Mortgage Terminology: Terms and Phrases Key to Understanding the Mortgage Loan Process

Mortgage Terminology: Terms and phrases key to understanding the mortgage loan process.  

As a  mortgage loan officer, sometimes it feels like I'm speaking another language to my clients, so I made this video with the most important mortgage terms to know if you're buying or refinancing a home.

And to help you out, I also put together a mortgage terminology download with all the most important mortgage terms explained. Get your copy here: Mortgage Terminology Download

Watch on Youtube:

Video Transcript

A home inspection is something that is almost never required, but I always, always, always say it again, always suggest.

You would not buy a car without having a mechanic look at it, right?

 I hope not. And if you're doing that, stop it.

Hey guys, LTV, DTI, ARM. Um, what? Oh my gosh, right?

So many terms, stay tuned with me till the end of this video.

And I'm gonna teach you all about the top mortgage terms and abbreviations that you need to know.

 My name is Stephanie Weeks and you've come to your one stop shop for anything and everything Mortgage education. 

I post new videos every Tuesday and Saturday.

Please give me a thumbs up, leave me some comments.

 Don't forget to subscribe to the channel and hit the bell to be notified.

I have helped thousands of customers with their mortgage financing.

And now my mission is to help millions of you with mortgage education.

Since I can't do loans for everybody, but I want you all to understand everything and what's going on.

So after helping thousands and thousands of customers and being recognized in

the top 1% in the nation for loan officers and loan production, for several years running, I have started to create these videos, which I hope that you find very educational. 

And not too boring because I mean, let's face it mortgages, they're not fun.

Do you wanna end up in loan denial? Do you wanna end up losing tons of money? Do you wanna have headaches? Do you wanna have late closings?

I'm sure the answer to all those questions is no.

So great news, I've got your back, hang tight with me for this video, and I'm gonna help you with all the terminology that you need to know.

And I'm also gonna share a  download with you as well. 

You know, when you do something and it becomes second nature when you've been doing it for so long?

And that's kind of how it is for me with 17 years of mortgage experience at this point, there's so many words, abbreviations and terminology.

That's just second nature to me.

And sometimes I have to stop myself and go, wait a minute, slow down, slow your roll, back up, explain what that term means, because you can see that people's eyes might start to glaze over.

So I have my little notes here with my cute little phone case, which I love so much by the way.

But so I wrote down at 25 terms that I think would be super helpful. And it's gonna be a little bit long, not too long though so don't hit pause. Don't leave me hanging there, hang in there with me.

We've got appraisal, which is to assess the value of the property. That is different from an inspection. 

We've got principle. That is the portion of your payment that goes to repay the loan balance, not to repay the interest.  That's the principle portion of your payment, principle.

APR, annual percentage rate. What the cost of the money is to you. Maybe your interest rate is 3%,

but it costs you $4,000 in closing costs to get that.

So who knows, maybe your APR is 3.4697%, whatever but APR that is annual percentage rate is again the cost of the money.

Term, that's gonna be your loan term. You know, a lot of people don't realize you don't just have 15 and 30-year options to choose from. We have 10, 15, 20, 25 and 30-year terms.

That's your fourth term I'm sharing with you.

Number five, preapproval. That's where you get pre-approved to go purchase a home. And your lender can issue a preapproval letter.

Amortization, that is again, basically the term in figured out the amortization and the amortization schedule to look at and say, okay, what am I paying in principle each month? What am I paying in interest? It  gives you month by month by month for the whole entire term of the loan and shows you the amortization of the loan.

Assets, basically checking, savings, stocks, bonds, CDs, 401(k), IRA, it is your assets. Fixed-rate mortgage talked about that in another video.

Fixed-rate mortgage. So your mortgage interest rate is fixed for the term of the loan.

While, number nine is adjustable-rate mortgage or ARM. That means that your rate is going to adjust at different stages with different caps, depending upon what you sign and agree to for loan.

Homeowners insurance, also called hazard insurance. Also abbreviated HOI, yes I know. It's like, why does everything have to have three different variations? 

But what can I say?

We like to keep it exciting in mortgage lending and not just have one term mean one thing, but it might mean five different things. Or have five variations.

So homeowners insurance, that's the insurance that protects your property in case of some type of issue or catastrophe or damage or loss that protects your home and ensures you to be able to rebuild the home, replace the home, fix what's wrong.

