Financial Terms Glossary
A simple, plain-English guide to common home-buying and mortgage terms.
A
- Adjustable-Rate Mortgage (ARM)
- Mortgage with a rate that can change after an initial fixed period.
- Amortization
- Gradual repayment of a loan through scheduled payments.
- APR
- Annual Percentage Rate; total cost of borrowing including certain fees.
- Appraisal
- Professional opinion of a home’s market value.
B
- Bridge Loan
- Short-term loan used to buy before selling an existing home.
- Buydown
- Upfront payment to temporarily or permanently lower the interest rate.
C
- Cash to Close
- Total amount needed at closing.
- Closing Costs
- Fees due at settlement including lender and title fees.
- Contingency
- Contract condition that must be met to proceed.
- Conventional Loan
- Mortgage not backed by FHA, VA, or USDA.
- Credit Score
- Numerical rating of credit risk.
D
- Debt-to-Income Ratio (DTI)
- Monthly debt divided by gross income.
- Down Payment
- Initial payment made toward the purchase price.
E
- Earnest Money
- Deposit showing buyer’s intent to purchase.
- Equity
- Home value minus loan balance.
- Escrow
- Neutral third party holding funds and documents.
F
- FHA Loan
- Government-insured mortgage with flexible guidelines.
- Fixed-Rate Mortgage
- Loan with an interest rate that does not change.
G
- Gift Funds
- Money gifted to help with down payment or closing.
H
- HOA
- Homeowners Association governing a community.
- Homeowners Insurance
- Insurance protecting the home against covered losses.
I
- Interest Rate
- Cost of borrowing money.
- Inspection
- Professional evaluation of property condition.
J
- Jumbo Loan
- Loan exceeding conforming limits.
K
- No Common Terms
- Few mortgage terms start with K.
L
- Loan-to-Value (LTV)
- Loan amount compared to property value.
- Lender Credit
- Credit used to offset closing costs.
M
- Mortgage Insurance
- Insurance protecting the lender.
- MLS
- Database of homes listed for sale.
N
- Net Sheet
- Estimated breakdown of costs or proceeds.
O
- Origination Fee
- Lender fee for processing the loan.
- Offer
- Written proposal to purchase a property.
P
- PITI
- Principal, Interest, Taxes, and Insurance.
- Pre-Approval
- Verified loan approval amount.
- Principal
- Original loan amount borrowed.
Q
- Qualification
- Lender review of borrower eligibility.
R
- Rate Lock
- Guarantee of interest rate for a set time.
- Recording Fee
- Fee to record documents with the county.
S
- Seller Credit
- Seller contribution toward buyer costs.
- Survey
- Map of property boundaries.
T
- Title
- Legal ownership of property.
- Title Insurance
- Protection against title defects.
U
- Underwriting
- Lender’s loan approval review.
- USDA Loan
- Government-backed rural housing loan.
V
- VA Loan
- Mortgage for eligible veterans.
W
- Walkthrough
- Final property check before closing.
- Wire Fraud
- Scams involving fake wiring instructions.
X
- No Common Terms
- X terms are rare in real estate.
Y
- Yield Spread
- Pricing credit tied to interest rate.
Z
- Zoning
- Local land-use regulations.
This glossary is for general education only and not legal or financial advice.