Glossary
The words on your disclosures.
Search a term, jump by letter, or browse by topic. If a word decides your file, ask a loan officer. Do not stop at a website.
Mortgage glossary
60 terms
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- 1003 / URLAProcess
- The Uniform Residential Loan Application, the form that starts a mortgage file. Nicknamed the 1003. Completeness matters more than calligraphy. What you sign has to match the documents.
Also called uniform residential loan application, loan application.
A
- Adjustable-rate mortgage (ARM)Loan types
- A loan whose interest rate can change after a fixed introductory period, on a published index and cap structure. The payment you start with is not a promise of the payment in year seven. Ask to see the caps in writing.
Also called variable rate.
- AmortizationCosts
- How a loan is paid down over time: each payment covers interest first, then principal. Early years are heavy on interest. A longer term usually means a lower payment and more interest over the life of the loan.
Also called amortization schedule, principal and interest.
- APRCosts
- Annual Percentage Rate. A broader cost figure than the interest rate alone, because it includes certain fees. Useful for comparing Loan Estimates. Still not a promise of your exact loan.
Also called annual percentage rate.
Read more:Interest rates, explained
- AppraisalProperty
- An independent opinion of market value used by the lender. It is not a home inspection and it is not a guarantee you got a good deal. If value comes in short, the file has to change: price, down payment, or program.
Also called appraised value, appraiser.
- AssetsCredit
- Money and accounts the lender can document: checking, savings, and sometimes retirement. Used for down payment, closing costs, and reserves after funding. Large deposits need a paper trail.
Also called bank statements, reserves, cash in the bank.
Read more:Mortgage checklist
C
- Cash-out refinanceLoan types
- A refinance that replaces your current loan and lets you pull equity out as cash. Underwritten more tightly than a rate-and-term refinance. Name the purpose. Unnamed cash is expensive money.
Also called cash out, take cash out.
Read more:Should I refinance?
- Cash to closeCosts
- What you need at the table after credits: remaining down payment, closing costs, and prepaids, minus earnest money already paid. It is not the same number as “down payment.” You will see it on the Closing Disclosure.
Also called money to close, funds to close.
Read more:What are closing costs?
- Clear to closeProcess
- Underwriting has signed off on conditions enough for the loan to close, pending final figures, insurance, and title. It is a status, not a party. Files can still stall if something changes.
Also called CTC, cleared to close.
- Closing costsCosts
- Fees and prepaid items required to close, separate from down payment: origination, appraisal, title, escrow, prepaid interest, and initial tax and insurance deposits, among others. Some can be negotiated or paid by a seller. None should be a surprise at the table.
Also called fees, settlement costs.
Read more:What are closing costs?
- Closing Disclosure (CD)Process
- The required form that shows final loan terms and cash to close. On a purchase you generally get it three business days before signing. Read it. Names, rate, and money should match what you were told.
- ConditionsProcess
- Items underwriting still needs before the loan can be approved or funded: a letter, a statement page, an explanation. Conditions are normal. Unanswered conditions are how closings slip.
Also called prior to docs, prior to funding, PTD.
- Conforming loanLoan types
- A conventional loan that meets Fannie Mae or Freddie Mac requirements, including the loan-limit cap for that county and year. Above that cap you are usually in jumbo territory.
Also called conforming limit.
- Conventional loanLoan types
- A mortgage not insured by FHA, VA, or USDA. Often paired with PMI when you put down less than 20%. Guidelines still exist. “Conventional” does not mean “anything goes.”
Also called conventional mortgage, fannie, freddie.
Read more:Conventional loans
- Credit reportCredit
- The record lenders pull (usually a tri-merge) to see debts, payment history, and scores. Mortgage scores are not the free number in a banking app. Hancock will not publish “the” minimum score on a webpage. Overlays differ by program and change.
Also called credit score, tri-merge, FICO.
Read more:Credit and mortgages
D
- Debt-to-income ratio (DTI)Credit
- Your monthly debt payments compared with gross monthly income. Housing payment is part of it; car loans and student loans are too. One underwriting test among several, not a personality score.
Also called backend ratio, front-end ratio.
Read more:How much home can I afford?
- Discount pointsCosts
- An upfront fee, usually 1% of the loan amount per point, paid to lower the interest rate. Whether that trade is smart depends on how long you will keep the loan. Points are not a donation to the loan officer.
Also called buy down, buydown.
- Down paymentCosts
- Cash that reduces the loan amount. It is not cash to close. You still need closing costs and, on many files, reserves. Lower down payment can mean mortgage insurance or different pricing, a trade-off, not a moral failing.
Also called downpayment, money down.
Read more:Down payments
E
- Earnest moneyProperty
- A deposit that shows a seller you are serious. Credited at closing when the deal funds. It can be at risk if you walk away outside your contract rights. Underwriting will want to see where it came from.
Also called EMD, good faith deposit, earnest deposit.
- EquityAfter closing
- The share of the home you own: value minus what you owe. Appraisals, market moves, and extra principal payments all change it. Equity is not a checking account until a refinance, sale, or HELOC makes it one.
