By Bill Lyons | Published on January 15, 2025

TABLE OF CONTENTS

›  A
›  B
›  C
›  D
›  E
›  F
›  H
›  I
›  J
›  L
›  M
›  N
›  O
›  P
›  Q
›  R
›  S
›  T
›  U
›  V
TABLE OF CONTENTS
    • 2/1 buydown: A 2/1 buydown mortgage is a financing option that offers a temporarily reduced rate. Borrowers pay a 2% reduced rate the first year and a 1% reduced rate the second year before the loan adjusts to its regular interest rate.
    • Ability-to-repay rule: An aspect of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that requires mortgage originators to make a reasonable, good-faith effort to determine whether a borrower will be able to pay back a loan according to its terms.
    • Adjustable-rate mortgage (ARM): A mortgage with an interest rate that changes over time. An adjustable-rate mortgage will typically have a fixed rate for a few years, after which the rate will periodically adjust based on market indexes.
    • Annual percentage rate (APR): A loan’s annual interest rate with lender fees and charges included.
    • Amortization: Mortgage amortization is the process of paying off a home loan’s principal amount and interest in installments over the loan’s term.
    • Application fee: A fee paid to the lender to cover the costs involved with reviewing and processing a mortgage application.
    • Appraisal: A professional evaluation of the fair market value of a particular property.
    • Appreciation: A property’s growth in value over time.
    • Asset: Items or resources that hold monetary value. Assets can be leveraged to increase borrowing power and qualify for a mortgage.
    • Assumable mortgage: A type of mortgage that allows a homeowner to transfer their rate and terms to the buyer of the home.
    • Balloon loan: A short-term loan where borrowers typically make low payments over most of the loan term, followed by an unusually large payment due at the end of the loan.
    • Break-even point: The point at which income is equal to costs. Calculating the break-even point can be useful when determining whether to purchase mortgage points or refinance.
    • Bridge loan: A short-term loan used to cover costs until a more permanent financing solution is secured.
    • Broker: Mortgage brokers connect borrowers with lenders and mortgage companies.
    • Broker fees: The commission that a mortgage broker charges for their services.
    • Buydown: A type of mortgage loan that allows borrowers to lower their rate for at least the first few years of their loan term.
    • Cash to close: The total amount of out-of-pocket money the buyer needs to bring to closing in order to finalize the purchase. This includes the down payment as well as any closing costs.
    • Cash-out refinance: A type of refinance loan where a borrower replaces their current mortgage with a larger one and pockets the difference in cash.
    • Certificate of Eligibility (COE): A document provided by the Department of Veterans Affairs (VA) that confirms a borrower is eligible for VA loan benefits.
    • Closing: The last step in the mortgage process where contracts are signed and ownership passes from the homeowner to the buyer.
    • Closing costs: The fees and expenses (outside of the down payment) that are tied to getting a mortgage and executing the real estate transaction.
    • Collateral: An asset owned by the borrower that is used to secure a loan.
    • Conforming loan: A mortgage that meets the conditions and requirements set by Fannie Mae and Freddie Mac.
    • Contingency: A clause specifying a condition that must be met before the purchase can be completed. For instance, one common contingency is the inspection contingency, which allows a buyer to back out if the home doesn’t pass inspection.
    • Conventional loan: A conventional loan is a mortgage provided by a private lender that is not backed by the government.
    • Credit report: An overview of an individual’s credit history and activity, including their record of repaying various debts.
    • Debt consolidation: A strategy where an individual combines various debts into a loan with a single monthly payment.
    • Debt-to-income (DTI) ratio: A metric, expressed as a percentage, that compares an individual’s gross monthly income to their monthly debts.
    • Deed: A deed is a legal document that officially transfers ownership of a property from a seller to a buyer.
    • Deed-in-lieu of foreclosure: An agreement where a homeowner facing foreclosure transfers ownership of the property to the lender rather than going through the foreclosure process.
    • Discount points: An upfront fee that allows a borrower to reduce the interest rate on their mortgage.
    • Down payment: The upfront sum the buyer pays to the seller when purchasing a home.
    • Earnest money deposit: A sum of money a buyer includes with their offer to show a seller that they’re serious about purchasing a home.
    • Equity: The difference between the current market value of a home and what the borrower still owes on the mortgage.
    • Escrow: A process where a neutral third-party holds onto money and/or assets of parties engaged in a real estate transaction until the deal has been finalized.
    • Fair market value (FMV): The price a home would likely sell for in an open market where a willing buyer and seller are informed and not facing external pressure.
    • Fannie Mae: The Federal National Mortgage Association (FNME) — commonly referred to as Fannie Mae — is a government-sponsored enterprise that purchases mortgages from lenders.
