General - Mortgage Lingo

When it comes to the mortgage process, one of the most confusing parts can be understanding the mortgage lingo. We have put together this guide to help you learn the basic terms that you will see used throughout the homebuying process.

Mortgage Lingo

Abbreviations

AMC
Appraisal Management Company
ARM
Adjustable Rate Mortgage
AUS
Automated Underwriting System
CD
Closing Disclosure
FHA
Federal Housing Administration
FMV
Fair Market Value
FRM
Fixed Rate Mortgage
HELOC
Home Equity Line of Credit
HUD
U.S. Department of Housing and Urban Development
LE
Loan Estimate
LTV
Loan to Value Ratio
MIP
Mortgage Insurance Premium
Non-QM
Non-qualified mortgage
NPI
Non-public Information
PMI
Private Mortgage Insurance
USDA
United States Department of Agriculture
VA
Veterans Administration

Partnerships

AnnieMac Worx
AnnieMac Worx is a separate company from AnnieMac Home Mortgage, acting as a partner to us. They provide no-cost resources and solutions to Real Estate Agents, Brokers, and Loan Officers.
SkillBridge
SkillBridge DOD (Department of Defense) program for finding internship opportunities for veterans. AnnieMac is an Industry Partner/Employer and an Authorized SkillBridge Organization. This partnership was created and managed by John Gagis, Branch Manager from Fairfield NJ through his relationship with Sargent Jason Procaccino.

