Empowering our neighbors with mortgage knowledge
We provide simplified explanations and informative videos for the most common mortgage terms, making it easier for you to stay informed and make confident decisions.
Amortization
The process of gradually paying off a mortgage loan through regular payments over a specific period.
Adjustable-Rate Mortgage (ARM)
A mortgage loan with an interest rate that can change periodically based on market conditions.
Collateral
Property or assets that are pledged as security for a loan.
Credit Score
A numerical representation of an individual’s creditworthiness, based on their credit history and financial behavior.
Down Payment
The initial payment made by a buyer towards the purchase of a home, typically a percentage of the total purchase price.
Escrow
An account where funds are held by a neutral third party until all conditions of a real estate transaction are met.
Foreclosure
The legal process through which a lender repossesses and sells a property when the borrower fails to make mortgage payments.
Interest Rate
The percentage charged by the lender for borrowing funds, applied to the outstanding loan balance.
Mortgage Insurance Premium (MIP)
MIP is a type of insurance that is required on all FHA loans regardless of how much equity is in the property. MIP is a fee charged to the borrower by FHA to insure the loan against default. It is paid upfront at the time of closing and is also included in the monthly mortgage payment. If a borrower puts at least 10% down, the MIP will be removed after 11 years. If a borrower puts less than 10% down, the MIP is required for the life of the loan.
Points
Points are fees paid by the borrower to the lender at closing in exchange for a lower interest rate on the loan. They are expressed as a percentage of the loan amount, with one point equal to 1% of the loan amount.
Principal
The original amount borrowed, excluding interest and other charges.
Jumbo Loan
Financing for non-owner occupied properties
Personalization for unique situations
Title Insurance
VA Loan
FHA Loan
Annual Percentage Rate (APR)
The total cost of borrowing, including interest and certain fees, expressed as an annual percentage rate.
Closing Costs
The fees and expenses associated with finalizing a mortgage loan, including appraisal fees, attorney fees, and title insurance.
Conventional Loan
A conventional loan is a mortgage that follows the guidelines set by Fannie Mae and Freddie Mac. These government-sponsored companies help provide lenders with the money they need to make home loans. Loan size, limited to $832,750 in most U.S. counties, is the most well-known requirement for conventional loans.
Debt-to-Income Ratio (DTI)
The percentage of a borrower’s monthly income that goes toward debt payments, including the mortgage.
Equity
The portion of a property’s value that the homeowner owns outright, calculated as the property’s market value minus any outstanding mortgage balance.
Fixed-Rate Mortgage
A mortgage loan with an interest rate that remains constant throughout the loan term.
Homeowners Insurance
Insurance coverage that protects the homeowner against damage or loss to the property and its contents.
Loan-to-Value (LTV) Ratio
The ratio of the loan amount to the appraised value or purchase price of the property, expressed as a percentage.
Origination Fee
A fee charged by the lender for processing and initiating a mortgage loan.
Pre-approval
A preliminary evaluation of a borrower’s financial situation to determine the maximum loan amount they are eligible for.
Private Mortgage Insurance (PMI)
PMI is a type of insurance that protects the lender if a borrower defaults on their mortgage. It is typically required on conventional loans when a borrower has less than 20% equity when starting a new mortgage. The PMI will be removed once the borrower has paid the balance down to 80% of the home’s original value.