Mortgage Glossary
General Mortgage Terms
Adjustable-Rate Mortgage (ARM)
A loan with an interest rate that may change periodically after an initial fixed period.
Amortization
The gradual repayment of a loan through scheduled payments over time.
Annual Percentage Rate (APR)
The total yearly cost of borrowing, including interest and certain fees.
Appraisal
A professional estimate of a property’s market value.
Assets
Funds or property owned by a borrower that may be used for down payment or reserves.
Bridge Loan
A short-term loan used to “bridge” the gap between buying a new home and selling an existing one, allowing a borrower to access equity for a down payment or purchase.
Buydown
A financing strategy where upfront funds are used to temporarily or permanently reduce the interest rate, lowering initial monthly payments.
Closing
The final step of a real estate transaction where documents are signed and ownership transfers.
Closing Disclosure (CD)
A final statement of loan terms and costs provided before closing.
Conforming Loan
A loan that meets limits set by Fannie Mae and Freddie Mac.
D
Debt-to-Income Ratio (DTI)
The percentage of income used to pay monthly debt obligations.
Down Payment
The upfront portion of the purchase price paid by the buyer.
Equity
The difference between a property’s value and outstanding loan balance.
Escrow
An account holding funds for taxes, insurance, or transaction management
Fixed-Rate Mortgage
A loan with a constant interest rate over the life of the loan.
Fixed-Rate Mortgage
A loan with a constant interest rate over the life of the loan.
Mortgage Broker
A licensed professional who acts as an intermediary between borrowers and multiple lenders to find and arrange the most suitable loan options.
Mortgage Insurance (MI)
Insurance protecting the lender if the borrower defaults.
Rate Lock
A guarantee of a specific interest rate for a set period.
Underwriting
The lender’s risk review process.
Investor Terms
Work directly with a local mortgage professional who puts clarity, transparency, and your goals first—whether you’re buying your first home, refinancing to improve your financial position, or expanding your investment portfolio.
Cap Rate
The rate of return on an investment property based on net operating income and purchase price.
DSCR (Debt Service Coverage Ratio)
A calculation used to determine whether a property's rental income can cover its mortgage payment.
Cash Flow
The net income remaining after expenses and debt payments
Gross Rent Multiplier (GRM)
A ratio comparing a property’s price to its annual rental income
1031 Exchange
A tax-deferral strategy allowing investors to reinvest proceeds into another property.
Operating Expenses
Costs required to maintain a property, excluding mortgage payments
Net Operating Income (NOI)
Income after expenses but before debt service.
Appreciation
The increase in a property’s value over time.
Vacancy Rate
The percentage of time a rental property is unoccupied.
Construction Terms
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Construction-to-Permanent Loan
A loan that converts from construction financing into a permanent mortgage.
Draw Schedule
A timeline of payments made to a builder during construction phases.
Builder Risk Insurance
Insurance covering a property during construction.
Change Order
A loan that converts from construction financing into a permanent mortgage.
Foundation Inspection
An inspection confirming proper foundation construction.
Certificate of Occupancy (CO)
A document confirming the home is safe for occupancy.
Hard Costs
Direct construction expenses such as labor and materials.
Soft Costs
Indirect costs like permits, plans, and engineering fees.
Title & Legal Terms
Title
Legal ownership of a property.
Title Insurance
Protection against ownership claims or defects.
Title Search
A review of public records to confirm ownership and lien
Lien
A legal claim against a property for unpaid debts
Deed
The legal document transferring ownership.
Easement
The right to use another’s land for a specific purpose.
Encumbrance
Any claim or restriction affecting property ownership.
Quiet Title
A legal action resolving ownership disputes.
Survey
A map showing property boundaries.