The mortgage terms you'll actually run into, defined in plain English.
Buying or refinancing a home means wading through unfamiliar vocabulary. This glossary covers 93+ of the terms HCMG's loan officers explain most often, written for humans, with the context you need to actually decide.
A home loan whose interest rate is fixed for an initial period and then adjusts on a set schedule based on a market index.
The schedule by which a loan balance is paid down over time through regular payments of principal and interest.
A blended figure that combines the note rate with most upfront loan costs to express the true yearly cost of borrowing.
An independent valuation of a property by a licensed appraiser, used to confirm that the home is worth what the buyer agreed to pay.
The final pre-closing step where the lender, title company, and settlement agent confirm every dollar in the transaction adds up exactly.
Short-term financing that helps a buyer purchase a new home before selling their existing one.
A licensed real estate agent who represents the buyer's interests in a home purchase transaction.
The total amount of money the borrower must bring to the closing table in certified funds.
A refinance that replaces your existing mortgage with a new, larger loan and returns the difference to you as cash.
The final step of a real estate purchase or refinance where loan documents are signed and ownership or lien position transfers.
The collection of fees and prepaid items, separate from the down payment, that a borrower pays at closing.
The five-page final-numbers document a lender must deliver to the borrower at least three business days before closing.
The asset pledged to secure a loan, which the lender can take and sell if the borrower defaults.
Recent sales of similar nearby properties, used to support an appraiser's opinion of value.
A conventional loan whose amount falls within the limit eligible to be purchased by Fannie Mae or Freddie Mac.
Mortgages not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac.
A lender's review of your credit report and score to assess your willingness and ability to repay debt.
A three-digit number summarizing your credit history, used by lenders as a primary risk metric.
The percentage of your gross monthly income that goes toward debt payments, including the proposed new mortgage.
Failure to meet the legal obligations of a loan, most commonly by missing scheduled payments.
The release and distribution of loan funds at closing to the parties entitled to receive them.
Prepaid interest paid at closing to permanently lower the loan's interest rate.
The portion of a home's purchase price the buyer pays out of pocket up front, with the mortgage covering the rest.
A good-faith cash deposit a buyer puts down when offering on a home, typically held in escrow until closing.
The portion of your home's value you own outright, calculated as current value minus what you owe on the mortgage.
A lender-managed account that holds funds for property taxes and homeowner's insurance, paid in monthly with your mortgage.
The Federal National Mortgage Association, a government-sponsored enterprise that buys conventional loans from lenders.
A government-insured mortgage program designed to help buyers with lower credit scores or smaller down payments qualify.
A home loan whose interest rate stays the same for the entire repayment period.
A temporary pause or reduction of mortgage payments granted by the servicer when a borrower faces hardship.
The legal process by which a lender takes possession of and sells a property after a borrower defaults on the mortgage.
The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise that buys conventional loans from lenders, complementing Fannie Mae.
A conforming loan in a designated high-cost area that exceeds the standard conforming limit but stays within a higher local ceiling.
Recurring fees paid by homeowners in a community with a homeowners association, funding shared maintenance and amenities.
A revolving credit line secured by your home's equity, with a variable rate and draw period followed by repayment.
Property insurance that covers losses to the dwelling, personal belongings, and liability, required by mortgage lenders.
The percentage of your gross monthly income consumed by total housing costs (PITI).
Debt that is repaid in fixed scheduled payments over a defined term, such as a car loan or student loan.
The percentage of the loan balance the lender charges as the cost of borrowing, paid annually but accrued daily.
A property purchased not to live in but to rent out or hold for appreciation, with stricter financing terms.
The four pillars of mortgage underwriting, every loan approval comes down to verifying these four categories.
A seller-financed purchase agreement where the buyer makes payments to the seller and receives title only after final payment.
Money the lender contributes toward your closing costs in exchange for accepting a slightly higher interest rate.
A legal claim against property that secures a debt and must be paid off before clear title can transfer.
A formal written agreement from the lender promising to fund a loan, subject to specific conditions.
The standardized three-page disclosure a lender must provide within three business days of a complete loan application.
A permanent change to the terms of an existing mortgage to help a borrower facing long-term hardship stay in the home.
The licensed individual who takes a borrower's loan application and represents them through the mortgage process.
The team member who assembles, verifies, and organizes the documents in a loan file before submission to underwriting.
The loan amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower).
The most probable price a property would bring in an arm's-length sale between a willing buyer and willing seller.
A licensed professional who shops a borrower's loan application across multiple wholesale lenders rather than originating directly.
The insurance premium paid on FHA loans, structured as both an upfront charge and an ongoing annual premium.
The borrower's signed promise to repay the loan, including the amount, rate, term, and payment terms.
A lump-sum prepayment toward principal followed by a recalculation of the monthly payment based on the new balance.
A residential development with individually owned homes plus shared common areas managed by a homeowners association.
A lender's preliminary commitment to lend you a specified amount, based on a review of credit, income, and assets.
A fee charged for paying off all or part of a loan before a defined period elapses.
An informal estimate of how much a lender might let you borrow, based on self-reported information without document verification.
Items paid at closing for costs that will be due in the future, such as property taxes and homeowner's insurance.
The home a borrower lives in as their main place of residence, qualifying for the most favorable loan terms.
The portion of your mortgage payment that goes toward reducing the loan balance, separate from interest.
Any payment made toward the loan balance beyond the scheduled monthly principal amount.
The four components that make up a typical fully-escrowed monthly mortgage payment.
An insurance policy that protects the lender if a borrower defaults on a conventional loan with less than 20% down.
The signed legal instrument in which a borrower promises to repay a specified sum under defined terms.
An offer from Fannie Mae or Freddie Mac to skip the traditional appraisal in favor of an automated valuation.
An annual tax levied by local governments on real estate, based on the property's assessed value.
The signed contract between buyer and seller that defines the terms of a real estate sale.
A lender's commitment to honor a specified interest rate for a defined period, regardless of market movement.
A licensed professional who helps clients buy, sell, or rent residential real estate.
Replacing an existing mortgage with a new one, typically to lower the rate, change the term, or extract equity.
Liquid funds the borrower must have available after closing, measured in months of full PITI payment.
A lender that originates loans directly to borrowers through its own loan officers, branches, and call centers.
A loan available to older homeowners that converts home equity into cash without requiring monthly payments during the borrower's tenure.
A property the borrower will occupy part-time, such as a vacation home, financed at terms between primary and investment.
A licensed real estate agent who represents the homeowner selling a property, also called a listing agent.
Money the seller contributes toward the buyer's closing costs or prepaids as part of the negotiated sale.
The company that collects monthly payments, manages the escrow account, and handles borrower service on a loan after closing.
The fees paid to the title company or attorney handling the closing, including title services and recording.
The act of placing or moving a lien into a lower priority position relative to other liens on the same property.
Costs charged by entities other than the lender for services the lender requires in the closing process.
A policy that protects buyers and lenders against claims arising from defects in the property's chain of ownership.
An examination of public records to verify the legal ownership of a property and identify any claims against it.
Still have questions about a mortgage term?
Talk to a licensed HCMG loan officer who can walk you through any of these terms as they apply to your specific situation.