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.

Want the full picture? Visit the Learning Center →

#

1031 Exchange: A qualifying exchange of real property held for business or investment that may defer recognition of gain under Internal Revenue Code §1031. Personal-use homes generally do not qualify. Deferred exchanges have identification, receipt, proceeds-handling and other conditions; receiving cash or other property can create taxable gain.

A

Abstract of Title: A summary of recorded instruments affecting a property’s title. It can help a title professional investigate ownership, liens and other interests, but does not guarantee that every claim or defect has been found.
Acceleration Clause: A loan provision allowing a lender to demand repayment of the remaining debt when specified conditions occur. Whether it can be exercised, and what notice or remedies apply, depends on the agreement and applicable law.
Adjustable-Rate Mortgage (ARM): A loan whose rate can change according to its contract. A 5/1 ARM commonly has five fixed years then annual resets; a 5/6 commonly resets every six months after five years. Index, margin, caps, floor, rounding and reset dates govern the actual rate.
Adverse Action Notice: An unfavorable credit action as defined by applicable law, such as a covered denial. Regulation B generally requires notification within 30 days after a completed application. Covered adverse-action notices give specific reasons or explain the right to request them within 60 days; exceptions and other timelines apply.
Amortization: Repaying principal through scheduled payments. For a fully amortizing fixed-rate loan, each payment covers accrued interest and principal; the split depends on rate and remaining term. Early payments are not always mostly interest.
Annual Escrow Analysis: A servicer review of projected escrow bills, deposits and target balances. For covered accounts, federal rules distinguish shortages, negative-balance deficiencies and surpluses. A surplus of at least $50 is generally refunded within 30 days of analysis when the borrower is current; lower contract or state limits may apply.
Appraisal: An opinion of property value as of a specified date. Mortgage programs determine when an appraisal or other valuation is needed and how value affects financing. It is not a home inspection or a guarantee of a future sale price.
Appraisal Gap: The difference between a purchase price and appraised value. It may affect permitted financing and cash needed, depending on LTV, down payment, program and contract. The buyer does not automatically have to pay the entire gap in additional cash.
APR: Annual percentage rate: a disclosed annualized measure including interest and specified finance charges under applicable rules. It excludes some transaction and housing costs. ARM APR does not show the maximum possible rate, and different terms require more than an APR comparison.
ARM Cap: A contractual limit on an ARM rate adjustment, expressed in percentage points. Initial, periodic and lifetime caps can differ. A 2/2/5 label commonly means 2 points at the first reset, 2 at subsequent resets and 5 over the starting rate; confirm frequency, floors and exact contract wording.
Assets: Resources such as cash, investments or property. Mortgage underwriting may require evidence that particular assets are owned, available and from acceptable sources. Eligible assets, required reserves and verification methods vary by program.
Assumable Mortgage: A mortgage whose obligations may be taken over by an eligible new borrower under the loan’s terms and program rules. Approval, liability release, available equity and any VA entitlement consequences must be checked. A lower note rate alone does not establish a better transaction.
ATR (Ability to Repay): For covered transactions, Regulation Z requires a reasonable, good-faith determination of the consumer’s ability to repay using specified factors and verified information. Coverage, exceptions and Qualified Mortgage provisions matter; it is not a guarantee that payments will remain affordable.

B

Balloon Payment: A loan with a large remaining amount due at a specified time because scheduled payments do not fully repay principal by then. The borrower needs funds to pay it; refinancing or selling may be possible but is not guaranteed.
Break-Even Point: The point where a defined benefit equals a defined cost. Simple cash-flow break-even divides upfront cash by a positive monthly payment reduction. It does not establish interest savings or the best refinance; compare costs, interest and remaining debt over the same holding period.
Bridge Loan: Short-term financing intended to cover a funding gap, for example between purchasing another home and receiving sale proceeds. The contract sets its rate, costs, security and repayment deadline. A sale delay does not automatically extend that deadline.
Buydown: An arrangement to reduce borrowing payments or pricing. Discount points may lower the note rate by a lender-specific amount. A temporary buydown normally funds a payment subsidy while the contractual note rate remains unchanged; 2-1 refers to subsidy-equivalent reductions of 2 then 1 percentage points.