Definitions

Adjustable Rate Mortgage (ARM)
a loan type that allows the lender to adjust the interest rate during the term of the loan.
Administrative Fee
A fee charged by a lender to cover the administrative costs of processing your loan request.
Amortization
A loan repayment plan, which enables the borrower to reduce their debt gradually through monthly payments of principal and interest.
Annual Percentage Rate (APR)
The yearly interest generated by a sum that's charged to borrowers or paid to investors.
Annuity
A specified income paid yearly or at other regular intervals, often on a guaranteed dollar basis.
Application
The process of applying for a mortgage.
Appraisal
An analysis performed by a qualified individual to determine the estimated value of a home.
Appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.
Appreciation
An increase in the value of a property due to changes in market conditions and other causes. The opposite of depreciation.
Asset
Anything of monetary value that is owned by a person.
Bankruptcy
A court proceeding in which a debtor, who owes more than his assets, can relieve the debts by transferring his assets to a trustee.
Bill of Sale
A written instrument that transfers title to personal property.
Breach of Contract
A violation of the terms of any legal obligation or agreement.
Bridge Loan
Sometimes called a "swing loan", a bridge loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
Broker
A state-licensed agent who, for a commission or a fee, represents property owners in real estate transactions.
Budget
A detailed plan of income and expenses estimated over a specified period of time.
Cash Out Refinance
A refinance loan that provides the borrower with cash that exceeds the amount required to pay off existing mortgages on the home. This additional cash can be used by the borrower for any purpose.
Closing
A meeting of the parties involved in a real estate transaction to finalize the process.
Closing Costs
The total of all the items that must be paid at closing related to your new mortgage.
Closing Disclosure
A standard form that states the final terms and closing costs associated with a mortgage loan.
Commitment Letter
A written offer from a lender to provide financing to a borrower.
Compound Interest
Interest paid on the original principal balance, and on the accumulated and unpaid interest.
Conforming Loan
A loan that does not exceed the maximum loan amount allowed for the most common mortgage investors.
Consumer Reporting Agency (CRA)
A company that prepares detailed reports used by lenders to determine a potential borrower’s creditworthiness.
Contingency
A condition that must be met before a contract is legally binding.
Cosigner
Another person who signs your loan and assumes equal responsibility for it.
Credit Report
A record of an individual's current and past debt repayment patterns.
Creditor
A person or business that is owed money.
Debt
An obligation to pay another.
Delinquency
The failure to make payments on debts when they are due.
Department of Veterans Affairs (VA)
An agency of the federal government that provides services and guarantees residential mortgages made to eligible veterans of the military services.
Disclosures
Information that must be given to consumers about their financial dealings.
Down Payment
The portion of the purchase price of a property that the borrower will be paying in cash rather than included in the mortgage amount.
Equal Opportunity Act (ECOA)
The federal regulations that requires lenders to make credit equally available to all without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity
An owner's financial position in a property. Equity is the difference between the property's value and the amount that is owed on mortgages.
Escrow
Funds paid by one party to another to hold until a specific date when the funds are released to a designated individual.
Eviction
The legal expulsion of an occupant from real property.
Fair Credit Reporting Act
A federal consumer protection regulation that controls the disclosure of credit information and establishes procedures for correcting mistakes in your credit file.
Fair Market Value
The highest price that a willing, but not compelled, buyer would pay, and the lowest price that a willing, but not compelled, seller would accept.
Fannie Mae
FNMA (Federal National Mortgage Association) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
Federal Housing Administration (FHA)
An area of the U.S. Department of Housing and Urban Development (HUD) that insures low down payment mortgages granted by some lenders.
FHA Mortgage
A mortgage insured by the Federal Housing Administration (FHA). FHA loans are also known as government mortgages.
Fixed Rate Mortgage
A mortgage in which the monthly principal and interest payments remain the same throughout the life of the loan.
Flood Insurance
Insurance that protects a homeowner from the cost of damages to a property due to flooding or high water.
Foreclosure
The legal process in which a borrower's ownership of a property is dissolved due to default.
Freddie Mac
FHLMC (Federal Home Loan Mortgage Corporation) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
Gap Loan
Short-term financing, usually to cover a gap in time between a person’s purchase of a home and that person’s later receipt of funds, usually from the sale of their previous home. Sometimes called a bridge loan or swing loan.
Hazard Insurance
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as homeowner's insurance.
Home Equity Line of Credit (HELOC)
A loan secured by real property, usually in a subordinate position, that allows the borrower to receive the loan proceeds in the form of multiple advances up to a limit that represents a maximum percentage of the borrower's equity in a property.
Home Inspection
A complete and detailed inspection that examines and evaluates the mechanical and structural condition of a property.
Homeowner's Insurance
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as hazard insurance.
Homeowners Association
A nonprofit association that manages the common areas of a condominium project or planned unit development (PUD).
HUD
HUD, also known as the U.S. Department of Housing and Urban Development, insures home mortgage loans made by lenders meet minimum standards for such homes.
Insurance
A form of contract that provides compensation for specific losses in exchange for a periodic payment.
Interest
The cost of the use of money.
Interest Rate
The cost of borrowing a lender's money. Interest takes into account the risk and cost to the lender for a loan.
Investment Property
A property that is not occupied by the owner.
Jumbo Mortgage
A loan that exceeds the maximum loan amount allowed by the most common mortgage investors.
Late Payment
A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.
Lease
A written contract between a property owner and a tenant that expresses the conditions under which the tenant may possess the real estate for a specified period of time and rent.
Lender
The bank, mortgage broker, or financial institution providing the loan funds to a borrower.
Lender Fees
Fees that are kept by the lender to cover some of their expenses and to meet their profitability goals. Typically fees such as origination fees, discount points, processing/administration fees, underwriting fees and document preparation fees are lender fees.
Liabilities
A person's financial obligations including both long-term and short-term debt, as well as any other amounts that are owed to others.
Liability Insurance
An insurance policy that offers protection against claims that a property owner's negligence resulted in bodily injury or property damage to another party.
Line of Credit
An agreement by a financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
Loan
Borrowed money that is usually repaid with interest.
Loan Commitment
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a commitment letter.
Loan Estimate
A written estimate of the closing costs the borrower will have to pay at closing.
Loan Origination
The process by which a mortgage lender creates a mortgage secured by real property.
Loan Term
The number of months that you will make monthly payments.
Lock
Written agreement in which a lender guarantees a specific interest rate if a loan closes within a set period of time.
Loan to Value Ratio (LTV)
A ratio used by lenders to calculate the loan amount requested as a percentage of the value of a home.
Lock Period
The number of days that the lender will guarantee the interest rate offered for a loan. In order to hold the guaranteed interest rate for a loan, the loan closing must occur during the lock period.
Monthly Payment
The monthly payment required to pay back your equity loan is calculated in accordance with the program you selected.
Mortgage
The legal document used by a borrower to pledge their property as security in order to obtain a loan.
Mortgage Insurance
Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults.
Non-Conforming Loan
A mortgage that exceeds the maximum loan amount for the most common mortgage investors.
Note
The written agreement signed by the borrower at closing that contains the promise to repay the loan.
Offer
A buyer's expression of willingness to purchase a property at the seller's specified price.
Origination Fee
A fee charged by a lender as a way to cover processing expenses or to increase their profitability for originating a mortgage loan.
Principal
The actual balance, excluding interest, of a mortgage loan.
Principal Balance
The outstanding balance of principal on a loan. Principal does not include interest or fees.
Private Mortgage Insurance
Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults.
Promissory Note
A written promise to pay a specified sum to specified person over a specified period of time.
Property Taxes
Taxes based on the assessed value of the home, paid by the homeowner for community services such as schools, public works, and other costs of local government. Sometimes paid as a part of the monthly mortgage payment.
Rate Lock
An agreement by a lender to guarantee the interest rate offered for a mortgage provided that the loan closes within the specified period of time.
Realtor
A real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors.
Real Estate Agent
A person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers.
Rural Housing Service (RHS)
An agency within the United States Department of Agriculture that provides financing to farmers and other qualified borrowers buying property in rural areas, who are unable to obtain loans elsewhere.
Refinance
The process of paying off any existing mortgages on a home with a new mortgage loan.
Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires mortgage lenders and brokers to give borrowers advance notice of closing costs in the form of a Good Faith Estimate.
Settlement
A meeting of parties involved in a real estate transaction to finalize the process. In the case of a purchase, the settlement usually involves the seller, the buyer, the real estate broker and the lender.
Swing Loan
Sometimes called a bridge loan, a swing loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
Term
The loan term is the number of months that you will make monthly payments.
Title
A legal written instrument evidencing a person's lawful possession of a property.
Total Closing Costs
This is the total of all the items that must be paid at closing related to your new mortgage.
Underwriting
Detailed process of evaluating a borrower's loan application to determine the risk involved for the lender. Underwriting usually involves an in-depth analysis of the borrower's credit history, as well as an examination of the value and quality of the subject property.
Underwriting Fee
A fee charged by some lenders to cover the cost of the lender's analysis of the risk associated with a loan.
VA Loan
A mortgage for veterans and service persons. The loan is guaranteed by the Department of Veterans Affairs (VA) and requires low or no down payment.