Mortgage Glossary
Mortgage paperwork is full of jargon. This glossary defines the terms you'll run into most often when buying or refinancing a home, each with a short, plain-English explanation and links to the calculators and guides where the term comes up.
Want the bigger picture rather than a single definition? Browse our mortgage guides for step-by-step explanations.
- Adjustable-Rate Mortgage (ARM)
- A loan with a rate that is fixed at first and then adjusts periodically with the market.
- Amortization
- Paying off a loan over time through scheduled payments of principal and interest.
- Annual Percentage Rate (APR)
- The yearly cost of a mortgage including interest and most lender fees, shown as one percentage.
- Closing Costs
- The fees you pay to finalize a mortgage, such as origination, appraisal, and title charges.
- Debt-to-Income Ratio (DTI)
- A percentage comparing your monthly debt payments to your gross monthly income.
- Discount Points
- Upfront fees paid at closing to buy down your mortgage interest rate.
- Down Payment
- The upfront cash you pay toward a home's price, reducing how much you borrow.
- Escrow
- An account a lender uses to hold and pay your property taxes and homeowners insurance.
- Fixed-Rate Mortgage
- A loan whose interest rate stays the same for the whole term, keeping payments steady.
- Loan-to-Value Ratio (LTV)
- A percentage comparing how much you borrow to the home's value, used by lenders to judge risk.
- Principal
- The amount you borrow and still owe on a mortgage, separate from interest.
- Private Mortgage Insurance (PMI)
- A fee on conventional loans with less than 20 percent down that protects the lender, not you.