Also called home equity.
- EscrowAfter closing
- Two different things people mix up: (1) the account your servicer uses to pay taxes and insurance from part of your monthly payment, and (2) the settlement process that holds money and documents until closing. Ask which one someone means.
Also called impound, impounds, escrow account.
F
- FHA loanLoan types
- A mortgage insured by the Federal Housing Administration. Often used with a lower down payment. Mortgage insurance works differently than conventional PMI. Property and occupancy still have to fit FHA rules.
Also called federal housing administration, MIP.
Read more:FHA loans
- Fixed-rate mortgageLoan types
- The interest rate stays the same for the life of the loan. The payment for principal and interest stays the same. Taxes and insurance in escrow can still change the total monthly draft.
Also called fixed rate, 30 year fixed, 15 year.
- FloatProcess
- The rate is not locked. It can move with the market until you lock. Floating is a decision, not a default. If your closing date is close, ask whether floating is still the honest move.
Also called floating the rate, unlocked.
G
- Gift fundsCosts
- Money a donor gives you toward the loan, documented with a gift letter and a trail of the transfer. Eligible donors vary by program. Ask before the money leaves their account. A screenshot after the fact is a painful way to learn the rules.
Also called gift letter, down payment gift.
Read more:Down payments
H
- HELOCLoan types
- A home equity line of credit, revolving money secured by the house, usually in second position. It is not a first-mortgage refinance. If you have one, your officer needs the statement; it affects title and equity.
Also called home equity line of credit, home equity line.
- HOAProperty
- Homeowners association dues, often monthly. They belong in the payment you have to live with even though they are not paid to the lender. Condos and some planned communities also require questionnaires that can decide eligibility.
Also called homeowners association, condo dues, association dues.
- Home inspectionProperty
- A look at the condition of the house for you, not for the lender. Separate from the appraisal. The appraiser is not hired to find a leaky roof for your benefit. Read the inspection yourself.
Also called inspector.
- Homeowners insuranceProperty
- The policy that covers the dwelling. Lenders require it. Flood coverage is separate when the zone requires it. A quote is not a binder. Premiums change cash to close and the escrow portion of the payment.
Also called hazard insurance, HOI, property insurance.
I
- Interest rateCosts
- The cost of borrowing the principal, expressed as a percentage. Not the same as APR. Not a number Hancock posts as a live quote on this site. Pricing depends on credit, LTV, occupancy, product, and lock period.
Also called note rate.
Read more:Interest rates, explained
J
- JumboLoan types
- A loan amount above the conforming limit for that county. Size, not luxury. Documentation and reserves can be tighter. A high price in a high-limit county might still be conforming.
Also called non-conforming, jumbo loan, jumbo mortgage.
Read more:Jumbo loans
L
- Loan EstimateProcess
- A required disclosure that shows estimated costs and terms after you apply. Read it. Compare it to later Closing Disclosures. Ask questions while there is still time to change course.
Also called LE.
- Loan officerProcess
- The person who originates your file. Look up their NMLS ID. Hancock routes you to a named officer, not a generic inbox. They are not the appraiser, not the title company, and not your real estate agent.
Also called originator, MLO, loan originator.
Read more:Find a loan officer
- Loan-to-value (LTV)Credit
- The loan amount divided by value (or purchase price, depending on the rule). Combined LTV includes second liens. LTV drives mortgage insurance, some pricing, and whether cash-out is even available.
Also called CLTV, combined loan to value.
- Lock extensionProcess
- More time on a rate lock when the file is not ready. Sometimes available, sometimes at a cost, sometimes not. Incomplete documents and fantasy closing dates are how people buy extensions.
Also called extend the lock, lock expired.
Read more:What is a rate lock?
M
- Mortgage insuranceCosts
- Protection for the lender, paid by you, when equity is thin. Conventional files often use PMI. FHA uses MIP. VA uses a funding fee instead of monthly MI. The names differ. The idea is the same: less down, more cost somewhere.
Also called MI, MIP, UFMIP.
Read more:Down payments
O
- OccupancyProperty
- Where you will actually live: primary, second home, or investment. It is a fact, not a marketing label. Mis-stating occupancy is how files fail. Guidelines and down payment change with occupancy on purpose.
Also called primary residence, second home, investment property.
Read more:Investment property basics
- Origination feeCosts
- What the lender charges to make the loan, shown on the Loan Estimate. Names of line items vary. Compare the LE, not a verbal “we don’t charge anything” that reappears as a processing fee.
Also called lender fees, underwriting fee, processing fee.
- OverlayCredit
- An extra rule on top of the base FHA, VA, USDA, or conventional guideline. Why a website will not publish one magic credit score or down payment. Your officer underwrites to the investor who will actually buy the loan.
Also called lender overlay, investor overlay.
P
- PITICosts
- Principal, interest, taxes, and insurance, the monthly housing number. Add HOA and you have PITIA. This is the payment to budget, not the principal-and-interest teaser from a rate ad.
Also called PITIA, principal interest taxes insurance, housing payment.
