. It is known as the COE. It shows your service meets the VA rules.
Read full definition →Certificate of Occupancy
A certificate of occupancy confirms a home is safe and legal to live in. New construction needs one before move-in. The city issues it.
Read full definition →Chattel
Chattel is movable personal property, as opposed to real estate. A chattel loan finances movable items like a manufactured home not attached to owned land.
Read full definition →Closing Agent
A closing agent is the neutral party, often a title company or attorney, who manages the closing, handles funds, and ensures documents are signed and recorded.
Read full definition →Cloud on Title
A cloud on title is any claim, lien, or defect that casts doubt on a property's clear ownership.
Read full definition →Commitment Letter
A commitment letter is a lender's formal written promise to fund a mortgage, issued after underwriting approves the loan.
Read full definition →Comparable Sales
Comparable sales, or comps, are recent sales of similar nearby homes that appraisers and agents use to estimate a property's market value.
Read full definition →Construction-to-Permanent Loan
A construction-to-permanent loan finances both the building of a new home and the long-term mortgage in a single loan with one closing.
Read full definition →Contingency
A contingency is a condition in a purchase contract that must be met for the sale to proceed, protecting the buyer or seller if it is not.
Read full definition →Conveyance
Conveyance is the legal transfer of property from one owner to another. It happens through a deed at closing. It makes the ownership change official and final.
Read full definition →Cost Approach
The cost approach is an appraisal method that estimates value as the cost to rebuild the structure new, minus depreciation, plus the land value.
Read full definition →Counteroffer
A counteroffer is a response to an offer that changes one or more terms, rejecting the original while proposing new conditions.
Read full definition →Covenant
A covenant is a binding promise written into a deed or contract, such as a restriction on how a property may be used.
Read full definition →Credit Bureau
A credit bureau is a company that collects and maintains consumer credit data, with the three major ones being Equifax, Experian, and TransUnion.
Read full definition →D
Debt Consolidation
Debt consolidation rolls several debts into one new loan. The goal is a lower rate or a single, simpler payment.
Read full definition →Debt-to-Income Ratio (DTI)
Your debt-to-income ratio compares monthly debt to gross income. It is often shortened to DTI. Lenders use it to judge how much you can afford.
Read full definition →Deed
A deed is the legal document that transfers ownership of real property from a seller to a buyer.
Read full definition →Deed of Trust
A deed of trust is a security instrument used in some states that involves a trustee holding title until the loan is repaid.
Read full definition →Default
Default is when a borrower fails to meet the loan terms. Missing payments is the most common cause. It can trigger serious action.
Read full definition →Delinquency
Delinquency is the state of being past due on a loan payment, beginning the day after a missed due date.
Read full definition →Discount Points
Discount points are upfront fees paid to the lender to permanently lower your mortgage interest rate, with one point costing 1% of the loan amount.
Read full definition →Down Payment
A down payment is the upfront cash you put toward a home purchase, with the rest financed by your mortgage.
Read full definition →Down Payment Assistance
Down payment assistance (DPA) is a grant or second loan that helps cover the upfront cash a homebuyer needs to close.
Read full definition →Debt Service Coverage Ratio (DSCR)
Debt service coverage ratio (DSCR) compares a rental property's income to its debt payments, qualifying investors on the property rather than personal income.
Read full definition →Deferred Student Loans
Deferred student loans are education debts not currently in repayment, which lenders still factor into your DTI.
Read full definition →Density
Density is how many homes or units are allowed on a piece of land. Local zoning sets the limit. It shapes what can be built.
Read full definition →Down Payment Gift Letter
A down payment gift letter is a signed statement confirming that funds given toward a purchase are a gift with no repayment expected.
Read full definition →Days on Market
Days on market, or DOM, is the number of days a listing has been active before going under contract.
Read full definition →Debt Ratio
A debt ratio, commonly the debt-to-income ratio, measures how much of your gross monthly income goes toward debt payments.
Read full definition →Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is an agreement where a struggling borrower voluntarily signs the home over to the lender to avoid formal foreclosure.