C

Cash-Out Refinance: Replacing secured debt with a larger loan and receiving proceeds after lien payoffs, costs and adjustments. More principal can raise debt but does not by itself prove a higher monthly payment; rate, term and charges also matter. LTV limits vary by program.
CFPB: The Consumer Financial Protection Bureau, a federal agency with consumer-finance responsibilities. Its complaint portal routes eligible complaints to companies or another agency. The portal says most companies respond within 15 days; that is not a guarantee of resolution or a universal legal deadline.
Chain of Title: The sequence of transfers and other recorded instruments through which ownership is traced. Reviewing it helps investigate title, but does not by itself prove that all liens, competing interests or recording defects are absent.
Clear to Close: A lender status indicating closing conditions have been met at that stage. It does not replace the required disclosures or guarantee funding. For covered mortgages the borrower generally receives a Closing Disclosure at least three business days before consummation.
Closing Costs: Charges connected with obtaining a loan and completing a property transaction. Actual charges depend on the transaction and may be paid in cash, financed or offset by credits. Closing costs differ from cash to close; neither alone measures the loan’s cost over a holding period.
Closing Disclosure: The standardized final terms-and-costs disclosure for covered closed-end mortgages. It generally must be received at least three business days before consummation. Certain material changes require a new waiting period. Reverse mortgages and HELOCs use different disclosures.
Co-borrower: A person who signs as a borrower and shares repayment obligations under the loan documents. Underwriting considers applicable income, debts and credit. Ownership interests and differences from a co-signer depend on the title, documents and program.
Conforming Loan: A mortgage meeting applicable Fannie Mae or Freddie Mac loan limits and eligibility rules. Limits vary by year, county and number of units. Conforming status does not guarantee a lower rate than a jumbo or other loan.
Construction Loan: Financing for construction, often disbursed in draws as agreed milestones are met. Interest, inspections, completion deadlines and conversion or repayment terms depend on the contract. Permanent financing is not automatically available.
Contingency: A contract condition that must be satisfied or waived for the transaction to proceed as specified. Cancellation rights, deadlines and return of earnest money depend on the written agreement and applicable law.
Conventional Loan: A mortgage not insured or guaranteed by a government agency. Conforming loans may follow Fannie Mae or Freddie Mac rules; jumbo and other conventional loans can use different investors. PMI and underwriting depend on the product; no credit score guarantees the best rate.
Credit Report: A record of credit accounts, payment history and other reportable information maintained by a credit bureau. Mortgage credit-report and score requirements depend on investor, lender, scoring model and current rules; a free report does not necessarily include a mortgage score.
Credit Score: A model-specific prediction of credit risk. Common consumer scores use a 300–850 range, but versions and mortgage requirements differ. A score threshold is one eligibility factor, not approval or a guaranteed interest rate.
Curtailment: An additional payment applied to principal, reducing the outstanding balance. Check how the servicer applies it and whether the contract has a prepayment charge. It generally shortens a fully amortizing schedule rather than changing the required payment unless a recast or other change is approved.

D

Debt-to-Income (DTI): Qualifying monthly debt divided by qualifying gross monthly income, multiplied by 100. Housing DTI uses the complete qualifying housing payment; total DTI adds other counted obligations. Income and debt treatment and limits vary by program and underwriting path. Zero or unknown income does not produce a valid ratio.
Deed: A legal instrument used to transfer an interest in real property. The type of deed, execution, delivery and recording requirements depend on jurisdiction. A deed is distinct from the promissory note and the mortgage or deed of trust securing a loan.
Deed in Lieu: Transferring the property to the lender under a negotiated agreement instead of completing foreclosure. Debt forgiveness, remaining liens, credit reporting and possible tax consequences depend on the agreement and law. It does not guarantee less credit damage or release from all liability.
Default: Failure to meet an obligation under the loan documents. Delinquency, late-fee dates, credit reporting and foreclosure are separate concepts with different thresholds and legal requirements. A universal 30-day default rule does not apply to every loan.
Deficiency Judgment: A court judgment for an enforceable amount remaining after foreclosure or another disposition, when permitted. The amount, available remedies and anti-deficiency protections depend on the jurisdiction, loan and transaction; negative equity alone does not establish a judgment.
Delinquency: A required payment that has not been made when due. Late-fee, reporting and foreclosure rules differ. Federal Regulation X generally restricts the first foreclosure notice or filing until a covered mortgage is more than 120 days delinquent, with specified exceptions; this is not a payment grace period.
Discount Points: Upfront charges to obtain a quoted lower mortgage rate. One point equals 1% of the loan amount. The rate reduction is specific to the offer; one point does not always buy a 0.25-percentage-point reduction. Compare actual costs, terms and holding period.
Down Payment: The portion of a purchase price paid without the purchase mortgage. Minimums depend on program, occupancy, borrower and property. Some eligible programs permit low or no down payment; mortgage-insurance requirements depend on the particular loan.
Down Payment Assistance (DPA): A program helping eligible buyers with a down payment or related costs. Assistance can be a grant or a repayable, deferred or conditionally forgivable loan. Eligibility, repayment, occupancy, sale and refinance conditions depend on the actual program.
Dual Tracking: Pursuing foreclosure while handling loss mitigation. Federal protections depend on a covered loan, a complete application, timing relative to a sale and other conditions. An application does not universally suspend every foreclosure action; seek prompt legal or HUD-approved counseling help.
Due-on-Sale Clause: A provision allowing a lender to demand repayment when an interest in the property is transferred without required consent. Federal and state law may protect specified transfers, so a sale or title change does not always permit enforcement.

