Mortgage Glossary

Table of Contents


2/1 Buy Down Mortgage:

The 2/1 Buy Down Mortgage makes it possible for the borrower to qualify at a lower interest rate, which means they can borrow more. The starting interest rate will go up by 1% after the first year and then increase again by 1% at the end of the second year. After that, it stays as a fixed interest rate for however long you have the loan. It’s common for borrowers to refinance at the end of two years so they can get a better deal; although, if they keep this same mortgage plan for three years or more, their average interest rates will stay fairly close to what market conditions were originally.


Acceleration Clause:

A mortgage provision that enforces the entire repayment of the loan if a single monthly payment is missed.

Accrued Interest: 

This is the unpaid interest that accumulates and adds to your overall debt.

Additional Principal Payment:

Prepaying your loan comes with several benefits, the most obvious being reducing your remaining balance.

Adjustable Rate Mortgage (ARM): 

An adjustable rate mortgage (ARM) has an interest rate that is linked to an index, meaning it may go up or down depending on movements in the market. Generally speaking, ARMs have lower initial payments than other types of mortgages. However, if interest rates rise over time, your monthly payments could increase as well.

Adjusted Basis:

The final value of a property which includes the original cost, any addition improvements and money spent on it, and depreciation.

Adjustment Date:

The date that the interest rate will change on an adjustable rate mortgage (ARM).

Adjustment Period:

The time in between each adjustment for an ARM (adjustable rate mortgage).

Affordability Analysis:

A mortgage pre-approval is vital to understand how much house you can afford. We’ll look at your income, debts, and savings to figure out the maximum amount of money you’re able to spend on a new home. Depending on the type of mortgage loan you want, we will also consider location and closing costs.


The repayment of a mortgage loan over time through periodic installments.

Amortization Term:

The amortization term is the number of months required to repay the mortgage loan. For example, a 30-year fixed rate mortgage has an amortization term of 360 months.

Annual Percent Rate (APR): 

Credit costs expressed as a yearly rate. APR is not an interest rate; rather, it’s  a way to determine the total cost of credit that encompasses factors such as interest, origination fees, loan discounts, transaction charges and premiums for credit-guarantee insurance. Given that APR enables you to compare the costs of similar loans side by side, it ultimately serves as a helpful tool.

Application Fee: 

The cost for applying for a loan or line of credit. This fee may include the costs of property appraisal and pulling a credit report.


A property valuation estimate created by a professional appraiser.

Appraised Value:

A professional appraisal of a property’s worth, based on the appraiser’s expertise and assessment of the property.


Anything with monetary value, including real estate property, personal effects, and legally binding claims against others (like savings accounts, stocks, mutual funds, etc.).


The transfer of a mortgage to another person.


A mortgage that can be transferred from the seller to the new buyer is called an assumable mortgage. For this to happen, usually requires a credit review of the new borrower by the lender, who may charge a fee for approving assumption. If a mortgage has what’s called a due-on-sale clause preventing its transferral, then it unfortunately can’t be assumed.

Assumption Fee:

When an assumption occurs, the fee paid to the lender by the real property’s purchaser.



The remaining amount of a loan that is yet to be paid.

Balance Sheet:

A financial statement detailing a person or company’s assets, liabilities, and net worth at a single point in time.

Balloon Mortgage:

A mortgage with monthly payments that are spread out over a long term but also requires a lump sum payment at an earlier specified time.

Balloon Payment:

The final, large payment made at the end of a balloon mortgage.

Before-tax Income:

Money earned before income taxes are deducted.

Biweekly Payment Mortgage:

A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment required if the loan were a standard 30-year fixed rate mortgage. In comparison to making monthly payments, this results in a substantial savings in interest for the borrower.

Bridge Loan:

A trust that allows the proceeds to be used to close on a new house before the present home is sold, this type of loan is also known as a “swing loan.”


A company that provides a service to connect people who need loans with potential lenders.


When the seller, builder or buyer pays an amount of money up front to reduce monthly payments during the first few years of a mortgage, this is called a buydown. Buydowns can occur in both fixed and adjustable rate mortgages.



Payment caps place a maximum on the interest rate or monthly payment, which can either increase incrementally or all at once. Be aware that this does not put a limit on how much money the lender earns in interest and may cause negative amortization down the road.