Read full definition →Depreciation
Depreciation is a drop in a property's value over time or from wear. For rentals, it is also a yearly tax deduction. It is the opposite of appreciation.
Read full definition →Documentary Stamp Tax
Documentary stamp tax is a Florida transfer tax charged on deeds and on new mortgages when property changes hands or is financed.
Read full definition →Due-on-Sale Clause
A due-on-sale clause lets a lender demand full repayment of a mortgage if the property is sold or transferred without the lender's consent.
Read full definition →E
Earnest Money
Earnest money is a good-faith deposit a buyer makes when signing a purchase contract, held in escrow and applied toward closing.
Read full definition →Equity
Equity is the portion of your home's value that you actually own, calculated as market value minus the outstanding loan balance.
Read full definition →Escrow
Escrow is a neutral third-party arrangement that holds funds or documents until the conditions of a transaction are met.
Read full definition →Escrow Account
An escrow account is an account your loan servicer maintains to collect and pay your property taxes and homeowners insurance.
Read full definition →Encumbrance
An encumbrance is any claim or restriction on a property. A lien, easement, or unpaid tax can be one. It can limit how you use or sell the home.
Read full definition →Equal Credit Opportunity Act
The Equal Credit Opportunity Act is a federal law. It is often called ECOA. It bans lenders from unfair bias when you apply.
Read full definition →Escrow Waiver
An escrow waiver lets a qualified borrower pay property taxes and insurance directly instead of through a lender-managed escrow account.
Read full definition →Effective Gross Income
Effective gross income is a property's total income minus expected vacancy and losses. Investors use it to judge a rental. It gives a truer picture than full rent.
Read full definition →Eminent Domain
Eminent domain is the government's power to take private land for public use. It must pay the owner fair value. It is used only for public need.
Read full definition →Escalation Clause
An escalation clause is a provision in an offer that automatically raises the buyer's price above competing offers, up to a stated maximum.
Read full definition →Escrow Analysis
An escrow analysis is the lender's annual review of your escrow account to make sure it holds enough to cover upcoming taxes and insurance.
Read full definition →F
FHA Loan
An FHA loan is a mortgage insured by the Federal Housing Administration, built for borrowers with lower credit scores or smaller down payments.
Read full definition →Fixed-Rate Mortgage
A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the entire loan term.
Read full definition →Forbearance
Forbearance is a temporary pause or cut in your mortgage payments. Lenders grant it during a hardship.
Read full definition →Foreclosure
Foreclosure is the legal process a lender uses to take back a home. It happens when the borrower stops making mortgage payments.
Read full definition →Fully Amortized Loan
A fully amortized loan is one whose scheduled payments completely pay off the principal and interest by the end of the term, leaving no balloon.
Read full definition →Funding Fee
A funding fee is a one-time charge on VA and USDA loans that helps sustain the programs in place of monthly mortgage insurance.
Read full definition →Fannie Mae
Fannie Mae is a government-sponsored enterprise that buys conforming mortgages from lenders, providing liquidity to the housing market.
Read full definition →Federal Housing Administration
The Federal Housing Administration, or FHA, insures loans made by approved lenders. That insurance lets them offer low down payments.
Read full definition →Fixed Period
The fixed period is the initial span of an adjustable-rate mortgage during which the rate stays constant before adjustments begin.
Read full definition →Float-Down
A float-down is an option that lets a borrower capture a lower rate if market rates fall during an existing rate lock.
Read full definition →Freddie Mac
Freddie Mac is a government-sponsored enterprise that, like Fannie Mae, buys conforming loans to keep mortgage credit flowing.
Read full definition →Front-End Ratio
The front-end ratio is the share of gross monthly income that goes to housing costs alone, including PITI.
Read full definition →Fair Market Value
Fair market value is the price a willing buyer and willing seller would agree on, with neither under pressure and both informed.
Read full definition →Federal Reserve
The Federal Reserve is the U.S. central bank, and its monetary policy strongly influences the interest-rate environment in which mortgage rates move.