E

Earnest Money: A deposit showing commitment under a purchase agreement, often credited toward funds due at closing. Its amount, custody, release and refund depend on the agreement and applicable law; it is not automatically refundable when a buyer changes their mind.
Easement: A right to use another person’s land for a specified purpose, such as access or utilities. Its scope, transfer, termination and effect on future owners depend on the instrument and applicable law.
ECOA: The Equal Credit Opportunity Act prohibits specified credit discrimination, including race, color, religion, national origin, sex, marital status, age when legally able to contract, public-assistance income and good-faith exercise of Consumer Credit Protection Act rights. Coverage and lawful evaluation rules apply.
Encumbrance: A claim, restriction or other interest affecting property, such as a lien or easement. Its effect on use, financing or transfer depends on the interest and law. A search or disclosure does not guarantee that every encumbrance has been found.
Equity: Estimated property value minus all debt secured by it, including additional liens. Equity can rise or fall with value and debt, and is not guaranteed profit. Selling costs and payoff adjustments reduce realizable proceeds.
Escrow: Funds or documents held by another party under specified conditions. In mortgage servicing, an escrow account collects money for bills such as taxes and insurance. In a sale, escrow can refer to holding deposits or closing funds until agreed conditions are met.
Escrow Shortage: An escrow balance below the target from an analysis, even if bills can be paid. In covered accounts, a shortage below one monthly escrow payment may remain outstanding, be due within 30 days, or be collected in equal payments over at least 12 months. A shortage at least one monthly payment may remain or be collected over at least 12 equal monthly payments. Negative-balance deficiencies follow different rules.
Escrow Surplus: An escrow balance exceeding the target balance established by an analysis. For covered accounts, a surplus of at least $50 generally must be refunded within 30 days of analysis if the borrower is current; smaller surpluses may be refunded or credited. A refund does not guarantee a lower future deposit.

F

Fannie Mae: A government-sponsored enterprise that purchases or guarantees eligible mortgages and supports the secondary mortgage market. Its acquisition and servicing standards apply to its programs; they are not the rules for every conventional loan.
FCRA: The Fair Credit Reporting Act governs consumer-reporting rights and responsibilities. Covered dispute investigations generally take 30 days, with specified situations allowing 45 days. It does not guarantee removal of accurate unfavorable information or a particular credit score.
FHA Loan: A mortgage insured by FHA, with program credit, property and underwriting conditions plus upfront and annual MIP. For case numbers assigned on or after June 3, 2013, original LTV at most 90% generally means 11 years of annual MIP; above 90% means the loan term. Older cases differ.
Forbearance: An agreement temporarily reducing or suspending required payments. It generally does not erase the debt. Repayment, interest, fees, credit reporting and options at its end depend on the agreement, program and applicable rules.
Force-Placed Insurance: Insurance obtained by a servicer when required coverage is absent or insufficient under applicable rules. It protects the lender’s interest and may provide narrower borrower coverage or cost more than a borrower-selected policy. Covered servicing rules require notices and other conditions before charging.
Foreclosure: A legal process to enforce a mortgage lien, governed by state law, loan terms and applicable federal protections. For covered loans, the first notice or filing generally cannot occur until more than 120 days delinquent, with exceptions. Timelines and rights are jurisdiction-specific.
Freddie Mac: A government-sponsored enterprise that purchases or guarantees eligible mortgages in the secondary market. Its own program requirements and servicing standards must be checked separately from Fannie Mae, FHA, VA and other rules.

