Mortgage glossary

Mortgage terms, defined plainly.

The terms you’re likely to meet on a Loan Estimate, Closing Disclosure, or mortgage statement, in plain language. Jump to a letter or read straight through.

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1031 Exchange: A tax strategy allowing you to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a like-kind property within strict IRS timelines. Does not apply to primary residences.

A

Abstract of Title: A condensed history of a property's ownership and any liens, encumbrances, or claims against it. Compiled by a title company from public records. Used to verify clear title before closing.
Acceleration Clause: A mortgage provision that allows the lender to demand full repayment of the loan immediately if you default, sell the property, or violate other loan terms. Triggers the foreclosure process if you cannot pay.
Adjustable-Rate Mortgage (ARM): A loan where the interest rate is fixed for an initial period (e.g. 5 years on a 5/1 ARM) then adjusts annually based on a market index. Your payment can go up or down after the fixed period ends.
Adverse Action Notice: A letter from a lender explaining why your credit application was denied, offered at worse terms, or not acted on. Legally required. You have 60 days to request more details.
Amortization: The process of paying off your loan through scheduled monthly payments. Early payments go mostly toward interest; later payments shift toward principal. On a 30-year loan it takes about 20 years before you pay more principal than interest each month.
Annual Escrow Analysis: Your servicer reviews your escrow account once a year to ensure enough is being collected for taxes and insurance. If they under-collected you get a shortage notice. If they over-collected and you're current, a surplus of $50 or more is refunded within 30 days.
Appraisal: An independent professional estimate of your home value ordered by the lender. Required for most loans. If the appraisal comes in below the purchase price, the lender will only loan based on the appraised value.
Appraisal Gap: The difference between the agreed purchase price and the appraised value when the appraisal comes in low. The buyer must cover this gap in cash, renegotiate the price, or walk away. Lenders only loan on the appraised value.
APR: Annual Percentage Rate -- the true yearly cost of your loan including interest rate plus lender fees and points. Always compare APR between lenders, not just the interest rate.
ARM Cap: Limits on how much your interest rate can change on an adjustable-rate mortgage. A 2/2/5 cap means it can rise max 2% at first adjustment, 2% each subsequent year, and no more than 5% total over the life of the loan.
Assets: What you own -- checking and savings accounts, retirement accounts, stocks, other real estate. Lenders verify assets to confirm you have enough for the down payment, closing costs, and reserves.
Assumable Mortgage: A loan that can be transferred to a new buyer who takes over the existing loan terms -- including the original interest rate. VA and FHA loans are typically assumable. Conventional loans usually are not. Highly valuable when existing rates are below market.
ATR (Ability to Repay): A federal rule requiring lenders to make a reasonable good-faith determination that you can repay the loan. If a lender ignores this rule, you may have the right to challenge the loan in court.

B

Balloon Payment: A large lump-sum payment due at the end of a loan term. Rare in residential mortgages today but still appears on some commercial or seller-financed loans. Watch for this on any closing document.
Break-Even Point: In refinancing, the number of months it takes to recoup your closing costs through monthly savings. If refinancing saves $200/month and costs $6,000 in fees, your break-even is 30 months. Only worth refinancing if you plan to stay longer than that.
Bridge Loan: A short-term loan that lets you buy a new home before selling your current one, using your existing home's equity as collateral. Typically 6-12 months. Higher rates and fees. Paid off when your old home sells.
Buydown: Paying discount points upfront to reduce your interest rate temporarily or permanently. A 2-1 buydown reduces your rate by 2% in year one and 1% in year two before settling at the note rate.