Read full definition →FICO Score
A FICO score is the most widely used credit score in mortgage lending, ranging from 300 to 850 and based on your credit history.
Read full definition →First Mortgage
A first mortgage is the primary loan on a property, holding the senior lien position ahead of any second mortgage or home equity line.
Read full definition →Flood Certification
A flood certification checks whether a home sits in a federal flood zone. Lenders use it to decide if flood insurance is needed. It is a small, standard fee.
Read full definition →Flood Zone
A flood zone is a FEMA-mapped area indicating a property's flood risk, which affects insurance requirements and cost.
Read full definition →Funding
Funding is the step where the lender disburses the loan money, completing the purchase after closing documents are signed.
Read full definition →G
Gift Funds
Gift funds are money a family member gives toward your purchase. They help cover the down payment or closing costs. The money is a gift, not a loan.
Read full definition →Good Faith Estimate
A Good Faith Estimate (GFE) was the older disclosure of estimated loan terms and closing costs, replaced in 2015 by the Loan Estimate.
Read full definition →Gross Monthly Income
Gross monthly income is a borrower's total monthly earnings before taxes and deductions, the figure lenders use for qualifying ratios.
Read full definition →Ginnie Mae
Ginnie Mae is a government agency that guarantees mortgage-backed securities composed of government-insured loans like FHA, VA, and USDA.
Read full definition →Gift of Equity
A gift of equity occurs when a seller, usually a family member, sells a home below market value and counts the difference as the buyer's down payment.
Read full definition →Gross Income
Gross income is your total earnings before taxes and deductions. It is the figure lenders use to calculate qualifying ratios.
Read full definition →H
Hard Money Loan
A hard money loan is a short-term loan backed by the property, not your income. Private lenders fund it fast. Investors use it for quick deals.
Read full definition →Hazard Insurance
Hazard insurance is the part of a home policy that pays for damage to the home itself. It covers fire, wind, hail, and lightning.
Read full definition →HELOC
A HELOC, or home equity line of credit, is a revolving credit line secured by your home's equity that works much like a credit card.
Read full definition →Home Equity Loan
A home equity loan is a second mortgage that gives you a lump sum against your equity at a fixed rate and fixed monthly payment.
Read full definition →Home Inspection
A home inspection is a professional examination of a property's condition, covering structure, systems, and major components.
Read full definition →Homeowners Association (HOA)
A homeowners association, or HOA, runs a community and sets its rules. It collects dues to maintain shared spaces.
Read full definition →Homeowners Insurance
Homeowners insurance protects your home and your belongings. It also covers you if someone is hurt on your property.
Read full definition →Home Affordable Refinance Program
The Home Affordable Refinance Program, or HARP, helped underwater owners refinance. It ran after the 2008 crash and has since ended.
Read full definition →Housing Ratio
The housing ratio is the percentage of gross monthly income consumed by the total housing payment, the same as the front-end ratio.
Read full definition →Hybrid ARM
A hybrid ARM is an adjustable-rate mortgage that combines an initial fixed-rate period with later adjustable periods.
Read full definition →Hard Inquiry
A hard inquiry is a credit check triggered when you apply for new credit, which can temporarily lower your score by a few points.
Read full definition →Home Equity
Home equity is the portion of your home you actually own, equal to its market value minus what you still owe on the mortgage.
Read full definition →Home Warranty
A home warranty is a service contract that covers repair or replacement of major systems and appliances for a set period, separate from homeowners insurance.
Read full definition →Homestead Exemption
Florida's homestead exemption lowers the taxable value of your main home. That cuts your yearly property tax bill. It applies to your primary residence.
Read full definition →Housing Expense Ratio
The housing expense ratio, or front-end ratio, compares your total monthly housing payment to your gross monthly income.
Read full definition →HUD-1 Settlement Statement
The HUD-1 Settlement Statement was the itemized list of all closing charges, largely replaced by the Closing Disclosure for most consumer mortgages in 2015.
