📖 Glossary

500 money, math, and health terms explained in plain English — each with an example and a free calculator.

42 terms found in Home Buying. Clear filters

A

Adjustable-Rate Mortgage (ARM) An adjustable-rate mortgage (ARM) is a home loan with an interest rate that is fixed for an initial period… Appraisal Gap An appraisal gap is the difference when a home appraises for less than the agreed purchase price. Because… Assessed Value Assessed value is the value a local government assigns to a property for property tax purposes. Depending on…

B

Bridge Loan A bridge loan is short-term financing that helps a homeowner buy a new home before selling their current one…

C

Cash-Out Refinance A cash-out refinance replaces an existing mortgage with a new, larger one and pays the borrower the… Closing Costs Closing costs are the fees and expenses paid when finalizing a real estate purchase or refinance, on top of… Closing Disclosure A Closing Disclosure is a five-page form that US mortgage lenders must provide at least three business days… Conventional Loan A conventional loan is a mortgage that is not insured or guaranteed by a government agency. Most conventional…

D

Down Payment A down payment is the portion of a purchase price paid upfront in cash, with the rest financed by a loan. For…

E

Earnest Money Earnest money is a deposit a home buyer pays after a seller accepts their offer, showing good faith that they… Escrow Account An escrow account, in the mortgage context, is an account managed by the loan servicer that collects part of…

F

FHA Loan An FHA loan is a US mortgage insured by the Federal Housing Administration, designed to make home buying… Fixed-Rate Mortgage A fixed-rate mortgage is a home loan whose interest rate stays the same for the entire term, so the…

H

HOA Fees HOA fees are regular dues paid to a homeowners association by owners of properties in certain neighborhoods… Home Appraisal A home appraisal is an independent estimate of a property's market value, prepared by a licensed appraiser… Home Equity Home equity is the portion of a property's value that the owner actually owns: the current market value minus… Home Equity Line of Credit (HELOC) A home equity line of credit (HELOC) is a revolving line of credit secured by a home. The owner can borrow… Home Equity Loan A home equity loan is a lump-sum loan secured by the equity in a home, repaid in fixed installments, usually… Home Inspection A home inspection is a visual examination of a property's condition by a professional inspector, typically… Home Warranty A home warranty is a service contract that covers the repair or replacement of certain home systems and… Homeowners Insurance Homeowners insurance is a policy that covers damage to a home and its contents from specified events, such as…

J

Jumbo Loan A jumbo loan is a US mortgage that exceeds the conforming loan limit set each year by the Federal Housing…

L

Loan Estimate A Loan Estimate is a standardized three-page form that US mortgage lenders must provide within three business… Loan-to-Value Ratio (LTV) Loan-to-value ratio (LTV) compares the size of a loan with the value of the asset securing it, expressed as a…

M

Mill Rate A mill rate, or millage rate, is a way of expressing a property tax rate: one mill equals one-thousandth of a… Mortgage A mortgage is a loan used to buy real estate, in which the property itself serves as collateral. The borrower… Mortgage Points Mortgage points, also called discount points, are fees paid to a lender at closing in exchange for a lower… Mortgage Pre-Approval Mortgage pre-approval is a lender's conditional statement of how much it is willing to lend a borrower, based… Mortgage Pre-Qualification Mortgage pre-qualification is an early estimate from a lender of how much a borrower might be able to borrow… Mortgage Rate Lock A mortgage rate lock is a lender's commitment to hold a specific interest rate for a set period, commonly 30… Mortgage Recast A mortgage recast, or re-amortization, is when a borrower makes a large lump-sum payment toward the principal…

P

PITI (Principal, Interest, Taxes, Insurance) PITI stands for principal, interest, taxes, and insurance — the four parts that commonly make up a monthly… Price-to-Rent Ratio The price-to-rent ratio compares the price of homes with the cost of renting similar homes in the same area… Private Mortgage Insurance (PMI) Private mortgage insurance (PMI) is insurance that protects the lender, not the borrower, if a borrower stops… Property Tax Property tax is a tax charged by local governments on real estate, usually based on the assessed value of the…

R

Real Estate Contingency In real estate, a contingency is a condition in a purchase contract that must be met for the sale to go… Rent-to-Income Ratio The rent-to-income ratio compares monthly rent with gross monthly income, expressed as a percentage. A widely… Reverse Mortgage A reverse mortgage is a loan that lets older homeowners convert part of their home equity into cash without…

T

Title Insurance Title insurance protects against financial loss from problems with a property's ownership history, such as…

U

Underwriting Underwriting is the process a lender uses to evaluate the risk of lending to a borrower and decide whether to… USDA Loan A USDA loan is a US mortgage backed by the Department of Agriculture for buying homes in eligible rural and…

V

VA Loan A VA loan is a US mortgage guaranteed by the Department of Veterans Affairs for eligible service members…
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Definitions are for general educational purposes only and are not financial, tax, legal, or medical advice.