Certificate of Eligibility:

A document that proves a Veteran’s eligibility for a Department of Veterans Affairs (VA) mortgage, issued by the federal government.

Certificate of Reasonable Value (CRV):

The Department of Veterans Affairs (VA) issues a document that establishes the maximum value and loan amount for a VA mortgage.

Change Frequency:

The adjustable rate mortgage (ARM) changes the frequency of payment and/or interest rates usually once every few months.


Closing is the point at which ownership gets transferred from the seller to the buyer. This finalizes everything, including paperwork and the payment of closing costs. With a mortgage, it’s also when disbursement of funds happen from lender to seller. If you’re refinancing, closing refers to making the final payment on your old loan with your new one. It’s also known as “settlement.”

Closing Costs:

buyers and sellers pay extra fees, in addition to the price of the property, when they finalize ownership transfer. These costs typically include an origination fee, charges for appraisal and title insurance, escrow costs, etc. They can vary depending on where you live and which lender you use but some mortgage loans offer “no closing cost” options.


The security a lender receives from a borrower in the form of property, which is used to back up a loan. If borrowers default on their loan, then the lenders can reclaim this property. As this offers protection to the lender, loans that are secured typically have lower interest rates than unsecured loans.

Compound Interest:

The interest rate is paid on both the unpaid principal balance and any accrued interest.

Consumer Reporting Agency (or Bureau):

An organization that prepares reports used by lenders to determine a potential borrower’s credit history. The agency gets data for these reports from a credit repository and from other sources.

Conversion Clause:

An ARM, or adjustable rate mortgage, sometimes offers a provision that allows the loan to be converted to a fixed rate. This usually occurs at the end of the first adjustment period, but may come with an extra cost.


If the borrower stops making payments on their loan, this person will be held responsible to pay back any unpaid debts.


Credit is the ability of a customer to receive funds, goods, or services before making payment(s). This is based on the trust that future payments will be made.

Credit Report:

An individual’s credit report is a document detailing their credit history, which is used by lenders to determine whether or not they are eligible for a loan.

Credit Risk Score:

Credit scores are important in mortgage loan underwriting because they show how risky a borrower is relative to other borrowers. The most common credit score, called the FICO® score, ranges from 300 to 850 and is calculated using information from your credit report. A higher FICO® score means you’re less risky, which usually leads to better loan terms.


Debt-to-Income (DTI) Ratio:

The percentage of your monthly income before taxes that goes towards paying off debts each month.

Deed of Trust:

In some states, a mortgage is replaced by a document called title. The ownership of title is given to a trustee.


Not being able to keep up with mortgage payments OR not following other requirements of the mortgage.


Failing to make your mortgage payments on time can result in consequences such as foreclosure, damage to your credit score, and difficulty securing future loans.


This sum of money can be used to secure a real estate purchase, or to ensure payment on a loan.


An ARM with an initial rate discount features a lower interest rate and monthly payments for a specific period of time, usually one year or less. Once the discount period ends, the ARM rate generally goes up according to its index rate.

Discount Fees: 

Also called Points and Discount Points, each point equals 1% of the mortgage loan’s principal amount. Homebuyers commonly pay points on both fixed rate and adjustable rate mortgages to cover loan origination fees and other closing costs. Borrowers may choose to finance these charges or Pay Them at Closing (PTC). When paying PTC, a borrower has the option of writing one check for all settlement costs or escrowing funds from their monthly payment until enough have accrued to cover expenses.

Some loan companies will add points to your mortgage amount, which subsequently raises the overall cost of the loan. You might be able to volunteer extra payments (points) in exchange for a lower interest rate from the company.

Down Payment: 

The money you pay the seller to cover the difference between their asking price and your loan amount.

Discount Points: 

Also called Points and Discount Points, each point equals 1% of the mortgage loan’s principal amount. Homebuyers commonly pay points on both fixed rate and adjustable rate mortgages to cover loan origination fees and other closing costs. Borrowers may choose to finance these charges or Pay Them at Closing (PTC). When paying PTC, a borrower has the option of writing one check for all settlement costs or escrowing funds from their monthly payment until enough have accrued to cover expenses.

Some loan companies will add points to your mortgage amount, which subsequently raises the overall cost of the loan. You might be able to volunteer extra payments (points) in exchange for a lower interest rate from the company.