C

Cash-Out Refinance: Replacing your existing mortgage with a larger loan and taking the difference in cash. You are borrowing against your equity. Most lenders allow up to 80% LTV. Your payment will be higher.
CFPB: Consumer Financial Protection Bureau. The federal agency that regulates mortgage lenders and servicers. If your servicer violates your rights, you can file a complaint at consumerfinance.gov. Most servicers respond within 15 days.
Chain of Title: The complete history of ownership of a property. Title companies search this to confirm the seller has clear legal right to sell and there are no liens or claims against the property.
Clear to Close: The green light from underwriting -- all conditions are satisfied and your loan is approved to proceed to closing. You should receive your Closing Disclosure within 24 hours of this milestone.
Closing Costs: Fees paid at closing typically totaling 2-5% of the loan amount. Includes lender fees, title insurance, appraisal, prepaid taxes and insurance, and settlement fees. You receive a Loan Estimate within 3 days of application showing estimated costs.
Closing Disclosure: A 5-page document showing your final loan terms, interest rate, monthly payment, and all closing costs. By law you must receive it at least 3 business days before closing. Compare it to your Loan Estimate line by line.
Co-borrower: A second person on the loan whose income, assets, and credit are all considered. Different from a co-signer. A co-borrower is on the loan and typically on the title as well.
Conforming Loan: A loan that meets Fannie Mae and Freddie Mac guidelines, including loan limits ($832,750 for a one-unit home in most areas in 2026; higher in high-cost areas). Conforming loans generally have lower rates than jumbo loans.
Construction Loan: A short-term loan that funds the building of a home. Funds are disbursed in draws as construction progresses. Converts to a permanent mortgage (construction-to-permanent) or must be paid off with a new loan when the build is complete.
Contingency: A condition in a purchase contract that must be met for the deal to close. Common contingencies include financing, appraisal, and inspection. If a contingency is not met, the buyer can typically walk away without losing their earnest money.
Conventional Loan: A mortgage not backed by the government. Follows Fannie Mae or Freddie Mac guidelines. Many lenders look for a 620+ credit score, though Fannie Mae's automated underwriting no longer applies a fixed 620 minimum; 740+ gets the best rates. PMI required if down payment is under 20%.
Credit Report: A detailed history of your borrowing and repayment pulled from Equifax, Experian, and TransUnion. Lenders pull all three for a mortgage. You can get free weekly reports from each bureau at annualcreditreport.com.
Credit Score: A 300-850 number summarizing your credit history. Many conventional lenders look for 620+. FHA allows 580+. Every 20-point drop in score can cost you a higher rate. Scores above 740 get the best pricing.
Curtailment: An extra payment applied directly to your principal balance, reducing your loan balance faster than the scheduled amortization. Always specify to your servicer that extra payments should be applied to principal.

D

Debt-to-Income (DTI): Your monthly debt payments divided by your gross monthly income. Front-end DTI covers just your housing payment. Back-end DTI includes all monthly debts. Most lenders want back-end DTI under 43-45%.
Deed: The legal document that transfers ownership of a property. Signed at closing. Recorded with the county. Different from the mortgage, which is the debt agreement -- the deed is about who owns the property.
Deed in Lieu: Voluntarily transferring your home to the lender to avoid foreclosure. Less damaging than foreclosure but still serious. Typically only offered after other loss mitigation options have been explored.
Default: Failing to meet the terms of your mortgage, typically by missing payments. Most loans enter default after 30 days past due. Per federal law, servicers are required to begin loss mitigation outreach no later than the 36th day of delinquency.
Deficiency Judgment: A court judgment allowing a lender to collect the remaining loan balance after a foreclosure or short sale if the sale price was less than what was owed. Not all states allow this. Check your state's anti-deficiency laws before a short sale.
Delinquency: Being past due on a mortgage payment. Reported to credit bureaus after 30 days. Stages: 30, 60, 90+ days delinquent. At 120 days delinquent servicers can begin the foreclosure process under federal rules.
Discount Points: Upfront fees paid to the lender to reduce your interest rate. One point equals 1% of the loan amount and typically lowers your rate by 0.25%. Worth it if you plan to stay in the home long enough to recoup the cost.
Down Payment: The portion of the purchase price you pay upfront. The rest is financed through your mortgage. Conventional loans allow as low as 3% down for first-time buyers. Under 20% typically requires PMI.
Down Payment Assistance (DPA): Programs -- typically offered by state or local housing agencies -- that provide grants or low-interest second loans to help buyers cover the down payment and closing costs. Income and purchase price limits usually apply. Ask your lender what programs are available in your area.
Dual Tracking: The illegal practice of pursuing foreclosure while simultaneously reviewing a borrower for loss mitigation. Prohibited under Regulation X (Federal Mortgage Law). If your servicer is doing this, you have grounds for a complaint.
Due-on-Sale Clause: A provision in most mortgages requiring the full loan balance to be paid if the property is sold or transferred. Prevents a buyer from assuming your mortgage without lender approval.

