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Mortgage Terms

Financial terms related to home loans, mortgages, and real estate financing.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a market index.

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Closing Costs

Fees paid at the end of a real estate transaction, typically 2–5% of the loan amount.

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Down Payment

An upfront cash payment when purchasing a home or vehicle, reducing the loan amount.

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Escrow

A neutral third party holding funds or assets until transaction conditions are met.

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Fixed-Rate Mortgage

A mortgage with an interest rate that stays constant throughout the loan term.

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Foreclosure

A legal process where a lender takes possession of a home after the borrower defaults.

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Home Equity Line of Credit (HELOC)

A revolving line of credit secured by your home equity, typically with variable rates.

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Loan-to-Value Ratio (LTV)

The ratio of loan amount to asset value; used in mortgage qualification.

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Mortgage

A loan used to purchase real estate, secured by the property itself.

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Origination Fee

A fee charged by a lender to process a new loan, typically 0.5–1% of amount.

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Private Mortgage Insurance (PMI)

Insurance required when down payment is less than 20%, protecting the lender.

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Refinancing

Replacing an existing loan with a new one, typically to lower interest rates.

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Underwater Mortgage

When the outstanding loan balance exceeds the current market value of the home.

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Qualified Mortgage

A home loan that meets CFPB rules limiting risky features, giving lenders legal safe harbor.

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Amortization

The gradual payoff of a loan through scheduled payments that cover both interest and principal.

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