Effective Gross Income: 

A borrower’s typical yearly income, including overtime that is regular or guaranteed. While salary is commonly the main source, other types of income may be accepted if it is dependable and substantial.


The value of someone’s ownership in a property. Equity is the difference between what the house could be sold for on the open market and how much is still owed on the mortgage. Also called Home Equity.


An item of value, money, or documents deposited with a third party to ensure delivery upon the fulfillment of a condition. For example, the deposit of funds or documents into an escrow account to be disbursed upon the closing of a sale of real estate.

Escrow Disbursements:

You can use escrow funds to pay for things like real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they come due.

Escrow Payment:

The part of your monthly mortgage payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. 


Fannie Mae:

Fannie Mae is a shareholder-owned company that was chartered by the government. It is also referred to as a “government-sponsored enterprise” or “GSE”. Fannie Mae is responsible for buying home loans from lenders and then packaging them into pools. Afterwards, they issue securities against these loan pools.


The Federal Housing Administration

FHA Mortgage:

A government-insured mortgage provided by the Federal Housing Administration.


The FICO score is part of a credit report that lenders use to determine the borrower’s risk when extended a loan. The score gets its name from the Fair Isaac Corporation, which created it.

FICO Score:

3-digit FICO® scores, which range from 300 to 850 and indicate credit risk levels, are the most commonly used form of credit score in U.S. mortgage loan underwriting. Lenders use a mathematical equation that analyzes various types of information found in your credit report to calculate your score. The higher your FICO® score is, the lower your level of credit risk will be; this often leads to more favorable loan terms overall.

First Mortgage:

A mortgage or loan that has top priority against a property.

Fixed Installment:

A mortgage loan’s monthly payment, which consists of principal and interest.

Fixed Rate Mortgage:

A home loan in which the interest rate is set at a fixed amount for the entire term of the loan. A Fixed Rate Mortgage will allow you to budget your payments and make consistent, predictable monthly payments.

Freddie Mac:

A government-sponsored enterprise (GSE) that buys home loans from lenders and then issues securities against them to finance these purchases.

Fully Amortized ARM:

An adjustable rate mortgage (ARM) is a type of home loan where the interest rate on the mortgage varies over time. The monthly payment amount will be sufficient to pay off the remaining balance on the loan at the prevailing interest accrual rate, over an amortization term.



Ginnie Mae is a government-owned corporation that took over the special assistance loan program from Fannie Mae. It is commonly referred to as Ginnie Mae.

Ginnie Mae (GNMA): 

Ginnie Mae is a government corporation that provides loans like FHA, VA, PIH, and RD. Although Ginnie Mae is not a Government Sponsored Enterprise (GSE), it’s still backed by the government. For more information on the difference between Ginnie Mae and a GSE, please visit now.

Good Faith Estimate (GFE): 

The EMD, or earnest money deposit, that you put down to secure the home. Lender must provide this list within three business days of receiving your mortgage application.

Growing-Equity Mortgage (GEM):

A fixed rate mortgage where your monthly payments gradually increase over time. The increased amount of each payment goes directly towards reducing the balance of the mortgage.

Guarantee Mortgage:

A mortgage that is guaranteed by someone other than the borrower or lender.


Home Equity: 

The difference between the appraised value of your home and the outstanding balance on your mortgage loan is called equity.

Housing Expense Ratio:

Gross monthly income budgeted for housing expenses, expressed as a percentage.


The U.S. Department of Housing and Urban Development

HUD-1 statement:

A statement that itemizes the funds that are due at closing. This can include items like real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a number within a standardized numbering system. The totals at the bottom of the HUD-1statement show seller’s net proceeds and buyers net paymentdue at closing time.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM):

A mix of a fixed rate and an adjustable rate loan, often called 3/1, 5/1 or 7/1, might offer the best of both worlds: rates that are lower than most ARMs with a monthly payment that is fixed for a longer time. “5/1” refers to the fact that there is a five-year period during which the borrower will havefixed payments and interest before it becomes  a traditional adjustable rate loan based on current rates at any point over 25 years. This option might be good for people who think they will move or refinance before (or shortly after) this adjustment takes place.



An index is a figure that lenders use to determine how much an interest rate will change on an adjustable-rate mortgage over time. The index might be a published percentage or number, like the average interest rate on Treasury bills. Some indexes are more volatile than others and have higher rates.

