Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that can change periodically based on an index. The rate may increase or decrease, affecting the monthly payment amount.
Amortization: The process of paying off a loan over time through regular payments. An amortization schedule shows the breakdown of each payment into principal and interest.
Annual Percentage Rate (APR): The total cost of borrowing, expressed as a yearly rate. It includes the interest rate and other fees associated with the loan.
Appraisal: An assessment of a property’s value, conducted by a licensed appraiser. It’s used to determine the amount a lender is willing to lend for a mortgage.
Balloon Mortgage: A mortgage with a large payment due at the end of the loan term. It typically offers lower interest rates and monthly payments but requires a lump sum payment at maturity.
Closing Costs: Fees and expenses paid at the closing of a real estate transaction. They may include appraisal fees, title insurance, and loan origination fees.
Closing Disclosure: A document provided to the borrower at least three business days before closing. It outlines the final terms and costs of the mortgage and must be acknowledged by the borrower before the closing can proceed.
Collateral: An asset, such as a home, used to secure a loan. If the borrower defaults, the lender can take possession of the collateral.
Contingency: A condition in a real estate contract that must be met for the transaction to proceed. Common contingencies include home inspections and financing approval.
Conventional Mortgage: A mortgage not insured or guaranteed by a government agency. It typically requires a larger down payment and higher credit score.
CU Promise: A unique home loan program offered by CUSO Home Lending that comes with three guarantees: Guaranteed Same-Day Loan Decision, Guaranteed Closing Date, and Guaranteed Local Servicing. The program is designed to provide borrowers with a reliable and trustworthy home loan experience.
Debt-to-Income Ratio (DTI): A measure of a borrower’s ability to manage debt. It’s calculated by dividing total monthly debt payments by gross monthly income.
Down Payment: The initial payment made when purchasing a home. It’s usually expressed as a percentage of the home’s purchase price.
Equity: The difference between a property’s market value and the outstanding mortgage balance. It represents the homeowner’s ownership interest in the property.
Escrow: An account held by a third party to manage funds for property taxes and insurance premiums. It ensures these expenses are paid on time.
Fixed-Rate Mortgage: A mortgage with an interest rate that remains constant throughout the loan term. It provides predictable monthly payments.
Foreclosure: A legal process where a lender takes possession of a property due to the borrower’s failure to make mortgage payments.
Pre-Approval: A lender’s assessment of a borrower’s creditworthiness and ability to afford a mortgage. It provides an estimate of the loan amount a borrower may qualify for.
Principal: The original amount borrowed for a mortgage. It’s the portion of the monthly payment that reduces the outstanding loan balance.
Underwriting: The process of evaluating a borrower’s creditworthiness and the risk of lending to them. It involves reviewing credit history, income, and other factors.
Warranty Deed: A type of deed where the seller guarantees that they hold clear title to a piece of real estate and have the right to sell it. The seller also guarantees that no other entity has a claim to the property.
Zoning: The process of dividing land into zones for specific purposes, such as residential, commercial, or industrial use. Zoning regulations are established by local governments and dictate how land can be used within each zone.
For a more comprehensive list of mortgage and real estate terms, please contact our knowledgeable team.