G

Gift of Equity: Equity a seller transfers by selling for less than the applicable value, when a mortgage program permits that treatment. Eligible relationships, valuation, documentation and permitted use toward down payment or costs vary by program.
Good Faith Estimate (GFE): An estimate of loan-related settlement charges. The Loan Estimate replaced it for most covered closed-end mortgages in 2015, but a Good Faith Estimate remains relevant to certain loans, including reverse mortgages.

H

Hard Inquiry: A credit-report inquiry associated with a credit application that may affect a score. Eligible mortgage, auto and student-loan rate shopping is grouped under model-specific rules: older FICO versions use 14 days and newer versions 45 days. This does not mean all inquiries or all scoring models are treated alike.
Hardship Letter: A written explanation of circumstances affecting repayment, submitted when requested for assistance. It should accurately describe the situation and requested help. Documentation and approval criteria depend on the actual program; the letter alone does not secure assistance.
HELOC: A revolving credit line secured by a home, with borrowing and repayment governed by its agreement. It may have a draw period, variable rate, repayment period or balloon payment. The lender may reduce or freeze availability in specified circumstances; unused credit is not guaranteed emergency cash.
HOA: An association administering a community under its governing documents and applicable law. Dues, assessments, services, restrictions and collection rights vary. Include applicable charges in a housing budget even when they are paid outside the mortgage payment.
HOEPA: The Home Ownership and Equity Protection Act adds protections for covered high-cost mortgages. Coverage thresholds, disclosures and prohibited features follow specific rules. Balloon payments have limited exceptions, and prepayment penalties are prohibited on covered high-cost loans; this is not a rule for every mortgage.
Home Equity Loan: A loan secured by home equity, often disbursed as a lump sum. Its rate may be fixed or adjustable and its lien position depends on the transaction. Compare actual payments, costs and terms; the home can be at risk if the loan is not repaid.
HPA: The Homeowners Protection Act governs borrower-paid PMI on covered residential mortgages. Request cancellation generally uses 80% original-value LTV with conditions; scheduled 78% termination requires current payments. Final termination generally occurs the first month after the amortization midpoint if current. High-risk, lender-paid, FHA and VA rules differ.
HUD-1: A settlement statement replaced by the Closing Disclosure for most covered closed-end mortgages in 2015. It remains used for certain transactions, including reverse mortgages. It is not simply an obsolete form for every loan.

I

Impound Account: Another name for a mortgage escrow account used to collect funds for specified property taxes, insurance or other covered bills. Check the actual items, account analysis and applicable rules.
Index: The reference rate used in an ARM contract. At a reset the contract applies its index observation, margin, rounding, caps and floor; simply adding today’s index to the margin may not produce the next contractual rate.
Inter Vivos Trust: A trust created during a person’s lifetime. Whether a property held in it avoids probate or qualifies for a mortgage depends on how the trust is established and funded, state law and the loan program. Lenders may require review of trust documents.
Irrevocable Trust: A trust generally designed to limit the settlor’s unilateral ability to revoke or change it. Modification, termination, creditor protection, tax treatment and mortgage effects depend on the trust, state law and court or beneficiary powers.

J

Jumbo Loan: A loan above the applicable conforming limit for its county, year and number of units. Jumbo loans are commonly conventional mortgages. Credit, down payment, reserves and pricing vary by investor; they are not automatically more expensive.

