Field & Main Bank

Mortgage & Home Financing Glossary

An extensive list of terms and definitions related to the home buying and selling experience

A mortgage where the interest rate applied to the outstanding balance changes throughout the life of the loan.

The repayment of a loan over time by installments, dealing with how much of your payment goes toward interest and how much is paid toward principal.

The actual interest rate you pay on your mortgage, including fees, points and other costs associated with the loan.

A comprehensive report that determines the value of a property.

The last step in the loan process where documents are signed.

These are fees associated with finalizing the purchasing of a property that are not included in the original purchased price. Purchased prices typically include origination fees, discount points, appraisal fee, title insurance, legal fees, real estate fees, prepayment of taxes and insurance, and real estate transfer taxes.

A short-term loan to finance the construction of a new residence, business or investment property, typically converted to a conventional loan after construction.

A mortgage that is not guaranteed or insured by a government entity such as the Federal Housing Agency (FHA) or Veterans Affairs (VA).

A detailed report that includes vital information about you and your credit history, compiled through credit reporting agencies.

The ratio of your liabilities (monthly bills and living expenses) divided by your gross monthly income.

An official public document that establishes property ownership.

A portion of money paid at the beginning of a loan to demonstrate commitment to the purchase.

Money paid to the seller by the buyer as a pledge to complete a real estate transaction.

A fund administered by a third party and used to pay taxes and insurance for a mortgage transaction.

The value of a property, minus any money owed against it.

A mortgage with a fixed interest rate that will not adjust at any point during the life of the loan.

The process by which a bank or lender sells a property after a borrower fails to meet the repayment terms of the loan.

A loan that allows you to borrow money from the equity in your home, based on a certain maximum draw amount.

The money paid by the borrower for the use of the money lent.

A limited, non-invasive examination of the condition of home that is completed by a third party prior to selling.

A legal claim or hold on a piece of property.

The price a seller can expect to receive for the sale of a property.

A fee charged for the processing of the application and documentation of the loan.

Points, also known as “discount points,” are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can, in turn, lower your monthly mortgage payments. A point is equal to 1% of your mortgage amount (or $1,000 for every $100,000).

The process through which a lender evaluates the credit of a potential borrower and determines the maximum amount they would be willing to lend.

The unpaid balance on your mortgage loan.

Extra insurance that a lender requires when a buyer obtains a loan for more than 80% of the home’s value. This insurance can be removed once your loan balance reaches 80% of the home’s value at the request of the borrower.

The act of replacing the existing loan on your property with a new one.

A title is the legal document stating you own a right to something. For real estate purposes, the title refers to ownership of the property, meaning that you have the rights to use that property.

Insurance taken out to protect both the borrower and the lender in case of a title dispute.

The process a lender uses to determine a borrower’s eligibility for a loan.

A deed is the legal document that transfers title from one person to another.