Initial Interest Rate:

The original interest rate of the mortgage is known as the “start rate” or “teaser.” It changes for an adjustable rate mortgage (ARM) and runs through an agreed upon number of months, which is known as the initial rate period.


The periodic payment that a borrower agrees to make to a lender at regular intervals.

Insured Mortgage:

A mortgage that is backed by either the Federal Housing Administration (FHA) or private mortgage insurance (PMI).


The cost of taking out a loan.

Interest Rate: 

The fee a lender imposes on you for each term of the loan. See also Fixed Rate Mortgage and Adjustable Rate Mortgage.

Interest Accrual Rate:

The rate of interest which builds up on the mortgage over time. In many cases, this is also the rate used to calculate monthly payments.

Interest Rate Buydown Plan:

An arrangement that enables the property seller to make monthly deposits into an account, which are then released each month to reduce the mortgagor’s mortgage payments during the early years of the loan.

Interest Rate Ceiling:

The maximum interest rate possible on an adjustable rate mortgage (ARM), as specified in the mortgage note.

Interest Rate Floor:

The minimum interest rate on an adjustable rate mortgage (ARM), as specified in the mortgage note.

Interest-Only Mortgage:

A mortgage that gives the borrower the option of paying only interest on their loan without having to pay down the principal balance.


Late Charge:

A fine that a borrower must pay when they’re late on a payment. This is typically 15 days after the due date.

Lease-Purchase Mortgage Loan:

An alternative financing option that allows low- and moderate-income home buyers to lease a home with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that accumulates in a savings account for a down payment.


A person’s financial obligations are their “liabilities.” These include money owed from both the long and short term.


If you stop making payments on your loan, the mortgage company has the right to take back your property.


Your home equity line of credit (HELOC) comes with a variable interest rate that is capped by law so that you don’t get charged too much.

Lifetime Payment Cap:

With an adjustable rate mortgage (ARM), your payments can go up or down, but only by a set amount over the life of the loan.

Lifetime Rate Cap:

For an adjustable rate mortgage (ARM), a limit is set on how much the interest rate can increase or decrease over the life of the loan. See cap.

Line of Credit:

A line of credit is a temporary loan agreement between a financial institution and borrower.

Liquid Asset:

A cash asset is an asset that can be easily converted into cash.


A loan that must be repaid, plus interest.

Loan to Value Ratio (LTV):

The LTV is a percentage that comes from dividing your mortgage by the appraised value of the property. So, if you’re taking out a $75,000 loan for a home valued at $100,000, then your LTV would be 75%. In general terms, the higher your credit score is when qualifying for a loan results in being able to have a higher LTV.


If you’re approved for a loan and rates rise before closing, you have the option to lock in the current rate.

Lock-In Period:

A loan rate lock guarantees the interest rate for a set period of time issued by a lender, which includes the loan term and points (if any) to be paid upon closing. Usually, short-term locks (under 21 days) are available after the lenders’ approval of the loan only. Although, many times a borrower is able to lock in their desired 30 day or more loan before even submitting their application.



The interest rate on an adjustable rate mortgage (ARM) will adjust periodically, and the difference in percentage points between the index rate and the ARM at each adjustment is called a margin.


The day on which the loan’s principal balance must be paid in full.

Minimum Payment: 

To stay in good standing, this is the lowest monthly payment you can make. An interest-only loan only requires that the interest be paid each month, but most loans require that both principal and interest be paid.

Monthly Fixed Installment:

The monthly payment that goes towards principal and interest is known as the amortization. When a mortgage has Negative Amortization, this means that the fixed installment doesn’t cover all of the interest owed or any amount for reducing the balance of what is owned on The loan. Therefore, instead of decreasing, the loan’s balance will increase.


A mortgage is a document that promises a property to the lender as collateral for payment of a debt. It can also refer to the loan used to buy property that is repaid over time. There are many different types of mortgages available depending on a borrower’s needs and financial status.

Mortgage Banker:

A company that solely offers mortgages for resale in the secondary mortgage industry.

Mortgage Broker:

A company that matches borrowers and lenders for the purpose of loan origination.

Mortgage Insurance:

A contract that protects the lender from loss if the borrower defaults on a government or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency.

Mortgage Insurance Premium (MIP):

The sum a borrower pays for mortgage insurance.

Mortgage Life Insurance:

A type of term life insurance that pays off the borrower’s debt if they die while the policy is in force.


