Simplified Mortgage Glossary

4506-C

A tax form that lets lenders verify your income by requesting your tax records from the IRS.

401(K)/403(B)

Retirement savings accounts through your employer where money grows tax-free until you withdraw it.

Ability to Repay

The lender's check to make sure you can actually afford to pay back the loan before approving it.

Acceleration Clause

A clause that lets the lender demand full payment immediately if you miss a payment.

Acceptance

When everyone signs the contract and the deal becomes official and legally binding.

Accommodation Mortgagor

Someone whose name is on the house title but isn't responsible for paying back the loan.

Additional Principal Payment

Extra money you pay toward your loan balance to pay it off faster and save on interest.

Adjustable Rate Mortgage

A loan where your interest rate can go up or down over time based on market conditions.

Adjustment Date

The specific date when your ARM interest rate changes.

Adjustment Period

How often your ARM interest rate can change (e.g., every 6 months or yearly).

Administrator

A system user with special permissions to set up and manage other users' access.

Amenity

Bonus features that make a property more attractive, like a pool, nice view, or nearby park.

American Land Title Association

The organization that sets standards for how title companies search property records.

Amortization

Paying off your loan gradually through regular monthly payments over time.

Amortization Schedule

A chart showing exactly how much of each payment goes to interest vs. principal over the life of your loan.

Amortization Term

The total length of your loan (e.g., 30 years = 360 months).

Amortize

Making regular payments that chip away at both what you borrowed and the interest you owe.

Annual Mortgagor Statement

A yearly statement showing what you paid in interest/taxes and your remaining loan balance.

Annual Percentage Rate

The TRUE yearly cost of your loan including interest, fees, and other charges - helps you compare loans.

Annuity

A fixed amount paid at regular intervals, like yearly or monthly.

Application

The form you fill out to apply for a mortgage (also called the 1003 form).

Application Date

The official date your loan application is considered complete - triggers disclosure deadlines.

Appraisal

A professional estimate of how much a property is worth.

Appraised Value

The dollar amount an appraiser says your property is worth - used to calculate your loan-to-value ratio.

Appraiser

A licensed professional who determines how much properties are worth.

Appreciation

When your home increases in value over time - the opposite of depreciation.

Assessed Value

The value your local government assigns to your property for calculating property taxes.

Assessment

The process of determining a property's value for tax purposes, or a special charge for things like sewer upgrades.

Assessor

A government official who determines property values for taxation.

Asset

Anything valuable you own: cash, investments, property, vehicles, etc.

Assignment

When a mortgage is transferred from one party to another.

Assignment of Mortgage

The legal document that officially transfers a mortgage to a new owner/investor.

Assignment of Trade

Bundling multiple loans together into investment securities - typically for Wall Street trading.

Assumable Mortgage

A mortgage that the buyer can take over from the seller instead of getting a new loan.

Assumption

When a home buyer takes over the seller's existing mortgage instead of getting their own.

Assumption Clause

Language in a mortgage that allows the buyer to take over the seller's loan.

Assumption Fee

A fee charged when someone takes over an existing mortgage from the previous owner.

Attorney-in-fact

Someone legally authorized to sign documents on behalf of another person.

Automatic Underwriting System

Computer software that quickly analyzes your application and gives an initial loan decision.

Balance Sheet

A financial snapshot showing what you own, what you owe, and your net worth.

Balancing (Balancer)

The process of checking that all loan fees match up correctly before and after closing.

Balloon Mortgage

A loan with low monthly payments but a large lump sum due at the end.

Balloon Payment

The big final payment due at the end of a balloon mortgage.

Bank

A regulated financial institution like a commercial bank, savings & loan, or thrift.

Bankrupt

A person or company that has been legally declared unable to pay their debts.

Bankruptcy

A legal process where someone who can't pay their debts surrenders assets to settle what they owe.

Basis Point

A tiny unit of measurement for interest rates: 100 basis points = 1%. Used to discuss rate changes.

Before-tax Income

Your income BEFORE taxes are taken out - also called gross income.

Beneficiary

The person designated to receive money or benefits from a trust, insurance policy, or deed.

Bequeath

To leave personal property to someone through your will.

Best effort lock

A rate lock where the lender commits to a price, but there's no penalty if the loan doesn't close.