Read full definition →I
Impound Account
An impound account is another name for an escrow account, where the servicer collects and pays your taxes and insurance.
Read full definition →Index
An index is a published benchmark interest rate that an adjustable-rate mortgage uses to set its rate after the fixed period.
Read full definition →Interest Rate
An interest rate is the percentage a lender charges annually for borrowing the mortgage principal, separate from fees.
Read full definition →Interest-Only Loan
An interest-only loan lets the borrower pay only the interest for an initial period, with no principal reduction during that time.
Read full definition →ITIN Loan
An ITIN loan is a mortgage for buyers who use an Individual Taxpayer Identification Number. It works for people without a Social Security number.
Read full definition →Initial Escrow Deposit
The initial escrow deposit is the upfront amount collected at closing to fund your escrow account for taxes and insurance.
Read full definition →Inquiry
An inquiry is a record of a lender or creditor checking your credit, which can be a hard or soft inquiry.
Read full definition →Investment Property
An investment property is real estate bought to generate rental income or appreciation rather than to live in.
Read full definition →Income Approach
The income approach is an appraisal method that values a property based on the rental income it generates.
Read full definition →Index Rate
An index rate is the benchmark interest rate that an adjustable-rate mortgage is tied to, determining how the rate moves after the fixed period.
Read full definition →Interest-Only Period
An interest-only period is a stretch at the start of a loan when the borrower pays only interest, with no principal, keeping payments lower.
Read full definition →J
Joint Tenancy
Joint tenancy is a form of co-ownership in which two or more owners hold equal shares with a right of survivorship.
Read full definition →Judgment Lien
A judgment lien is a court-ordered claim against a debtor's property arising from an unpaid legal judgment.
Read full definition →Jumbo Loan
A jumbo loan is a mortgage that exceeds the conforming loan limit and therefore can't be sold to Fannie Mae or Freddie Mac.
Read full definition →L
Lien
A lien is a legal claim against a property that secures a debt and must be satisfied before clear title can transfer.
Read full definition →Loan Estimate
A Loan Estimate (LE) is a standardized three-page disclosure lenders must provide within three business days of application.
Read full definition →Loan Officer
A loan officer is a licensed professional who guides borrowers through the mortgage application, qualification, and closing process.
Read full definition →Loan-to-Value Ratio (LTV)
Loan-to-value ratio (LTV) is the loan amount divided by the property's appraised value, expressed as a percentage.
Read full definition →Lock Period
A lock period is the window during which a lender guarantees a quoted interest rate while your loan is processed.
Read full definition →Loan Modification
A loan modification permanently changes the terms of an existing mortgage to make payments affordable for a struggling borrower.
Read full definition →Loan Servicing
Loan servicing is the ongoing management of your mortgage after closing. It covers payments, escrow, and statements. A company called a servicer handles it.
Read full definition →Lock Extension
A lock extension prolongs an existing rate lock when the loan can't close before the lock expires, usually for a fee.
Read full definition →Lease Option
A lease option is an agreement that lets a tenant rent a home with the right to buy it later at a set price, often with part of the rent credited toward the purchase.
Read full definition →Legal Description
A legal description precisely identifies a property in official records. It is more exact than a street address. It pins down the exact land being sold.
Read full definition →Lender Credit
A lender credit is money the lender contributes toward the borrower's closing costs, usually in exchange for a slightly higher interest rate.
Read full definition →Liabilities
Liabilities are your debts and monthly obligations. Credit cards, car loans, and student loans all count. Lenders add them up to size your loan.
Read full definition →Lifetime Cap
A lifetime cap is the maximum amount an adjustable-rate mortgage's interest rate can rise over the entire life of the loan.
Read full definition →Loan Commitment
A loan commitment is the lender's binding agreement to provide financing once stated conditions are met, the strongest form of mortgage approval before closing.
Read full definition →Loan Term
A loan term is the length of time over which a mortgage is repaid, most commonly 30 or 15 years.