E

Earnest Money: A deposit (typically 1-3% of the purchase price) paid when you go under contract to show you are serious. Applied toward your down payment or closing costs at settlement. May be forfeited if you back out without a valid contingency.
Easement: A legal right for someone other than the owner to use a portion of the property for a specific purpose -- like a utility company running power lines or a neighbor's driveway access. Easements are attached to the property and survive sales.
ECOA: Equal Credit Opportunity Act. Prohibits lenders from discriminating based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. Lenders must notify you in writing if your credit application is denied.
Encumbrance: Any claim, lien, easement, or restriction on a property that may affect its value or the owner's ability to sell. All encumbrances are identified in the title search and disclosed to the buyer before closing.
Equity: The portion of your home you actually own -- the difference between your home's current value and what you owe on the mortgage. Equity grows as you pay down the loan and as your home appreciates in value.
Escrow: A holding account managed by your servicer where a portion of your monthly payment is collected for property taxes and homeowners insurance. Your servicer pays these bills on your behalf when they are due.
Escrow Shortage: When your escrow account does not have enough funds to cover your taxes and insurance. If it's less than one month's escrow payment, your servicer may bill you for it within 30 days or spread it over 12+ months; larger shortages must be spread over at least 12 months, increasing your monthly payment.
Escrow Surplus: When your servicer collected more than needed in your escrow account. If you're current, a surplus of $50 or more must be refunded within 30 days (smaller amounts may be credited to next year), and your monthly payment may decrease slightly.

F

Fannie Mae: Federal National Mortgage Association. A government-sponsored enterprise that buys conforming mortgages from lenders, freeing up capital for more lending. Sets guidelines for conventional loan qualification.
FCRA: Fair Credit Reporting Act. Governs how credit bureaus and lenders collect and use your credit information. Gives you the right to dispute inaccurate items on your credit report. Per federal law, errors must be investigated within 30 days.
FHA Loan: A government-backed loan insured by the Federal Housing Administration. Requires 3.5% down with 580+ credit score. Has upfront MIP of 1.75% and monthly MIP. If under 10% down, MIP stays for the life of the loan.
Forbearance: A temporary pause or reduction in mortgage payments agreed to by your servicer during a financial hardship. Payments are not forgiven -- they must be repaid. Does not automatically damage your credit if properly structured.
Force-Placed Insurance: Insurance a servicer purchases on your behalf when your homeowners insurance lapses -- and charges back to you. Almost always more expensive than market-rate insurance. You have the right to dispute it if you have valid coverage.
Foreclosure: The legal process by which a lender takes ownership of a property when the borrower defaults. Under federal law, servicers cannot begin foreclosure until a borrower is 120 days delinquent. Stays on your credit for 7 years.
Freddie Mac: Federal Home Loan Mortgage Corporation. Similar to Fannie Mae -- buys conforming mortgages and sets qualification guidelines. Both work together to keep mortgage money flowing through the US housing market.

G

Gift of Equity: When a family member sells you their home below market value and the difference counts as your down payment. The seller must provide a gift letter. Lenders treat it like cash down payment. Tax implications may apply to the seller.
Good Faith Estimate (GFE): Replaced by the Loan Estimate in 2015. Some people still use this term informally to refer to the estimated closing cost breakdown provided early in the loan process.