The person who takes out a mortgage.


Negative Amortization:

Amortization ensures that monthly mortgage payments are substantial enough to not only pay the interest, but also reduce the principle. by Negative amortization occurs when these monthly payments fall short of covering the interest cost; as a result, this unpaid amount gets tacked onto the remaining balance of what is owed– often causing customers to owe more than they initially did. This usually happens with an ARM whose payment cap leaves little wiggle room for much else beyond just meeting Interest due.

Net Worth:

A person’s assets’ total worth, including cash.

Non Liquid Asset:

An investment that cannot be quickly turned into cash.


A legal document that requires a borrower to repay a mortgage loan within specified time frame and at an agreed upon interest rate.


Origination Fee:

An origination fee is a charge imposed by the lender for processing a loan application. This fee is typically stated in points, with one point being equal to 1 percent of the mortgage amount.

Owner Financing: 

A transaction in which the party selling the property provides all or part of the financing for the purchase.


Payment Change Date:

The new monthly payment amount on an adjustable rate mortgage (ARM) or a graduated-payment mortgage (GPM) takes effect the month after the adjustment date.

Payment Period: 

The loan repayment timeline. Home loans typically have monthly payments, but other options such as biweekly payments may be available.

Payoff Amount: 

The amount of money, in cash, required to pay off your loan.

Periodic Payment Cap:

A limit on how much payments can go up or down in any one adjustment period.

Periodic Rate Cap:

A limit on the amount that the interest rate can rise or fall during a single adjustment period, regardless of how high or low market indices might be.

PITI Reserves:

Reserves refers to the cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The PITI reserves (principal, interest, taxes, and insurance) must equal the amount that the borrower would have to pay for PITI over a set period of time (usually three months).


Discount points are feeb paid to the lender, usually at Closing, in order to secure a lower mortgage rate. One point is 1 percent of your loan amount. So if you’re borrowing $165,000, one point equals $1 650. Lenders typically charge these on both adjustable-rate and fixed-price mortgages to cover various fees associated with originating the loan. Points are a one-time fee due at closing, which the borrower, seller of the property, or both can pay. They’re occasionally included in the mortgage amount but this makes the loan more expensive overall. You might be able to get a lower interest rate by agreeing to pay points.

Prepayment Penalty:

A fee that may be charged to a borrower who pays off their loan before the designated time.


A mortgage pre-approval is a commitment from a lender assuring you that they will extend credit up to a specific amount for purchasing a home. An analysis of your financial status and credit history will be conducted by the lender.

Pre-payment Penalty:

A fee that is charged when a loan’s original terms are not met, and the loan is paid off earlier than planned.


A process that determines your ability to repay a loan. It calculates this information by taking into account your assets and income but not credit history. Unlike pre-approval, it does not guarantee you approval for the loan itself.

Prime Rate:

The rate banks charge to their most qualified and valued customers. When the prime rate goes up or down, other rates often follow suit, including mortgage interest rates.


The term “principal” refers to the borrower’s remaining unpaid balance or the amount borrowed. The monthly mortgage payment consists of two parts: principal and interest. Interest is what accrues on top of the principal balance based on time, typically (but not always) expressed as a percentage rate applied to that outstanding balance.

Principal Balance:

The amount of money owed on a mortgage, not including interest or any other charges.

Principal, Interest, Taxes, and Insurance (PITI):

There are four different aspects to a standard monthly mortgage payment. The “principal” is the part of the payment that lowers the remaining balance on the mortgage. “Interest” refers to  the fee charged for being loaned money in the first place. And finally, “taxes and insurance” both relate to the monthly cost of property taxes and homeowners insurance, respectively–whether these amounts go into an escrow account each month or not.

Private Mortgage Insurance (PMI):

Mortgage insurance protects lenders from loss if a borrower defaults, and is provided by a private mortgage insurance company. If the loan-to-value (LTV) percentage of the loan is higher than 80 percent, most lenders will require MI.


Qualifying Ratios:

The two calculations used to determine if someone can take out a mortgage are the housing expense as a percent of income ratio and the total debt obligations as a percent of income ratio.


Rate Lock:

If you’re looking to purchase a home, you may want to consider locking in your mortgage rate. Locking in your rate means that the lender promises to hold a specific combination of an interest rate and points for an agreed upon time (typically 10, 15, 30, 45 or 60 days). The longer you need the rates locked in for typically requires more points or higher interest rates.