L

Lien: A legal claim or security interest in property associated with an obligation. Priority, enforceability and the effect of sale or foreclosure depend on law and the documents. Transfers may require payoff, release, assumption or other arrangements; not every lien simply disappears.
Living Trust: A trust established during life. Properly transferred assets may avoid probate under applicable state law. Mortgage eligibility, borrower obligations and any permitted transfer protections depend on trust terms, program rules and law.
Loan Estimate: A standardized proposed-terms-and-costs disclosure for covered closed-end mortgages. Generally delivered or mailed within three business days after the creditor receives the six required application items. Reverse mortgages and HELOCs use different disclosures; a quote alone is not necessarily a complete application.
Loan Modification: An agreed change to existing loan terms, such as rate, payment schedule or maturity. It may reduce payments, extend repayment or capitalize amounts due; those effects can change total cost and balance. Eligibility and available changes depend on the servicer, investor and program.
Loan Officer: A mortgage originator helping arrange a loan. Depending on employer and activity, originators may require state licensing or federal registration. Verify the person and company through NMLS Consumer Access and the applicable regulator.
Loan Servicer: The company administering a loan account, including collecting and applying payments and providing account information. It may also administer escrow and assistance processes where applicable. The servicer may differ from the loan owner or original lender.
Loan-to-Cost (LTC): Loan-to-cost: loan amount divided by the eligible project cost, multiplied by 100. The lender or program defines which costs are included and any limit; it differs from loan-to-value.
Loss Mitigation: Processes for considering ways to address delinquency or avoid loss, such as a repayment plan, modification or disposition. Covered servicing rules create specific review and foreclosure protections when conditions are met; they do not require every option or guarantee approval.
LTV: Loan-to-value: a defined loan balance divided by the applicable property value, multiplied by 100. Purchase underwriting often uses the lower of price and appraised value, subject to program rules. CLTV includes additional liens; do not confuse original, current and combined LTV.

M

Margin: The contractual percentage-point amount added to the selected index when calculating an ARM reset. Caps, floors, rounding and index timing also apply. Margin is not itself the full rate or a guarantee of the next payment.
MIP: FHA mortgage insurance premium. Upfront and annual charges depend on applicable program rules; annual MIP is normally collected monthly. Duration depends on case-assignment date, original LTV and term. Current rules cannot be applied universally to older FHA loans.
Mortgage: A legal instrument securing an obligation with real property. The note states repayment obligations; the mortgage or deed of trust provides security and remedies subject to its terms and applicable law.
Mortgage Insurance: Coverage protecting the lender against specified borrower-default losses. Requirements, premiums, financing, cancellation and refund rules differ for conventional PMI, FHA MIP and other programs. It is distinct from homeowners insurance and does not eliminate the borrower’s debt.
Mortgage Statement: An account statement reporting amounts due and loan activity for a period. Covered periodic-statement rules specify information and exemptions. Compare it with payment records and related notices; the principal balance is not a date-specific payoff quote.

N

Negative Amortization: An increase in principal when unpaid accrued interest is added to the balance. It can occur when a required or accepted payment is below accrued interest under the contract. The resulting larger balance differs from simply paying interest without reducing principal.
NMLS: Nationwide Multistate Licensing System, used for mortgage licensing and registration. NMLS Consumer Access helps check records; an NMLS identifier does not itself mean state licensing, approval of a loan, or a guarantee of conduct.
Non-QM Loan: A mortgage that does not meet a particular Qualified Mortgage definition. Non-QM does not mean no consumer protections or no underwriting. Ability-to-repay and other rules may still apply, subject to the transaction’s coverage and exceptions.
Note Rate: The interest rate used under the note to calculate interest for the applicable period. A fixed note rate stays fixed under its terms; an ARM rate may reset. It differs from APR, which annualizes specified finance charges under disclosure rules.
Notice of Default (NOD): A notice of default used in certain state-law processes. Required content, delivery, recording, cure rights and foreclosure steps vary by jurisdiction. Covered federal servicing protections also have conditions and exceptions; a notice is not itself proof that every foreclosure requirement is satisfied.

O

Origination Fee: A lender charge for originating a loan, which may be stated as dollars or a percentage. Use the actual disclosed charges and compare equivalent quotes. A fee called a point does not by itself prove that a rate reduction was purchased.