Read full definition →Lock-In Period
A lock-in period is the window during which a lender guarantees a quoted interest rate while the loan is processed.
Read full definition →M
Manufactured Home Loan
A manufactured home loan pays for a factory-built home on a permanent foundation. These loans have their own rules.
Read full definition →Margin
A margin is the fixed percentage a lender adds to the index to set an adjustable-rate mortgage's fully indexed rate.
Read full definition →Mortgage
A mortgage is a loan used to buy or refinance a home. The home itself secures the loan.
Read full definition →Mortgage Broker
A mortgage broker is a licensed intermediary who shops multiple wholesale lenders to find a borrower the best rate and program.
Read full definition →Mortgage Insurance
Mortgage insurance protects the lender against loss if the borrower defaults, and is required on low-down-payment loans.
Read full definition →Mortgage Note
A mortgage note is the legal document in which the borrower promises to repay the loan and sets out the terms.
Read full definition →Mortgagee
A mortgagee is the lender in a mortgage transaction, the party that lends money and holds the lien on the property.
Read full definition →Mortgagor
A mortgagor is the borrower in a mortgage transaction, the party that pledges the property as collateral for the loan.
Read full definition →Manual Underwriting
Manual underwriting is a hands-on loan review by a person. It is used when software cannot approve the file. A real underwriter reads your full story.
Read full definition →Maximum Loan Amount
The maximum loan amount is the largest sum a borrower can borrow under a given program, set by limits, income, and property value.
Read full definition →Mello-Roos
Mello-Roos is a special tax used mainly in California to fund infrastructure. It is tied to certain newer developments. It adds to the tax bill.
Read full definition →Mortgage Banker
A mortgage banker is a lender that funds loans with its own money, then often sells them on the secondary market.
Read full definition →Mortgage Lien
A mortgage lien is the legal claim a lender places on a property as security for the mortgage loan.
Read full definition →Maturity Date
The maturity date is the day a mortgage is scheduled to be fully paid off, the end of the loan term.
Read full definition →Mechanic's Lien
A mechanic's lien is a claim a contractor or supplier can place on a property for unpaid work or materials.
Read full definition →Mortgage Point
A mortgage point, or discount point, is an upfront fee equal to 1% of the loan amount that a borrower pays to lower the interest rate.
Read full definition →N
Negative Amortization
Negative amortization is when your payment does not cover all the interest owed. The unpaid interest is added to your balance.
Read full definition →Non-QM Loan
A non-QM loan is a mortgage that falls outside the Consumer Financial Protection Bureau's Qualified Mortgage standards, often using alternative income documentation.
Read full definition →Note Rate
The note rate is the actual interest rate stated on your mortgage note, used to calculate your monthly payment.
Read full definition →Net Tangible Benefit
Net tangible benefit is the requirement that a refinance, especially a streamline, must meaningfully help the borrower.
Read full definition →Non-Occupant Co-Borrower
A non-occupant co-borrower is someone who joins the loan to help qualify but won't live in the home.
Read full definition →O
Origination Fee
An origination fee is a lender charge for processing and underwriting a mortgage, usually 0.5%–1% of the loan amount.
Read full definition →Owner-Occupied
Owner-occupied is a property classification meaning the borrower will live in the home as their primary residence.
Read full definition →Occupancy
Occupancy is how you plan to use a home. It can be your primary residence, a second home, or an investment. It shapes your loan terms.
Read full definition →Owner Financing
Owner financing is a sale in which the seller extends credit to the buyer directly, instead of a bank or mortgage lender.
Read full definition →P
Par Rate
A par rate is the interest rate a borrower can get with no discount points paid and no lender credit received.
Read full definition →Piggyback Loan
A piggyback loan pairs a first mortgage with a simultaneous second mortgage to avoid PMI or stay under the jumbo limit.
Read full definition →PITI
PITI stands for principal, interest, taxes, and insurance. Together they make up your full monthly payment. Lenders use it to test affordability.
Read full definition →Points
Points are upfront fees paid to the lender, with discount points lowering the rate and origination points covering loan costs.