H

Hard Inquiry: A credit check by a lender when you apply for a loan. Can temporarily lower your score by a few points. Multiple mortgage inquiries within a 14-45 day window count as one inquiry under most scoring models.
Hardship Letter: A written statement explaining why you cannot make your mortgage payments, submitted with a loss mitigation application. Should be factual, specific, and include dates and dollar amounts. Vague letters are routinely denied.
HELOC: Home Equity Line of Credit. A revolving line of credit secured by your home equity. Works like a credit card with your home as collateral. Rates are typically variable. Separate from your first mortgage.
HOA: Homeowners Association. If your property is in an HOA community, you pay monthly or annual dues. These are included in your DTI calculation by lenders and must be paid to avoid a lien on your property.
HOEPA: Home Ownership and Equity Protection Act. Federal law that provides extra protections for high-cost mortgages. Prohibits certain loan terms like balloon payments and prepayment penalties on covered loans.
Home Equity Loan: A fixed-rate lump-sum loan against your home equity. Different from a HELOC -- you get all the money at once and repay it in fixed monthly installments. Your home is the collateral. Also called a second mortgage.
HPA: Homeowners Protection Act of 1998. Lets borrowers request cancellation of borrower-paid PMI when the balance is scheduled to reach 80% of the home's original value (if payments are current and other conditions are met), requires automatic termination at 78% of original value, and ends PMI no later than the loan's midpoint. Applies to single-family primary-residence loans closed on or after July 29, 1999.
HUD-1: The settlement statement used before 2015. Now replaced by the Closing Disclosure. If you closed on a loan before October 2015 you received a HUD-1 instead.

I

Impound Account: Another name for an escrow account used primarily in California and some western states. Same concept -- monthly deposits collected by the servicer to pay taxes and insurance.
Index: The benchmark interest rate that adjustable-rate mortgages are tied to. Common indexes include SOFR (Secured Overnight Financing Rate) and the 1-year Treasury. Your ARM rate = index + margin.
Inter Vivos Trust: Another name for a living trust -- a trust created while you are alive. Allows property to pass to heirs without probate. Mortgage lenders can lend to inter vivos trusts if the trust is revocable and you are both the trustee and beneficiary.
Irrevocable Trust: A trust that cannot be changed or revoked after it is created. Unlike a living trust, you give up control of the assets. Lenders typically will not make mortgage loans directly to irrevocable trusts. Property must often be transferred out of the trust to refinance.

J

Jumbo Loan: A loan that exceeds the conforming loan limit ($832,750 for a one-unit home in most areas in 2026; higher in high-cost areas). Requires stronger credit and larger down payment. Not backed by Fannie Mae or Freddie Mac. Typically requires 720+ credit score.

L

Lien: A legal claim against a property -- usually for unpaid debts. Mortgage lenders hold a lien on your home. Unpaid taxes, contractor bills, or HOA dues can also create liens. Liens must be cleared before a property can be sold.
Living Trust: A legal arrangement where you transfer property into a trust during your lifetime. You typically remain the trustee and beneficiary while alive. Upon death, property passes to heirs without probate court. Fannie Mae and Freddie Mac allow mortgages to be held in revocable living trusts.
Loan Estimate: A standardized 3-page document lenders must provide within 3 business days of your application. Shows your estimated interest rate, monthly payment, and closing costs. Use it to compare multiple lenders.
Loan Modification: A permanent change to the terms of your mortgage -- lowering the rate, extending the term, or adding missed payments to the balance. Requires lender approval and documentation of hardship. Can help avoid foreclosure.
Loan Officer: The person at a lender or mortgage company who takes your application, explains loan options, and guides you through the process. Also called a mortgage originator. Must be licensed with an NMLS number.
Loan Servicer: The company that manages your mortgage after closing -- collects payments, manages your escrow account, handles customer service, and processes payoffs. Your servicer may be different from your original lender.
Loan-to-Cost (LTC): Used in construction and renovation lending -- the loan amount divided by the total cost to build or improve the property. Different from LTV which uses the appraised value. Lenders typically cap LTC at 80-90%.
Loss Mitigation: Options available to borrowers who cannot make their mortgage payments. Includes repayment plans, forbearance, loan modification, short sale, and deed in lieu. Servicers are required by law to evaluate all options before foreclosing.
LTV: Loan-to-Value ratio. Your current loan balance divided by the appraised value of your home. 90% LTV means you owe 90% of what the home is worth. Above 80% LTV on conventional loans typically requires PMI.