    • Federal Housing Administration (FHA): A federal government agency that offers mortgage insurance on FHA loans, which offer flexible qualifying and down payment requirements.
    • Fixed-rate mortgage: A home loan where the borrower locks in an interest rate that remains the same over the life of the loan.
    • Forbearance: An agreement between the lender and the borrower to temporarily pause mortgage payments in order to avoid foreclosure.
    • Foreclosure: The legal process where a lender attempts to seize possession of the borrower’s home after the borrower stops making loan payments.
    • Freddie Mac: The Federal Home Loan Mortgage Corporation (FHLMC) — commonly referred to as Freddie Mac — is a government-sponsored enterprise that purchases mortgages from lenders. Freddie Mac typically buys mortgages from smaller financial institutions compared to Fannie Mae.
    • Home equity line of credit (HELOC): A HELOC gives homeowners a revolving line of credit based on their level of equity.
    • Home equity loan (HELOAN): A home equity loan is a type of loan that is secured by the borrower’s equity in their home.
    • Home inspection: A professional assessment of a property’s condition, quality, and safety.
    • Homeowners insurance: A type of property insurance that provides coverage in case of damage to the home as well as protection for items and assets within the home.
    • Interest-only loan: With an interest-only loan, the borrower only pays the interest on the loan for a temporary period of time.
    • Interest rate: The amount a borrower pays a lender in order to borrow money. The interest rate is expressed as a percentage and does not factor in the fees and expenses that APR includes.
    • Investment property: A property that a borrower purchases to rent out, resell, or hold onto with the hope of the home appreciating in value.
    • Jumbo loan: A jumbo loan is a type of mortgage that allows for loan amounts exceeding loan limits set by the Federal Housing Finance Agency (FHFA).
    • Loan estimate: A document outlining the loan terms, interest rate, fees, and estimated closing costs associated with a mortgage.
    • Loan term: The amount of time it takes to pay off a mortgage in full.
    • Loan-to-value (LTV) ratio: A metric that compares a borrower’s loan amount with the appraised value of the property. Lenders use the LTV ratio to evaluate the risk of lending.
    • Mortgage: A loan that an individual takes out to buy a home.
    • Mortgage lender: A company or financial institution that loans money out to those looking to buy, build, refinance, or renovate property.
    • Non-conforming loan: Non-conforming loans don’t meet Fannie Mae and Freddie Mac guidelines and thus can’t be sold on secondary mortgage markets.
    • Non-qualified mortgage: A non-QM loan is a type of home loan that doesn’t meet standards set by the Consumer Financial Protection Bureau (CFPB).
    • Notice of default: A notification from a lender that lets a borrower know they haven’t been making payments and/or adhering to their loan terms. This is typically the first step of the foreclosure process.
    • Origination fee: A one-time fee charged by a lender to cover the administrative costs involved with processing a new loan application.
    • PITI reserves: Principal, interest, taxes, and insurance (PITI) reserves refers to cash a borrower must have on hand after making a down payment and covering closing costs.
    • Prepayment penalty: A fee charged by some lenders when a borrower pays off their mortgage early.
    • Pre-approval: An initial evaluation of a borrower’s qualifications and a conditional agreement from the lender that they will loan a borrower money.
    • Principal: The amount of money an individual borrowed to buy a home (does not include interest).
    • Private mortgage insurance (PMI): An insurance policy paid by borrowers that is used to reimburse lenders in case a borrower defaults.
    • Qualified mortgage: A home loan that adheres to standards set by the Consumer Financial Protection Bureau (CFPB) which is free from any features the agency considers to be risky.
    • Refinance: Changing the terms of an existing mortgage or replacing it entirely with a new loan.
    • Second mortgage: A loan that’s secured by the borrower’s home equity. A second mortgage is another name for a home equity loan.
    • Seller concessions: Financial incentives offered by the seller of a home in order to motivate the buyer to complete the transaction.
    • Title: A legal term referring to the ownership rights an individual has over a given property.
    • Title insurance: A type of insurance that can protect the buyer and the lender in case issues with the title arise. The buyer typically pays for title insurance at closing.
    • Underwriting: The process of determining whether a borrower is qualified for the loan they’re applying for and verifying that the information listed on their mortgage application is accurate.
    • USDA loan: A USDA loan is a mortgage backed by the United States Department of Agriculture (USDA) that allows buyers to purchase a home in qualifying rural areas with no down payment.
    • VA loan: A VA loan is a mortgage program backed by the Department of Veterans Affairs (VA) that allows qualifying service members, veterans, and spouses to access mortgages that offer favorable terms and no down payment requirements.

    Find the best loan for you. Reach out today!

    Get Started
    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.