The process of gradually paying off a loan through regular payments of principal and interest.
Amortization
APR (Annual Percentage Rate)
The true cost of borrowing, including interest and fees, expressed as a yearly rate.
A standardized form that outlines the terms, monthly payment, and closing costs of a mortgage.
Loan Estimate
An account where a portion of your monthly mortgage payment is held to pay property taxes and insurance.
Escrow
PMI (Private Mortgage Insurance)
Insurance required if your down payment is less than 20%, protecting the lender if you default.
DTI (Debt-to- Income Ratio)
The percentage of your gross monthly income that goes toward debt payments, used to assess loan eligibility.
Upfront fees paid to lower your interest rate, also known as “discount points.”
Points
A guarantee from a lender to hold a specific interest rate for a set time, typically while your loan is being processed.
Rate Lock
The lender’s process of evaluating your financial information to determine loan approval.
Underwriting
A policy that protects against legal claims or issues with the property title.
Title Insurance
A final document outlining your loan details and closing costs, provided at least three days before closing.
Closing Disclosure
Expenses you pay upfront at closing, such as interest, taxes, and insurance.
Prepaid Costs
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