M

Margin: The fixed percentage added to the index rate on an adjustable-rate mortgage. If the index is 3% and your margin is 2.5%, your rate would be 5.5%. The margin never changes -- the index does.
MIP: Mortgage Insurance Premium. The FHA version of mortgage insurance. Includes an upfront premium of 1.75% of the loan amount (often rolled into the loan) plus an annual premium paid monthly. Cannot be cancelled on most FHA loans without refinancing.
Mortgage: The legal agreement between you and your lender where you pledge your home as collateral for the loan. Different from the promissory note (your promise to repay). The mortgage is what gives the lender the right to foreclose if you default.
Mortgage Insurance: Insurance that protects the lender (not you) if you default. Required on conventional loans when LTV exceeds 80% (PMI) and on all FHA loans (MIP). VA and USDA loans have their own funding/guarantee fees instead.
Mortgage Statement: A monthly document from your servicer showing your loan balance, payment due, interest rate, escrow balance, and payment history. Review every statement for errors -- misapplied payments and unauthorized fees are common servicer mistakes.

N

Negative Amortization: When your monthly payment is less than the interest owed, causing your loan balance to increase rather than decrease. Prohibited on Qualified Mortgages. Still exists on some older loans. Your balance can exceed the original loan amount.
NMLS: Nationwide Multistate Licensing System. Every mortgage loan officer must be registered and licensed here. You can verify any loan officer at nmlsconsumeraccess.org. Always check before working with someone.
Non-QM Loan: A mortgage that does not meet the CFPB Qualified Mortgage standard. Serves borrowers who cannot document income traditionally -- self-employed, investors, recent credit events. Higher rates and fees. Less consumer protection than QM loans.
Note Rate: The actual interest rate written in your promissory note -- the rate used to calculate your principal and interest payment. Different from APR, which includes fees. This is the rate your payment is based on.
Notice of Default (NOD): A formal public notice filed by the lender indicating the borrower has defaulted and foreclosure proceedings may begin. The starting gun of the foreclosure timeline. Under federal servicing rules, the first foreclosure notice or filing generally can't happen until you're more than 120 days delinquent.

O

Origination Fee: A fee charged by the lender to process your loan. Typically 0.5-1% of the loan amount. Sometimes quoted as points. Negotiable on some loan types. Shown on your Loan Estimate and Closing Disclosure.