P

PACE Lien: Property Assessed Clean Energy financing repaid through a property-tax assessment for eligible improvements. Costs, assessment priority, underwriting and sale or refinance effects depend on the program and applicable law. It is financing, not automatically a government grant or free improvement.
Per Diem Interest: Interest calculated for a day under the loan’s applicable rate and day-count convention. Closing or payoff documents may use it for a partial period. Confirm the covered dates and convention; not every loan uses an identical daily calculation.
PITI: Principal, interest, property taxes and homeowners insurance. PITI alone may omit mortgage insurance, HOA, assessments, flood insurance and other housing costs. Distinguish principal-and-interest payment, PITI and complete housing payment.
PMI: Private mortgage insurance protects the lender. It is common on conventional loans above 80% LTV, with monthly, upfront, split or lender-paid arrangements. Covered borrower-paid policies have cancellation and termination rules; current-value removal depends on investor conditions, not simply any new appraisal.
Points: A charge expressed as a percentage of the applicable loan amount: one point is 1%. Discount points may be exchanged for a lower quoted rate, but the actual reduction requires an alternative quote. Origination points may instead pay lender charges. Compare costs, payment, debt and holding period.
Pre-Approval: A lender’s preliminary indication of potential financing, often after reviewing income, credit and assets. The term varies by lender. It is conditional, may expire, and does not guarantee final underwriting, property approval or funding.
Pre-Qualification: An initial estimate of possible financing based on information the lender obtains. Practices and terminology vary; do not assume every pre-qualification is unverified or every pre-approval is fully underwritten. Neither guarantees a loan.
Prepayment Penalty: A contractual charge for specified early repayment, when permitted by law. Applicability, triggers, period and amount must be checked in the loan documents. Federal rules restrict it on covered loans and prohibit it for covered high-cost mortgages; it is not present or permitted on every loan.
Principal: The outstanding borrowed amount, excluding accrued interest unless it has been capitalized. In a fully amortizing schedule, principal payments reduce it; interest-only or negatively amortizing payments behave differently. Fees financed into a loan may increase the initial principal.
Probate: A legal process for administering a deceased person’s estate under state law. Whether a property passes through probate depends on ownership, valid transfer arrangements and available procedures or exceptions. A death does not automatically erase secured loan obligations.
Promissory Note: The borrower’s written promise to repay a loan under specified terms, including rate, payments and maturity. Read it together with any riders, security instrument and applicable disclosures; a quoted payment alone does not describe every obligation.

Q

QM (Qualified Mortgage): A category of mortgage meeting specified requirements under applicable Ability-to-Repay rules. Different QM categories have different conditions and legal protections. QM status is not a guarantee of affordability, approval, low cost or absence of borrower risk.
QWR (Qualified Written Request): A written mortgage-servicing request meeting applicable content and delivery requirements. Covered requests generally receive acknowledgment within five business days and response within 30, excluding Saturdays, Sundays and federal holidays; extensions, exceptions and shorter deadlines apply. Use any designated address.

R

Rate Lock: An agreement concerning a quoted rate for a specified period under stated conditions. Expiration, changes to loan terms or eligibility, and extension charges depend on the lock agreement. Confirm what is locked, through when and at what cost.
Refinance: Replacing an existing loan with a new one. Evaluate actual costs, financed amounts, remaining and new terms, interest, payment and remaining debt over the expected holding period. A lower payment or rate alone does not establish savings.
Regulation X: The federal regulation implementing RESPA and related mortgage-servicing provisions. Particular sections have coverage limits, conditions and exceptions; its protections should not be applied universally to every loan or process.
Regulation Z: The federal regulation implementing the Truth in Lending Act and related consumer-credit rules. Disclosure, rescission and other requirements vary by transaction. For example, a purchase mortgage does not carry the same rescission right as certain principal-dwelling refinances.
Repayment Plan: An agreed schedule for repaying overdue amounts, often in addition to ongoing payments. The amounts, duration, eligibility and consequences of missing the plan depend on the actual agreement and program. It does not necessarily change the loan’s underlying terms.
Rescission: Rescission is cancellation of a transaction under an applicable legal right. Federal mortgage rescission generally covers certain credit secured by a principal dwelling, not purchase-money mortgages. The three-business-day period depends on the required notice and disclosures; exceptions and extended rights require specific conditions.
Reserves: Eligible assets available after required closing funds, when the program requires them. Reserve requirements and the expense used to express them in months vary by loan, property and underwriting; there is no universal number of required months.
RESPA: The Real Estate Settlement Procedures Act governs specified settlement practices and related protections for covered transactions. Regulation X includes escrow, servicing and loss-mitigation provisions with scope, conditions and exceptions; it does not guarantee assistance or require every option before any foreclosure.
Right of Rescission: For certain covered loans secured by a principal dwelling, the right to cancel generally lasts until midnight of the third business day after the latest of consummation, required rescission notice and material disclosures. Purchase-money loans and some same-creditor refinances are exempt; HELOCs have separate rules.

