Mortgage documents are full of acronyms and industry shorthand. Every term below is written the way a licensed loan officer would explain it in conversation — no jargon, no hedging. Jump straight to a letter or scan through top-to-bottom.
A
- Adjustable-Rate Mortgage (ARM)
- A mortgage with an interest rate that can change after an initial fixed period, which may raise or lower the monthly payment.
- Amortization
- Paying down a loan over time through scheduled payments that reduce the balance.
- APR
- Annual Percentage Rate — the yearly cost of borrowing, expressed as a percentage, that includes interest and certain loan fees.
- Appraisal
- An independent, licensed opinion of a home's market value used by the lender to confirm the property supports the loan amount.
B
- Balloon Loan
- A loan with a large final payment due at the end of the term after smaller regular payments.
C
- Closing Disclosure
- A federally required form showing final loan terms, monthly payments, and closing costs — delivered at least three business days before closing.
- Closing Costs
- Fees paid at closing, such as lender, appraisal, title, recording, and Florida documentary-stamp fees.
- Conventional Loan
- A mortgage not insured or guaranteed by a government agency (FHA, VA, USDA). Typically sold to Fannie Mae or Freddie Mac.
- Credit Score
- A three-digit number lenders use to estimate how likely you are to repay debt on time. Mortgage lenders use FICO scoring models.
D
- Debt-to-Income Ratio (DTI)
- Your total monthly debt payments (including the new mortgage) divided by your gross monthly income, shown as a percentage.
- Down Payment
- The upfront cash you pay toward the purchase price of a home. Ranges from 0% (VA, USDA) to 20%+ depending on program.
E
- Equity
- The portion of the home you own outright — the home's market value minus what you still owe on mortgages or liens.
- Escrow
- An account used by the lender or servicer to hold funds and pay property taxes and homeowners insurance on your behalf when due.
F
- FHA Loan
- A mortgage insured by the Federal Housing Administration. Allows down payments as low as 3.5% and credit scores as low as 580.
- Fixed-Rate Mortgage
- A mortgage with an interest rate that stays the same for the entire life of the loan.
- Forbearance
- Temporary lender-approved permission to pause or reduce mortgage payments, with the paused amount repaid later.
- Foreclosure
- The legal process a lender uses to take back a property after the borrower misses payments.
H
- HELOC
- Home Equity Line of Credit — a revolving line of credit secured by your home equity, similar to a credit card.
- Home Inspection
- A buyer-ordered professional review of a home's physical condition, separate from the lender's appraisal.
I
- Interest Rate
- The cost of borrowing money, shown as a percentage of the loan amount and applied to the outstanding balance.
J
- Jumbo Loan
- A mortgage larger than the annual conforming loan limit set by the Federal Housing Finance Agency for the county.
L
- Loan Estimate
- A three-page form showing estimated interest rate, monthly payment, and total closing costs — delivered within 3 business days of application.
- Loan Modification
- A permanent change to mortgage terms (rate, term, or balance) intended to make payments more manageable for a struggling borrower.
- Loan-to-Value Ratio (LTV)
- The mortgage amount divided by the appraised value of the property, shown as a percentage.
M
- Mortgage
- A loan agreement that lets you buy or refinance a home, using the property itself as security for the debt.
- Mortgage Insurance
- Insurance that protects the lender if the borrower defaults. Required on most low-down-payment loans.
P
- PMI
- Private Mortgage Insurance — required on most conventional loans with less than 20% down. Cancellable once you reach 20% equity.
- Principal
- The amount the borrower must repay, not including interest.
- Property Taxes
- Local taxes based on assessed property value, typically collected monthly via escrow and paid to the county.
R
- Refinance
- Replacing an existing mortgage with a new loan — often to lower the rate, change the term, or pull equity out as cash.
- Reverse Mortgage
- A loan for eligible homeowners age 62+ that converts home equity into cash without a required monthly mortgage payment.
S
- Servicer
- The company that manages mortgage billing, payment processing, escrow, and borrower support after closing — may differ from the originator.
- Short Sale
- Selling a home for less than the remaining mortgage balance, with lender approval.
T
- Title Insurance
- Insurance that protects the lender and (optionally) the buyer against certain ownership or title problems with the property.
U
- USDA Loan
- A mortgage program for eligible rural and suburban homebuyers, often with no down payment and competitive rates.
V
- VA Loan
- A mortgage program for eligible active-duty servicemembers, veterans, and surviving spouses. No down payment and no PMI required.