P

PACE Lien: Property Assessed Clean Energy -- financing for home improvements repaid through your property tax bill. Creates a lien that is senior to your mortgage in some states. Can complicate refinancing and sales. Lenders often require PACE liens to be paid off before closing.
Per Diem Interest: The daily interest charge on your mortgage. Relevant at closing -- you prepay interest from your closing date to the end of the month. Also used in payoff statements to calculate interest if you close after the quote date.
PITI: Principal, Interest, Taxes, and Insurance -- the four components of your total monthly mortgage payment. Some lenders also include HOA fees and MIP/PMI in this calculation for DTI purposes.
PMI: Private Mortgage Insurance. Required on conventional loans when your down payment is less than 20% (LTV above 80%). Protects the lender, not you. Under the Homeowners Protection Act, you can ask to cancel borrower-paid PMI once your balance is scheduled to reach 80% of the home's original value (conditions apply); it must end automatically when the balance is scheduled to reach 78% of original value if you're current, and no later than the midpoint of the loan term.
Points: Upfront fees paid to the lender expressed as a percentage of the loan amount. One point = 1% of the loan. Discount points buy down your rate. Origination points are lender fees. Both appear on your Loan Estimate.
Pre-Approval: A lender commits to a loan amount after verifying your income, assets, and credit with actual documents. Stronger than pre-qualification. A true pre-approval letter shows sellers you are a serious, verified buyer.
Pre-Qualification: An informal estimate of what you might be able to borrow based on self-reported information. No documents verified, no credit pull required. Not the same as pre-approval -- most sellers and agents know the difference.
Prepayment Penalty: A fee charged if you pay off your loan early -- by selling, refinancing, or making large extra payments. Rare on modern residential mortgages but still exists on some loans. Always check your note before refinancing.
Principal: The original amount borrowed, or the remaining balance you owe not including interest. Each monthly payment reduces your principal slightly. Extra principal payments can dramatically shorten your loan and reduce total interest paid.
Probate: The court-supervised process of distributing a deceased person's estate. Property held in a living trust bypasses probate. Property held in the deceased's name alone must go through probate before it can be transferred or sold.
Promissory Note: Your written legal promise to repay the mortgage. States the loan amount, interest rate, payment schedule, and consequences of default. You sign this at closing. Keep a copy -- it is the most important document in your loan package.

Q

QM (Qualified Mortgage): A loan that meets CFPB standards for safe lending under the Ability-to-Repay rule. QM loans cannot have risky features like negative amortization or interest-only payments. Most conventional loans are QMs.
QWR (Qualified Written Request): A formal written letter to your mortgage servicer requesting information or disputing an error. Per federal law, your servicer must acknowledge it within 5 business days and respond within 30. Sending a QWR creates a legal paper trail.

R

Rate Lock: A lender guarantee to hold your interest rate for a set period -- typically 30, 45, or 60 days -- while your loan is processed. If rates rise before closing, you are protected. If rates drop, you may be able to renegotiate depending on the lender.
Recission: The right to cancel a refinance or home equity loan within 3 business days of signing. Does not apply to purchase loans. If the lender failed to deliver required notices, the rescission window may extend up to 3 years.
Refinance: Replacing your existing mortgage with a new loan -- typically to get a lower rate, lower payment, shorter term, or access equity. Involves closing costs of 2-5% of the loan amount. Calculate your break-even point before deciding.
Regulation X: Implements RESPA. Covers escrow account administration, force-placed insurance rules, error resolution (12 CFR 1024.35), information requests (12 CFR 1024.36), and loss mitigation procedures (Federal Mortgage Law).
Regulation Z: A federal rule that implements TILA. Requires lenders to clearly disclose APR and loan terms. Covers your right to cancel a refinance within 3 days, ability-to-repay rules, and mortgage servicing standards.
Repayment Plan: An agreement with your servicer to pay back missed payments over time while resuming regular payments. A common first step in loss mitigation. Less severe than a loan modification and does not require as much documentation.
Reserves: Savings you have left over after closing -- usually measured in months of mortgage payments. Many loan programs require 2-6 months of reserves. Shows lenders you can handle a financial setback without defaulting.
RESPA: Real Estate Settlement Procedures Act. Federal law governing mortgage servicing and settlement costs. Requires servicers to respond to written requests, prohibits kickbacks, and mandates loss mitigation review before foreclosure.
Right of Rescission: Your legal right to cancel a refinance or home equity loan within 3 business days of closing. Does not apply to purchase loans. If a lender fails to provide this notice properly, your rescission period can extend up to 3 years.