Betterment

An improvement that adds value to a property (vs. repairs that just maintain it).

Bill of Sale

A legal document that transfers ownership of personal property (like a car) to someone else.

Binder

A temporary insurance agreement showing a company's intent to insure a property.

Biweekly Payment Mortgage

A mortgage where you pay every 2 weeks instead of monthly - helps you pay off faster and save interest.

Blanket Mortgage

A single mortgage that covers an entire building or development, not individual units.

Bona Fide

Acting honestly and without intent to deceive or defraud.

Bona Fide Discount Point

An upfront fee paid to the lender specifically to get a lower interest rate.

Borrower

The main person responsible for repaying a loan - they sign the promissory note and mortgage.

Borrower Portal

A secure website where borrowers can check loan status, upload documents, and communicate with their lender.

Breach

Breaking a contract or failing to meet a legal obligation.

Bridge Loan

A short-term loan that lets you buy a new home before selling your current one.

Broker

A middleman who connects buyers and sellers (or borrowers and lenders) for a fee.

Building Code

Local rules about how buildings must be constructed for safety - properties must meet these to get financing.

Bulk

Selling a group of loans together at once, rather than one at a time.

Business Continuity Plan

A company's plan for how to keep operating during emergencies or disasters.

Business Day

A regular weekday when banks are open - excludes weekends and bank holidays.

Business to Business

A website or system that allows businesses to exchange information and conduct transactions together.

Buydown Account

An account that holds funds to help cover your mortgage payments during a buydown period.

Buydown Mortgage

A mortgage where someone pays upfront to temporarily or permanently reduce your interest rate.

Cap

A limit on how much your ARM interest rate or payment can increase or decrease.

Capital

Money or wealth used to invest, run a business, or generate more money.

Capital Expenditure

A major expense to improve a property and extend its useful life (like a new roof).

Capital Improvement

A permanent addition that increases a property's value (like adding a deck or renovating a kitchen).

Cash-out Refinance

Getting a new, larger mortgage to pay off your old one AND get extra cash for other uses.

Certificate of Deposit

A bank document proving you deposited money that will earn interest over a set time period.

Certificate of Deposit Index

A benchmark rate based on CD interest rates, used to adjust some ARM rates.

Certificate of Eligibility

A government document proving a veteran qualifies for a VA home loan.

Certificate of Reasonable Value

A VA document stating the maximum home value and loan amount for a veteran's mortgage.

Certificate of Title

An official document confirming who legally owns a property.

Chain of Title

The complete history of everyone who has owned a property, from first owner to current.

Change Frequency

How often (in months) the rate or payment changes on an adjustable-rate mortgage.

Chattel

Another word for personal property (things you own that aren't real estate).

Clear Title

A property title with no liens, disputes, or legal issues - ready for clean transfer.

Closer

A person who prepares and coordinates all the final documents needed to complete a home purchase.

Closing

The final meeting where you sign all the paperwork, pay closing costs, and officially become the homeowner.

Closing Cost Item

An individual fee you pay at closing, like appraisal fee, title insurance, or origination fee.

Closing Costs

All the fees and expenses you pay when finalizing your home purchase (beyond the home price) (origination fee, attorney fee, taxes, amount on escrow, and charges for obtaining title insurance)

Closing Date

The actual date when the home sale is finalized and ownership transfers.

Closing Disclosure

The detailed 5-page form showing your final loan terms, monthly payment, and all closing costs.

Cloud on Title

Issues found in a title search that could affect ownership - must be resolved before selling.

Coborrower

An additional borrower who shares responsibility for the loan and is on the title.

Code of Federal Regulations

A collection of all federal regulations organized by topic and agency.

Collateral

Something valuable (like your home) that secures a loan - the lender can take it if you don't pay.

Collection

Actions taken to get late borrowers back on track or to begin foreclosure if needed.

Combined Loan to Value

Your total loan amount divided by your home's value when you have multiple mortgages.

Commission

The fee paid to a real estate agent or broker for helping complete a sale.

Commitment Letter

A formal letter from a lender stating they will give you a loan under specific terms.

Commitment period

The time window during which a lender must deliver loans into an investment pool.

Common Area Assessments

Fees charged by HOAs for maintaining shared spaces like pools, landscaping, and common areas.