Read full definition →Portfolio Loan
A portfolio loan is a mortgage the lender keeps on its own books instead of selling to Fannie Mae or Freddie Mac.
Read full definition →Pre-Approval
A pre-approval is a lender's documented assessment of how much you can borrow, based on verified income, assets, and credit.
Read full definition →Pre-Qualification
A pre-qualification is a quick, early estimate of what you might borrow. It uses details you share, with no full check.
Read full definition →Prepayment Penalty
A prepayment penalty is a fee some loans charge if you pay off or refinance the mortgage early, within a set period.
Read full definition →Principal
Principal is the amount you originally borrow on a mortgage, and the remaining balance you still owe over time.
Read full definition →Private Mortgage Insurance (PMI)
Private mortgage insurance (PMI) is insurance conventional lenders require when your down payment is under 20%, protecting the lender against default.
Read full definition →Promissory Note
A promissory note is the written promise to repay a loan, spelling out the amount, rate, payment schedule, and terms.
Read full definition →Property Tax
Property tax is an annual tax levied by local governments based on a property's assessed value, paid through escrow on most mortgages.
Read full definition →Partial Claim
A partial claim is an FHA loss-mitigation option that moves past-due mortgage payments into a separate, interest-free second loan you repay only when you sell, refinance, or pay off the first mortgage.
Read full definition →Per Diem Interest
Per-diem interest is the daily interest charged on a mortgage from the day funds are disbursed at closing through the end of that month.
Read full definition →Power of Attorney
A power of attorney is a legal document that authorizes someone to sign mortgage and closing paperwork on another person's behalf.
Read full definition →Prepaid Items
Prepaid items are upfront charges for expenses like homeowners insurance, property taxes, and per-diem interest that a lender collects at closing to fund the escrow account and cover interest before the first payment.
Read full definition →Primary Residence
A primary residence is the home you live in most of the year. It qualifies for the lowest mortgage rates, smallest down payments, and tax benefits like the homestead exemption.
Read full definition →Q
Qualified Mortgage
A Qualified Mortgage (QM) is a loan meeting CFPB standards designed to ensure the borrower can repay, giving lenders legal protection.
Read full definition →Quitclaim Deed
A quitclaim deed transfers whatever interest the grantor holds in a property without any warranty of clear title.
Read full definition →Qualifying Ratios
Qualifying ratios are the two debt-to-income calculations, front-end and back-end, that lenders use to decide how much mortgage you can afford.
Read full definition →R
Rate Lock
A rate lock is a lender's commitment to hold a quoted interest rate for a set number of days while your loan is processed.
Read full definition →Rate-and-Term Refinance
A rate-and-term refinance replaces your existing mortgage to change the rate, the term, or both, without taking cash out.
Read full definition →Recording Fee
A recording fee is a charge by the county clerk to officially enter the deed and mortgage into the public record.
Read full definition →Refinance
A refinance replaces your current mortgage with a new loan, usually to lower the rate, change the term, or access equity.
Read full definition →Renovation Loan
A renovation loan finances both the purchase (or refinance) and the cost of repairs or improvements in a single mortgage.
Read full definition →Reserves
Reserves are the savings you keep after your down payment and closing costs. Lenders measure them in months of payments. They act as a safety cushion.
Read full definition →Reverse Mortgage
A reverse mortgage lets homeowners 62 and older convert equity into cash without monthly mortgage payments, with the balance due when they leave the home.
Read full definition →Rural Development Loan
A Rural Development loan is the USDA's zero-down mortgage for eligible rural and suburban properties and moderate-income buyers.
Read full definition →Recast
A mortgage recast re-amortizes your loan after you make a large lump-sum payment toward principal, lowering the monthly payment while keeping the same rate and term.
Read full definition →Residual Income
Residual income is the money left over each month after a borrower pays the mortgage, debts, taxes, and basic living expenses. It is a key qualifying factor for VA loans.
Read full definition →Right of Rescission
The right of rescission is a federal three-day window that lets borrowers cancel certain refinances and home equity loans on their primary residence without penalty.