Read more:Mortgage calculator
- PMICosts
- Private mortgage insurance on many conventional loans with less than 20% down. Different from FHA MIP. It can often be removed later when equity and the servicer’s rules allow. Ask how, before you assume it lasts forever.
Also called private mortgage insurance.
- Pre-approvalProcess
- A conditional letter based on a real review of credit and documents. Not a final approval, not a rate lock, and still dependent on the property. What listing agents take seriously in a multiple-offer situation.
Also called preapproval, pre approval, pre-approval letter.
Read more:Prequalification vs. pre-approval
- Prepaid interestCosts
- Interest from the day you close until the first of the next month, collected at closing. Closing on the 2nd costs more prepaid interest than closing on the 28th. It is math, not a penalty.
Also called per diem interest, odd days interest.
- PrepaidsCosts
- Amounts collected at closing for things that come due later: prepaid interest and initial deposits into escrow for taxes and insurance. They are part of cash to close. They are not lender profit disguised as a surprise.
Also called prepaid items, initial escrow deposit.
- PrequalificationProcess
- An early estimate, often from information you provide without a full document review. Useful for a first conversation. Easy to overstate. Weaker than pre-approval when a seller is choosing among offers.
Also called pre-qual, pre qualification.
Read more:Prequalification vs. pre-approval
- PrincipalCosts
- The amount you borrowed that you still owe, not including interest. Extra principal payments shrink this faster. A refinance replaces it with a new loan amount that may include costs.
Also called loan amount, unpaid principal balance, UPB.
R
- Rate-and-term refinanceLoan types
- A refinance that changes the rate and/or term without taking substantial cash out. Different decision from cash-out. Run the break-even against closing costs and how long you will keep the home.
Also called limited cash-out, no cash out refinance, rate and term.
Read more:Should I refinance?
- Rate lockProcess
- An agreement to hold an interest rate for a defined period while the loan is processed, with conditions. Locks expire. A lock is not a closing date. Complete documents and a realistic calendar matter.
Also called locked rate, lock period.
Read more:What is a rate lock?
- ReservesCredit
- Documented assets left after you close, often counted in months of housing payment. Investment and jumbo files ask for more. Money you already spent on furniture is not a reserve.
Also called months of reserves, asset reserves.
- Reverse mortgageLoan types
- A loan for eligible older homeowners that does not require a monthly principal-and-interest payment the same way a forward mortgage does. Taxes, insurance, and occupancy still matter. It is a specific product, not free money.
Also called HECM, home equity conversion mortgage.
Read more:Reverse mortgage
S
- Seller creditCosts
- Money the seller agrees to put toward your costs, written in the contract. Loan programs cap how much is allowed. A handshake credit that never hits the addendum is not a credit.
Also called seller concession, seller assist, closing cost credit.
- ServicingAfter closing
- Who collects your payment after closing. It may not be Hancock. Loans are often sold or transferred. Read the first statements and set up the payment so it cannot be missed.
Also called servicer, loan servicer, who I pay.
Read more:Life after closing
- Settlement agentProcess
- The company or attorney who runs closing: documents, funds, and recording. Confirm wire instructions by calling a number you already have. Last-minute emails that change the account are a classic fraud pattern.
Also called closing agent, escrow officer, title company.
T
- TermLoan types
- How long the loan is scheduled to last, in years. A new 30-year refinance restarts the clock even if you have been paying for a decade. Shorter terms cost more per month and less interest over time.
Also called loan term, 30 year, 15 year.
- Title insuranceProperty
- Insurance against certain defects in ownership. Lenders require a lender’s policy. An owner’s policy is a separate conversation about protecting you. Title problems are why closings slip on otherwise clean files.
Also called owners policy, lenders policy, title search.
U
- UnderwritingProcess
- The review that decides whether the loan meets investor and regulatory guidelines. Conditions are normal. Silence is not. Your loan officer should be able to tell you what is still open.
Also called underwriter, UW, credit decision.
- USDA loanLoan types
- A rural development mortgage with location and income limits. “Rural” on a map is a government definition, not a vibe. Property eligibility and your household income both have to fit.
Also called rural development, RD loan.
Read more:USDA loans
V
- VA loanLoan types
- A loan backed by the Department of Veterans Affairs for eligible veterans, service members, and some surviving spouses. Entitlement and occupancy are facts. A Certificate of Eligibility is the starting document, not the finish.
Also called veterans loan, certificate of eligibility, COE.
Read more:VA loans
- Verification of employment (VOE)Process
- The lender confirming you still work where you said, often near closing. Changing jobs, going on unpaid leave, or switching to 1099 during the file can undo a week of work. Ask before you resign.
Also called VOE form, verbal VOE.
W
- Wire fraudProcess
- Criminals impersonate title or lenders and send fake wiring instructions. Always confirm by phone using a number you already know, not a number in a new email. Hancock will not be offended if you hang up and call back.
Also called wire instructions, closing wire, title wire scam.
These definitions are education, not a commitment to lend and not a substitute for the disclosures on your loan.
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