BenThe straight-talk dictionary
Forty terms you'll hear in the process, explained the way I'd explain them across a desk — no unnecessary jargon.
APR (Annual Percentage Rate)
The true yearly cost of your loan — interest rate plus most fees, expressed as a percentage. Two loans with the same rate can have very different APRs, which is why comparing APRs matters more than comparing rates.
Amortization
The schedule that splits each payment between interest and principal. Early on, most of your payment is interest; the balance flips over time.
Appraisal
A licensed professional's opinion of what the home is worth, ordered by the lender to make sure the property supports the loan.
ARM (Adjustable-Rate Mortgage)
A loan whose rate is fixed for an initial period (like 5 or 7 years), then adjusts periodically with the market. Lower starting rate, more future uncertainty.
ARV (After Repair Value)
What an investment property should be worth after renovations — the number fix & flip loans are built around.
Cash-Out Refinance
Replacing your mortgage with a bigger one and taking the difference in cash — converting home equity into money you can use.
Clear to Close
The underwriter's final green light: every condition is satisfied and the closing can be scheduled. The best three words in the process.
Closing Costs
The fees to finalize the loan and transfer the home — lender fees, title, appraisal, taxes, insurance. Typically 2–5% of the loan amount.
Conventional Loan
A mortgage not insured by the government, following Fannie Mae/Freddie Mac guidelines. Down payments start at 3% for first-time buyers.
Credit Score
A number (usually 300–850) summarizing your credit history. Mortgage lenders typically pull a specific version that may differ from the score in your banking app.
DSCR (Debt Service Coverage Ratio)
Rent divided by the property's full payment. At 1.25, the property earns 25% more than it owes — investor loans qualify on this instead of your personal income.
DTI (Debt-to-Income Ratio)
Your monthly debt payments divided by gross monthly income. The classic guideline: housing under ~28%, total debts under ~36% — though many programs allow more.
Down Payment
The part of the price you pay upfront. The 20% rule is a myth: conventional starts at 3%, FHA at 3.5%, VA at zero.
Earnest Money
A deposit submitted with your offer showing you're serious. It's held in escrow and applied to your purchase at closing.
Equity
The part of the home you truly own: market value minus what you owe. It grows through payments and appreciation.
Escrow
A neutral third party holding money during the transaction — and after closing, the account your lender uses to pay your taxes and insurance.
FHA Loan
A government-insured mortgage with 3.5% down from a 580 credit score. The most forgiving mainstream path to a first home.
Fixed-Rate Mortgage
Your rate — and your principal & interest payment — never changes for the life of the loan. The 30-year fixed is America's default for a reason.
HELOC
A home equity line of credit: a revolving credit line secured by your equity. Draw what you need, when you need it, like a credit card with much better rates.
Jumbo Loan
A mortgage larger than the conforming limit (~$806,500 in most areas for 2026). Stricter requirements, and lender pricing varies wildly — comparison shopping pays most here.
LTV (Loan-to-Value)
The loan amount as a percentage of the home's value. 80% LTV or below usually means no mortgage insurance on conventional loans.
Loan Estimate
The standardized 3-page disclosure you get within 3 business days of applying, showing rate, payment, and closing costs — designed so you can compare lenders line by line.
Mortgage Broker
A licensed professional who shops your loan across many wholesale lenders instead of selling one lender's products. Brokers don't fund loans themselves; they place your file with a lender that does.
Mortgage Insurance (PMI / MIP)
Insurance protecting the lender when your down payment is under 20%. PMI (conventional) can be removed as equity grows; FHA's MIP usually lasts the life of the loan.
Origination Fee
What a lender or broker charges to create the loan, usually a percentage of the amount. Always visible on your Loan Estimate.
PITIA
Principal, Interest, Taxes, Insurance, and Association dues — the full monthly cost of owning, and the payment lenders actually qualify you on.
Points (Discount Points)
Prepaid interest: 1 point = 1% of the loan, paid at closing to buy a lower rate. Worth it only if you'll keep the loan past the break-even.
Pre-Approval
A lender's conditional commitment based on verified information. Far stronger than a pre-qualification — but still weaker than pre-underwriting.
Pre-Qualification
A quick estimate based on what you tell a lender, with nothing verified. Fine for a ballpark; weak in a bidding war.
Pre-Underwriting
Your income, credit, and asset documents reviewed by an underwriter before you shop. Your offer competes almost like cash — this is how I work every file.
Principal
The amount you actually borrowed. Every payment chips away at it — slowly at first, then faster.
Rate Lock
Freezing your interest rate for a set window (usually 30–60 days) so market moves can't hurt you before closing.
Refinance
Replacing your current mortgage with a new one — to lower the rate, change the term, remove mortgage insurance, or pull cash out.
Seller Concessions
Money the seller agrees to contribute toward your closing costs — a negotiable way to reduce your cash to close.
Title Insurance
Protection against ownership disputes and liens hiding in the property's history. The lender requires their policy; yours is optional but wise.
Underwriting
The lender's deep review of your finances and the property to approve the loan. The underwriter is the person we're really building your file for.
VA Loan
The benefit earned by veterans and service members: zero down, no monthly mortgage insurance, competitive rates. If you're eligible, it's usually unbeatable.
Wholesale Lender
Lenders that don't work with borrowers directly — they price and fund loans submitted by brokers. You'd never deal with one yourself; your broker does.
Cash to Close
The total money you bring to the closing table: down payment plus closing costs, minus credits and your earnest money already paid.
Contingency
A condition in your offer that lets you exit the deal safely — most commonly inspection, appraisal, and financing contingencies.
No results — just ask me directly.