Real Estate Agent:

A real estate agent is a profession thatethicacy assists the buying or selling of property.

Real Estate Settlement Procedures Act (RESPA):

A law that requires lenders to give borrowers notice of closing costs before finalizing the transaction.

Real Estate Agent®:

A real estate broker who is an active member of a local board affiliated with the National Association of Real Estate Agents.


The noting or registration of a legal document with the appropriate government office, making it part of the public record. This includes documents such as deeds, mortgage notes, satisfaction of mortgages, or extensions of mortgages.


A refinance occurs when a borrower pays off their existing loan with the proceeds from a new loan, using the same property as security. Borrowers may choose to refinance for various reasons, such as receiving more favorable rates, lower payments, or decreased term. In some cases, borrowers may also seek to receive additional cash through refinancing.

Revolving Liability:

A credit products, such as a credit card, that enables customers to spend against a pre-approved line of credit.


Secondary Mortgage Market:

The market in which current mortgages are bought and sold.


The property designated to secure a loan through equity.

Seller Carry-back:

A financial arrangement in which the owner of a property provides financing to the buyer, often with an assumable mortgage. This can be helpful for buyers who may not qualify for traditional financing.


An organization that collects payments of interest and principal from borrowers, as well as manages their escrow accounts. This company often provides services to mortgages that were bought by investors in the secondary mortgage market.

Settlement Costs: 

The fees you must pay when the sale is finalized are typically called closing costs.

Standard Payment Calculation:

The method used to determine the monthly payment required in order to equal out the balance of a mortgage over time through interest rates.

Step-Rate Mortgage:

A mortgage where the interest rate is fixed for a specific period of time (seven years, for example) and then can increase or adjust according to present market conditions. This will result in increased payments over time. However, at the end of the specified period, both the rate and monthly payments will remain constant until the loan is paid off.



The term of a loan is the amount of time that it takes for the loan to reach maturity. This is usually used to calculate monthly mortgage payments.

Third-party Origination:

A lender may use another party to originate, process, underwrite, close, fund or package the mortgages it plans exchange for money in the secondary mortgage market.

Total Expense Ratio:

The percentage of your gross monthly income that is composed of your monthly housing expenses and other debts.

Transaction Fee: 

A fee associated with every financial transaction. Withdrawals, balance transfers, and cash advances may all incur additional costs.

Treasury Index:

The index used to determine interest rate changes for certain adjustable rate mortgage (ARM) plans is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities, or it can be derived from the U.S. Treasury’s daily yield curve; which is based on the closing market bid yields on actively traded Treasury securities in said over-the-counter market.


The Mortgage Disclosure Improvement Act is a federal law that requires lenders to provide potential borrowers with written documentation of the terms and conditions of their mortgage, including APR and other fees.

Two-step Mortgage:

An adjustable rate mortgage, also known as an ARM, where the interest rate changes depending on market conditions. The initial interest rate is lower than that of a fixed-rate mortgage for a set period of time; usually five or seven years. After this introductory period ends, the interest adjusts annually until it reaches its maximum and then remains at that level for the life of the loan.



The process of analyzing a loan application to determine the risk for the lender is called underwriting. This analysis consists of inspecting the borrower’s creditworthiness and the quality of the property itself.

USDA Loan: 

A loan that is backed by the United States Department of Agriculture and can be used to purchase or fix a home in selected rural areas.


VA Loan:

The Department of Veterans Affairs guarantees this mortgage, making it more accessible for those who have served our country. It is also commonly referred to as a government mortgage.

Variable Rate: 

An interest rate that adjusts according to an index, like the US Treasury Bill Rate or Prime Rate. As the payments on a loan change over time, so does the interest rate.


“Wrap Around” Mortgage:

A “Wrap Around” mortgage is when the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. The full payments are made to the new Wrap Around mortgagee, who then forwards those same amounts to pay off the previous first mortgagee. Although these types of mortgages may not be allowed or even discovered by holders of first mortgages, if found out, could result in a demand for immediate payment in full.


Zero Point/Zero Fee Loan: 

This is a no-points, no-fees loan. You pay a higher interest rate, but the lender pays the closing costs. Not advantageous for people wanting to stay in their dwelling long term.