A

• Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that adjusts periodically based on a benchmark index.
• Amortization: The process of gradually paying off a loan through regular principal and interest payments.
• Appraisal: A professional evaluation of a property’s market value, typically required by lenders.
• Asset-Based Lending: A loan secured by assets rather than credit history or income verification.

B

• Balloon Loan: A mortgage with low or interest-only payments for a period, followed by a lump-sum payment at maturity.
• Bridge Loan: A short-term loan that helps buyers purchase a new property before selling their current one.
• Broker Price Opinion (BPO): An estimate of a property’s value prepared by a licensed real estate agent or broker.
• Buyer’s Agent: A real estate agent representing the interests of the buyer in a transaction.

C

• Cash-Out Refinance: Refinancing a mortgage for more than the remaining balance to extract cash from home equity.
• Closing Costs: Fees and expenses due at the completion of a real estate transaction.
• Collateral: An asset pledged to secure a loan, such as a home in a mortgage agreement.
• Conventional Loan: A mortgage not insured or guaranteed by a government agency.
• Credit Score: A numerical representation of a borrower’s creditworthiness.
• Consumer Bridge Loan: A short-term loan for homeowners to secure a new home before selling their existing one.

D

• Debt-to-Income Ratio (DTI): A borrower’s total monthly debt payments divided by their gross monthly income.
• Deed of Trust: A document used in some states in place of a mortgage, involving a trustee.
• Down Payment: The upfront amount paid by a buyer toward the purchase of a property.

E

• Earnest Money Deposit (EMD): A deposit made by a buyer to demonstrate commitment to purchasing a property.
• Equity: The difference between a property’s market value and the amount owed on it.
• Escrow: A third-party holding of funds or documents until contractual obligations are met.

F

• Fixed-Rate Mortgage: A loan with a constant interest rate for the entire term.
• Foreclosure: The legal process by which a lender takes possession of a property due to nonpayment.
• Funding Fee: A fee charged on VA loans to fund the program.

G

• Government-Sponsored Enterprise (GSE): Entities like Fannie Mae and Freddie Mac that help provide liquidity to the mortgage market.
• Gross Rent Multiplier (GRM): A measure used by investors to evaluate rental properties.

H

• Hard Money Loan: A short-term, asset-based loan secured by real estate, often used for investments or flips.
• Home Equity Line of Credit (HELOC): A revolving credit line secured by home equity.
• HUD (Department of Housing and Urban Development): A federal agency overseeing housing policies and programs.

I

• Interest-Only Loan: A mortgage that allows borrowers to pay only interest for an initial period.
• Investor Loan: A mortgage designed for real estate investors, often requiring higher down payments.

J

• Jumbo Loan: A mortgage exceeding conforming loan limits set by Fannie Mae and Freddie Mac.

L

• Loan-to-Value Ratio (LTV): The loan amount divided by the property value.
• Lock-In Period: The time frame during which a lender guarantees a specific interest rate.

M

• Mortgage-Backed Securities (MBS): Investments backed by pools of mortgages.
• Mortgage Insurance Premium (MIP): Required insurance on FHA loans to protect lenders against defaults.

N

• Non-Qualified Mortgage (NonQM): A loan that does not meet traditional Qualified Mortgage standards but allows alternative income verification and flexible terms.
• Note: A legal document outlining the terms of a loan.

O

• Owner-Occupied: A property where the borrower resides as their primary residence.

P

• Points: Fees paid to lower the interest rate on a mortgage.
• Prepayment Penalty: A fee charged for paying off a loan early.
• Private Mortgage Insurance (PMI): Insurance required on conventional loans with less than 20% down.
• Portfolio Loan: A loan held by the lender instead of being sold on the secondary market.

Q

• Qualified Mortgage (QM): A mortgage that meets specific regulatory guidelines to ensure affordability and lower risk.

R

• Rate Lock: A guarantee from a lender that an interest rate will not change before closing.
• Reverse Mortgage: A loan allowing homeowners 62+ to convert home equity into income.
• Real Estate Owned (REO): A property owned by a lender after foreclosure.

S

• Second Mortgage: A loan taken out using a property’s equity while the primary mortgage remains in place.
• Second Mortgage Hard Money: A high-interest, short-term loan secured against a property’s equity, used primarily for investment purposes.
• Seller Financing: A transaction where the seller provides financing to the buyer instead of a traditional lender.
• Short Sale: A property sold for less than the mortgage balance with lender approval.
• Stated Income Loan: A loan that allows borrowers to qualify based on stated income rather than traditional income verification.

T

• Title Insurance: Protection against claims on a property’s ownership.
• Trust Deed Financing: A form of lending where investors provide loans secured by real estate, often used in private lending.

U

• Underwriting: The process of evaluating a borrower’s risk before approving a loan.

V

• VA Loan: A mortgage backed by the Department of Veterans Affairs, available to eligible military service members.
• Vacancy Rate: The percentage of unoccupied rental properties in a given area.

W

• Wraparound Mortgage: A secondary financing method where the new mortgage includes the existing mortgage balance plus additional financing.

This glossary serves as a valuable resource for buyers, sellers, and investors navigating the mortgage and real estate market.