Mortgage terminology

mortgage (noun): A loan that is taken out to buy a house, property, or other types of real estate.  The borrower is then bound to repay the lender in regular instalments over time. – It will take us another 14 years to pay off the mortgage on our home.

with example sentences

adjustable-rate mortgage (noun): A mortgage loan with an unpredictable interest rate which fluctuates periodically based on the state of the property market. – The interest rates on our adjustable-rate mortgage have increased with the recent rise in house prices.

amortization (noun): Paying off one's mortgage over a fixed period such that the amount still owed decreases with each payment. – The majority of properties have an amortization of less than 20 years.

amount financed (noun): The amount of money one borrows, minus the fees charged by the lender. – The total amount financed was much more than we had initially expected.

annual income (noun): A borrower's total earnings before tax deductions over a year, a factor which has a huge influence on whether a lender considers a borrower to be eligible for a mortgage loan. – Our loan application was turned down because our annual income was too low.

annual percentage rate (noun): A broader measure of the cost of borrowing money to purchase a property than an interest rate. – We were unpleasantly surprised by the annual percentage rate quoted to us by our lender.

appraisal fee (noun): The fee a borrower must pay for an assessment of a property that the borrower intends to buy. – The appraisal fee on the property came to nearly £500.

assets (noun): Personal property considered to be of value that can be used to pay off debts. – Among Raymond's assets were a garage that belonged to his father and several acres of land.

balloon loan (noun): A loan that has an extra-large one-time payment, usually at the end of a loan term. – We decided to go for a balloon loan, as it was easier than making monthly payments.

closing (noun): The final step in property transactions where the property passes from the seller to the buyer. – Once the documents have been signed, we will be ready to start with the closing.

closing costs (noun): The settlement fees a borrower pays a lender for finalising their loan. – Our settlement fees were far higher than we had initially expected.

closing disclosure (noun): A legal document issued by a lender which indicates the final terms and costs of a mortgage before the loan is closed. – The amount indicated in our closing disclosure was much lower than we'd anticipated.

construction loan (noun): A loan that is taken out to cover the costs of construction on a property. – We applied for a construction loan to cover the cost of the new roof.

conventional loan (noun): A loan that is neither insured nor guaranteed by the government. – Maud and Jeffrey applied for a conventional loan, believing that the process would be cheaper and quicker.

credit history (noun): Documentation of a person's credit accounts, and their history of punctual payments as shown in their credit report. – Malcom's loan application was turned down because of his poor credit history.

credit score (noun): An indicator based on a mathematical formula which indicates how likely a person is to pay back a loan on time. – With such a low credit score, your loan application is unlikely to be approved.

debt-to-income ratio (noun): A measurement of a person's monthly debts divided by their monthly income. Potential lenders often use one's debt-income ratio to indicate the likelihood of their ability to keep up with monthly payments. – My debt-to-income ratio is roughly 49%.

deed of acquisition (noun): A signed legal document regarding the purchase and ownership of a home or property. – The seller and the buyer signed the deed of acquisition in the presence of a lawyer.

delinquent (noun): The state of being late for one's mortgage payments. – It is vital that we make our payments on time, or else we will be declared delinquent.

down payment (noun): The amount a buyer pays for their home upfront. By paying a larger down payment, a borrower is more likely to receive lower interest rates and be approved for a mortgage loan. – We made a down payment of £40,000 on the property, as it was all we could afford.

earnest money (noun): A deposit that a buyer pays to show their trustworthiness on a signed agreement to buy a home. – Tom paid the seller an earnest money deposit of £25,000 when he bought his New York apartment.

escrow account (noun): An account implemented by a lender to cover property-related expenses. –  Most of the taxes on our home are covered by our escrow account.

finance charges (noun): The total sum of loan charges and interest rates that a buyer pays over the life span of their mortgage loan. – Our finance charges amounted to well over £30,000 over a 20-year period.

fixed-rate mortgage (noun): A mortgage loan where the interest is set when a buyer takes out a loan and does not change under any circumstances. – Ours is a fixed-rate mortgage, so we've been paying the same interest rates for the past ten years.

forbearance (noun): When a lender allows a borrower to pay their mortgage at a lower rate, or stop paying it altogether, with the assumption that they will resume regular payments at a fixed time. – After his accident left him unable to work, Gary was granted forbearance.

foreclosure (noun): When a lender takes back property after the borrower fails to keep up with their mortgage payments. – Adam's failure to make his mortgage payments resulted in foreclosure and he lost his house.

home appraisal (noun): A document giving useful information about a property that indicates how much it is worth. – When the sellers received their appraisal, they were pleasantly surprised.

home inspection (noun): An examination of a property by an inspector to indicate its strengths and weaknesses. – We will not know what state the house is in until it's had a home inspection.

homeowner's insurance (noun): Insurance that covers damage to one's property in the case of unexpected incidents such as fire, flooding, etc. – The damage sustained during the fire was covered by my homeowner's insurance.

home purchase price (noun): The amount agreed upon by a buyer and seller at which the buyer will purchase the property. – We settled on a home purchase price that was £15,000 lower than we'd originally asked for.

index (noun): An adjustable interest rate reflecting the current condition of the financial market. – Our mortgage index is considerably higher than it was this time last year.

interest rate (noun): The amount a buyer pays their mortgage provider each year for lending them money. – Our interest rate has increased significantly this year.

