Mortgage Glossary
Mortgage terms, explained clearly.
A plain-English glossary for home buyers, homeowners, and anyone learning mortgage basics.
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Featured Terms
PMI
PMI stands for private mortgage insurance, commonly required on conventional loans with less than 20% down.
PPITI
PITI stands for principal, interest, taxes, and insurance.
AAPR
APR is the annual percentage rate, a broader cost measure that combines the interest rate with certain loan costs so borrowers can compare offers more clearly.
DDebt-to-Income Ratio
Debt-to-income ratio, or DTI, compares monthly debt payments with gross monthly income.
DDown Payment
A down payment is the upfront amount a buyer pays toward the purchase price of a home.
LLoan-to-Value Ratio
Loan-to-value ratio, or LTV, compares the loan amount with the property value.
Recently Added
Points
Mortgage points are upfront fees paid to change loan pricing, often to reduce the interest rate.
PPrincipal
Principal is the amount borrowed or the remaining loan balance owed to the lender.
RRefinancing
Refinancing means replacing an existing mortgage with a new loan.
TTitle Insurance
Title insurance helps protect against covered problems with property ownership records or title defects.
UUnderwriting
Underwriting is the lender review process used to evaluate borrower, property, and loan risk before approval.
VVA Loan
A VA loan is a mortgage program for eligible veterans, service members, and certain surviving spouses.
Popular Terms
Mortgage Insurance
Mortgage insurance is coverage connected to a mortgage that helps protect the lender or loan program from borrower default risk.
CClosing Costs
Closing costs are fees and prepaid items paid when a home purchase or refinance closes.
EEscrow
Escrow is an account or process used to hold money for specific housing costs, often property taxes and insurance.
IInterest Rate
An interest rate is the percentage used to calculate the cost of borrowing the mortgage balance.
PPrincipal
Principal is the amount borrowed or the remaining loan balance owed to the lender.
RRefinancing
Refinancing means replacing an existing mortgage with a new loan.
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APR
APR is the annual percentage rate, a broader cost measure that combines the interest rate with certain loan costs so borrowers can compare offers more clearly.
AARM
An ARM, or adjustable-rate mortgage, is a mortgage with an interest rate that can change after an initial fixed period.
AAmortization
Amortization is the process of paying down a loan through scheduled payments that include interest and principal.
AAppraisal
An appraisal is a professional opinion of a property value, often required by a lender before final loan approval.
C
Closing Disclosure
A Closing Disclosure is a final mortgage document that summarizes loan terms, payments, closing costs, and cash needed to close.
CClosing Costs
Closing costs are fees and prepaid items paid when a home purchase or refinance closes.
CConventional Loan
A conventional loan is a mortgage that is not insured or guaranteed by a government program such as FHA, VA, or USDA.
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Loan Estimate
A Loan Estimate is an early mortgage document that shows estimated loan terms, payment, closing costs, and cash to close.
LLoan Term
A loan term is the length of time scheduled to repay the mortgage.
LLoan-to-Value Ratio
Loan-to-value ratio, or LTV, compares the loan amount with the property value.
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PITI
PITI stands for principal, interest, taxes, and insurance.
PPMI
PMI stands for private mortgage insurance, commonly required on conventional loans with less than 20% down.
PPoints
Mortgage points are upfront fees paid to change loan pricing, often to reduce the interest rate.
PPrincipal
Principal is the amount borrowed or the remaining loan balance owed to the lender.
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