S

Second Mortgage: A lien subordinate to another lien under applicable priority rules. A HELOC or home-equity loan may occupy this position, but actual priority must be checked. Sale, refinancing and foreclosure can affect security and debt differently; unpaid obligations do not automatically disappear.
Seller Concessions: Seller contributions toward permitted buyer costs. Caps and allowed expenses depend on program, occupancy and LTV; Fannie Mae purchase limits can be 3%, 6% or 9% for principal/second homes, or 2% for investment properties. A concession is not automatically an allowable down payment.
Servicer Transfer: A change in who services the mortgage. It does not itself rewrite the contract. Federal notice timing and a 60-day protection for on-time payments received by the old servicer apply to covered transfers, with exceptions. Confirm autopay, balances and the new address; scheduled escrow or ARM changes may still occur.
Short Sale: A sale for which a lienholder agrees to accept less than the amount otherwise owed to permit the transaction. Approval and terms must be in writing. Release of the lien does not necessarily release personal liability for a deficiency, and completion does not guarantee a particular credit outcome.
Single Point of Contact: A contact or assigned personnel for servicing assistance. Federal continuity-of-contact requirements apply to certain servicers and delinquent loans, with exceptions; they do not universally promise one named employee for every borrower.
SOFR: Secured Overnight Financing Rate: a measure of overnight Treasury-collateralized borrowing published by the New York Fed. A mortgage may use a specified average, compounded rate or term benchmark; use the index and observation convention named in the contract.
Subordination: An agreement changing priority among liens. A refinance may require a junior creditor’s agreement to retain the intended priority. Whether it is needed or available depends on existing liens, the new transaction, program and applicable law.
Survey: A professional measurement and depiction of property boundaries and specified features. Scope, records, exceptions and legal significance depend on the survey and jurisdiction; it is not a guarantee that every title or boundary issue has been resolved.

T

Tenancy in Common: A form of shared ownership in which owners hold interests that may be unequal. Transfer, inheritance, partition and restrictions depend on the deed, agreements and state law. It does not by itself create a right of survivorship.
TILA: The Truth in Lending Act provides consumer-credit disclosure and other protections implemented by Regulation Z. APR, finance charges and rescission rights follow transaction-specific definitions, coverage and exceptions. Not every mortgage has a three-business-day cancellation period.
Title: The legal ownership interests and rights associated with a property. Records, liens, restrictions and competing claims may affect those rights. Requirements for acceptable title in a transfer or loan depend on the transaction and applicable law.
Title Insurance: Insurance against specified title risks under a policy, subject to exclusions, exceptions and limits. A lender’s policy protects the lender’s covered interest; an owner’s policy protects the covered owner interest. Requirements and premiums depend on the transaction and policy.
Title Search: An examination of specified records to investigate ownership, liens and other interests affecting property. The search’s scope and available records matter; it does not guarantee discovery of every defect or unrecorded claim.
Transfer on Death (TOD) Deed: A deed intended to transfer an interest at death where state law permits it and its requirements are met. Validity, recording, revocation, beneficiary rights and effects on debts depend on the jurisdiction. It does not automatically eliminate a mortgage or every probate issue.

U

Underwriting: Review of a borrower, property and loan against applicable approval requirements. An approval may have conditions, and unresolved conditions or changed facts can affect closing. Documentation and decision criteria depend on the lender and program.
USDA Loan: USDA offers distinct direct and guaranteed housing programs. Single Family Housing Guaranteed eligibility includes property location, adjusted household income and underwriting. Zero down may be available; fees and income limits are program- and date-specific, not universal to every USDA loan.

V

VA Loan: A VA-guaranteed loan for eligible borrowers, including certain veterans, service members and spouses. No monthly mortgage insurance is charged. Funding fees, exemptions, entitlement, valuation and underwriting conditions apply; zero down and the lowest total cost are not guaranteed in every transaction.
Verification of Deposit (VOD): Documentation verifying specified deposit-account information for underwriting. A lender may use a verification form, statements or an approved electronic method. Required fields, acceptable sources and review periods vary by program.
Verification of Employment (VOE): Confirmation of specified employment or income information for underwriting. Timing, permitted methods, fields and any final verification depend on the lender and loan program; there is no universal requirement to perform exactly two checks.
Verification of Mortgage (VOM): Verification of mortgage payment history using records acceptable to the lender or investor. It is not required in the same form for every loan; credit reports, statements or other verified records may be permitted.

W

Wire Fraud: A scam diverting payment through fraudulent wire instructions or impersonation. Independently confirm instructions with a known, trusted contact using previously verified contact information before sending funds. If fraud is suspected, promptly contact the sending bank and appropriate authorities.

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