(mortgage) lender (noun): – A financial institution that lends people money to buy a house or other property. – Of all the lenders we applied to, this one offered us the most reasonable rates.

loan estimate (noun): A written document that a potential buyer receives after applying for a mortgage. – We will not know how much our mortgage costs will be until we receive our loan estimate.

loan modification (noun): A change in the terms of a borrower's loan which can reduce their mortgage payments to an amount they can afford. – After Martha was made redundant, she and Graham applied for a loan adjustment.

margin (noun): The number of points that the lender adds to the index on an adjustable-rate mortgage after the initial rate period comes to an end. – After our initial rate period ended, a six-point margin was added to our index.

mortgage (noun): A loan that is taken out to buy a house, property, or other types of real estate.  The borrower is then bound to repay the lender in regular instalments over time. – It will take us another 14 years to pay off the mortgage on our home.

mortgage closing costs (noun): Processing fees which a buyer pays to a lender to complete a real estate transaction. These cover the cost of appraisals, the issuing of titles, etc. – Our mortgage closing costs were much higher than we'd expected.

mortgage equity (noun): The difference between the current value of a borrower's property and the amount that they still owe on the property. – Our total mortgage equity is close to £20,000.

mortgage statement (noun): A document issued by a lender providing details about one's loan. – I keep all our mortgage statements in the top left drawer.

mortgage term (noun): The length of time that a person has in which to pay off their mortgage. – The mortgage term on our house is 18 years.

origination fee (noun): An initial payment requested by a lender to process an application for a loan. – They will not process our application until we've paid our origination fee.

payoff amount (noun): The amount that a borrower must pay to satisfy the terms of their mortgage and pay off any remaining debt. – The payoff amount was higher than either my husband or I had expected it to be.

P.I.T.I. (noun): An acronym that stands for principal, interest, taxes, and insurance, the four basic elements of a mortgage payment. – When we first applied for our loan, our lender calculated the monthly P.I.T.I. costs.

preapproval document (noun): A document issued by a lender stating the willingness to lend a fixed loan amount. – We can't make an offer on the property until we receive a preapproval document.

prepayment penalty (noun): The fee that some lenders charge people who pay off their mortgage early. – If we pay off our mortgage now, we will have to pay a prepayment penalty.

principal (noun): The amount of a mortgage loan that the borrower has yet to pay back. – The principal on our mortgage is currently £20,000.

private mortgage insurance (noun): A type of mortgage insurance required of many borrowers who take out a conventional loan. – Our loan mortgage application will not be approved unless we agree to pay private mortgage insurance.

property taxes (noun): Taxes paid to local jurisdictions that are based upon the value of your property. – Property taxes are considerably higher down here than they are in the north of the country.

real estate agent (noun): A person who sells and rents homes and property for others. – The real estate agent showed us around the property and answered all our questions.

refinance (verb): To replace one's old mortgage with a new one. When a person refinances their mortgage, the servicer pays off their old mortgage with the new one. – We refinanced our mortgage last year.

repayment plan (noun): A structured plan which enables a borrower to make up missed mortgage payments over a fixed period of time. – Our lender sent us a repayment plan stating how we can pay back last year's missed payments.

security interest (noun): The lender's right to take a home and sell it to pay off the amount owing on the loan if the borrower fails to make their mortgage payments. – John's failure to make his mortgage payments resulted in the company selling off the property as security interest.

seller concessions (noun): Costs that the seller of a property agrees to pay, therefore lowering the initial costs for the buyer. – Some of the initial costs of our home were covered by seller concessions.

seller financing (noun): A loan that the person who is selling a property makes to a buyer. – After our mortgage application was turned down by several companies, we opted for seller financing.

servicer (noun): The company that processes and sends a borrower's mortgage statements. – Our servicer is a local company that was recommended to us by friends.

short sale (noun): The sale of a property for less than the amount that is owed on the mortgage. – After their divorce, James and Edith were forced to accept a short sale on their home.

survey (noun): A drawing of a property illustrating the location of the house as well as any other existing structures. – When we looked at the survey of the house, we realised that there was an outdoor shed.

title (noun): A document showing one's legal ownership of a property and the rights associated with it. – It is indicated in the title that we can remove the surrounding fencing should we see fit.

title insurance (noun): Insurance that protects buyers and lenders from financial loss due to defects in a property. – Thankfully, our title insurance paid for the damage caused by the gas explosion.

Reference and further resources