Read full definition →S
Second Mortgage
A second mortgage is a loan secured by the same home as the first mortgage but in a subordinate lien position.
Read full definition →Self-Employed Borrower
A self-employed borrower owns a business or works as an independent contractor and documents income differently than a W-2 employee.
Read full definition →Seller Concession
A seller concession is money the seller credits toward the buyer's closing costs as part of the purchase negotiation.
Read full definition →Servicer
A servicer is the company that collects your mortgage payments, manages escrow, and handles customer service after the loan closes.
Read full definition →Settlement Statement
A settlement statement is an itemized accounting of all the funds changing hands at closing for both buyer and seller.
Read full definition →Short Sale
A short sale is a sale in which the lender agrees to accept less than the mortgage balance to release the lien.
Read full definition →Streamline Refinance
A streamline refinance is a simplified refinance for existing government loans, with reduced documentation and often no new appraisal.
Read full definition →Subordinate Financing
Subordinate financing is any loan that ranks behind your first mortgage. A second mortgage is one example. It gets paid after the first loan.
Read full definition →Survey
A survey is a map of a property's exact boundaries and structures. It shows where the land begins and ends. It confirms what you are buying.
Read full definition →Subprime
Subprime refers to mortgages offered to borrowers with weaker credit, usually carrying higher interest rates and fees to offset the added lending risk.
Read full definition →T
Tax Lien
A tax lien is a government claim against a property for unpaid property taxes, taking priority over most other liens.
Read full definition →Temporary Buydown
A temporary buydown lowers the interest rate for the first one to three years of a loan using funds placed in an escrow at closing.
Read full definition →Title
Title is the legal right to own and use a property. A clear title means no one else has an unresolved claim. It confirms you truly own the home.
Read full definition →Title Insurance
Title insurance is a one-time-premium policy that protects against losses from title defects discovered after purchase.
Read full definition →Title Search
A title search is an examination of public records to verify legal ownership and uncover liens, judgments, or claims against a property.
Read full definition →Tradeline
A tradeline is any account on your credit report, such as a credit card, auto loan, or mortgage, with its history and balance.
Read full definition →TILA-RESPA Integrated Disclosure (TRID)
The TILA-RESPA Integrated Disclosure, or TRID, is the rule behind the loan estimate and closing disclosure. It makes loan costs clear.
Read full definition →Total Loan Amount
The total loan amount is the base loan plus any financed fees, such as upfront mortgage insurance or a VA funding fee, rolled into the balance.
Read full definition →Truth in Lending Act
The Truth in Lending Act is a federal law that requires lenders to disclose the full cost of credit, including the APR, finance charges, and total payments, so borrowers can compare offers.
Read full definition →Two-Step Mortgage
A two-step mortgage has one rate for the early years. Then it adjusts once to a new rate for the rest of the term. It changes just one time.
Read full definition →U
Underwriting
Underwriting is how a lender reviews your loan. It checks your credit, income, assets, and the home to decide on approval.
Read full definition →Uniform Residential Loan Application (1003)
The Uniform Residential Loan Application is the standard mortgage form. Most people just call it the 1003. Every lender uses the same one.
Read full definition →USDA Loan
A USDA loan is a zero-down mortgage backed by the U.S. Department of Agriculture for eligible rural and suburban properties.
Read full definition →Underwater Mortgage
An underwater mortgage is one where you owe more than the home is worth. It happens when values fall below the loan. It makes selling harder.
Read full definition →V
VA Loan
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs for eligible veterans, service members, and surviving spouses.
Read full definition →Verification of Employment
A verification of employment confirms where you work and what you earn. Lenders contact your employer to check. It backs up your stated income.
Read full definition →Verification of Deposit
A verification of deposit confirms the money in your bank accounts. Lenders send it to your bank. It checks your balances directly.
Read full definition →W
Warranty Deed
A warranty deed transfers ownership with a guarantee that the seller holds clear title and will defend it against claims.
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