S

Second Mortgage: A loan secured by your home that is subordinate to your first mortgage. Includes home equity loans and HELOCs. If you default, the first mortgage lender gets paid before the second mortgage lender.
Seller Concessions: The seller agrees to pay a portion of your closing costs, reducing your out-of-pocket expenses at closing. Limits vary by loan type and LTV -- typically 3-6% of the purchase price on conventional loans. Must be written into the purchase agreement.
Servicer Transfer: When your loan is sold and a new company takes over collecting your payments. Your loan terms never change. You must receive notice 15 days before the transfer. There is a 60-day grace period during which you cannot be penalized for sending payment to the old servicer.
Short Sale: Selling your home for less than the amount owed on the mortgage, with lender approval. Avoids foreclosure but still impacts your credit. The lender may forgive the remaining balance or pursue a deficiency judgment depending on state law.
Single Point of Contact: Per federal law, servicers must assign a specific person or team as your dedicated contact during loss mitigation. They must be knowledgeable about your case and able to provide updates on your application status.
SOFR: Secured Overnight Financing Rate. Replaced LIBOR as the primary benchmark index for adjustable-rate mortgages. Published daily by the Federal Reserve Bank of New York. Your ARM rate adjusts based on changes to SOFR plus your margin.
Subordination: When a lender agrees to let their lien take a lower priority position. Required when refinancing a first mortgage if you have a HELOC or second mortgage -- the second lender must agree to remain in second position after the new first mortgage closes.
Survey: A professional measurement and mapping of your property boundaries. May be required by your lender or title company. Identifies encroachments, easements, and exact lot lines. Important if you plan to build fences or additions.

T

Tenancy in Common: A form of co-ownership where each person owns a specified percentage of the property and can sell or will their share independently. No right of survivorship -- if one owner dies, their share goes to their heirs, not the surviving co-owners.
TILA: Truth in Lending Act. Federal law requiring lenders to clearly disclose APR, finance charges, and loan terms before you sign. Gives you the right to cancel certain refinances within 3 business days.
Title: Legal ownership of a property. Before closing, a title company searches public records to confirm the seller has clear title and there are no liens or competing claims. You need clear title to get a mortgage.
Title Insurance: Protects against claims on property ownership from before your purchase -- like undisclosed liens, forgery, or errors in public records. Lender title insurance is required. Owner title insurance is optional but strongly recommended.
Title Search: A review of public records to verify the history of ownership and identify any liens, easements, or encumbrances on a property. Conducted by the title company before closing. Required for every mortgage.
Transfer on Death (TOD) Deed: A deed that automatically transfers property to a named beneficiary upon your death, without going through probate. Not available in all states. Does not affect your ability to sell or refinance during your lifetime.

U

Underwriting: The process where an underwriter reviews your income, assets, credit, and the property to make a final loan decision. Outcomes: Approved, Approved with Conditions (most common), or Denied. Conditions must be cleared before closing.
USDA Loan: A zero-down-payment loan for homes in eligible rural and suburban areas backed by the US Department of Agriculture. Has income limits (typically 115% of area median income) and an upfront guarantee fee of 1% plus annual fee of 0.35%.

V

VA Loan: A zero-down-payment loan for eligible veterans, active duty service members, and surviving spouses. No monthly PMI. Competitive rates. Has a one-time funding fee (1.25-3.3%) that can be financed. The best loan program for those who qualify.
Verification of Deposit (VOD): A document from your bank confirming your account balances and how long the account has been open. Lenders use this to verify you have the funds for your down payment, closing costs, and reserves. Required for most mortgage applications.
Verification of Employment (VOE): Confirmation from your employer that you currently work there, your position, and your income. Lenders typically verify employment twice -- at application and again just before closing. A job change mid-process can delay or kill your loan.
Verification of Mortgage (VOM): A document from your current servicer confirming your payment history, current balance, and loan terms. Required when you apply for a new loan to prove you have been making on-time payments. Late payments on a VOM can disqualify you from certain loan programs.

W

Wire Fraud: A scam where criminals intercept closing communication and send fake wiring instructions. One of the most common real estate crimes. Always verify wire transfer information by calling the title company directly at a number you look up yourself -- never trust instructions sent by email.

General education from Lighthouse Companies, LLC. Sources are linked in each guide. Your documents and circumstances determine what applies to your loan.