Property taxes, so you have sales taxes, you know about that, right? Well, property taxes are the taxes that are assessed on the value of your property and you pay those every single year. But if you have an escrow account you're paying in every month and then the bills paid out that one time a year.

Okay, we've got number 12: DTI ( debt to income). All of your debts using minimum payment required, plus your new proposed house too, in relation to your income that gives us your DTI or debt to income.

Down payment, pretty self explanatory, but still covering the term, down payment. That's the amount that you're putting down on the price of the home. And that is way your price may not match your loan amount.  

Private mortgage insurance also called MIP for the government loans, PMI for the non government loans. And that is a type of insurance that gives you no benefit, no benefit.

It protects the lender in case you default on the loan, it helps them to offset their losses.

Now well I say it gives you no benefit, it really does because if you're like most of us,

we don't have 20% to put down, right?

So mortgage insurance helps those of us who don't to get a loan without a large down payment. So it does benefit you in that way.

Title: When you are financing a home, we wanna have clear title to make sure there's no liens or encumbrances because your mortgage lien wants to lien the title basically or lien, the property. The title to the property, so you've got title.

Then we have real estate agent, of course, real estate agent, realtor, agent, interchangeable terms, but that's a person who helps you to negotiate the purchase of a home.

A lot of people think, oh they just show you properties!

Oh my gosh, if you even knew the stuff that they have to do for you, it is a lot! And there is a reason they get paid. So real estate agent.

Earnest money deposit, also called EMD, also called deposit, also called good faith money. That is the money that you give the seller in good faith, that, Hey, we agree to these terms and I'm serious I really wanna buy the house. So here's some money, I don't know, $500, $1,000 whatever you agree to, to say in good faith that I do plan to buy this home, and I do plan to go to close in.

Home inspection, remember that's different than an appraisal. A home inspection is something that is almost never required, but I always, always, always say it again, always suggest.

You would not buy a car  without having a mechanic look at it, right?

I hope not. And if you're doing that, stop it.

You should not shall I say, spend so much money, possibly the biggest purchase of your entire life and not make sure the  condition of the property  is acceptable for what you're willing to purchase.

Closing costs, now that's different than prepaid items, which is prepaid taxes and insurance. Sticking another term in there, prepaids. Closing costs, closing costs is lender, appraiser, title company, clerk of court, maybe termites certificate, maybe home inspector .See, what am I missing? Maybe credit reports, maybe discount points that you're buying the rates you're spending to buy the rate. 

Seller concessions, in the mortgage realm -there's a different term to this than in other realms-but in our realm  seller concessions is what is the seller agreeing to do for you. And most of the time, that's when you negotiate that the seller is gonna pay some closing costs and prepaid items for you so that you don't have to come up with all of that money because it does add up really, really quickly.

Then we have Escrow. Escrow is a not interest bearing account where you're putting money in with your lender each month, maybe for taxes and insurances. And they're holding it separate from your mortgage, right? Even though you're making that payment, they're putting it in two spots. And then  when that tax bill comes to you once a year or the home insurance comes to you once a year, they pull the money from escrow that you've paid and they go ahead and pay that annually for you. That is escrow.

Discount points are when you pay fees to buy down your interest rate. So you were buying to a lower interest rate.

Title insurance, there's owner's title insurance and there's lenders title insurance. A title company can tell you so much more about this than I can, but title insurance protects you and or the lender, depending upon what you get, in case there's any encumbrances on the title or issues that were either missed or maybe not even seen, right?

Maybe there's like so many ways we can go with that, but it's not just 'cause somebody missed something it's because something might have been legitimate, but not filed correctly. And so there's different things that could cause issue with title. And so the lender wants protection and you should get protection too.

Get owner's title insurance. That's what I'd say.

So term number 25 is Closing Disclosure.

Your closing disclosure is the document that you get at closing, that breaks down exact numbers to the penny of your loan transaction, either purchase or refinance, closing disclosure.

I'm gonna give you two downloads today and I'm gonna put the link below. So the first one is, let me look at my cheat sheet here, purchase process checklist.

And then I've also got another download with another cheat sheet, with mortgage terminology that you need to know.

Because there's so many things to try to remember.

Thank you so much for watching.

And if you feel like, that you might win now at the mortgage game, then type of win in the comments below, all caps W-I-N.

I really, really hope that you've enjoyed the video.

If you have, give me a thumbs up, subscribe to the channel, hit the bell to be notified, share it with your friends, share it with your family and check out some other videos that I'm gonna drop here for you guys as well.

And let's connect on social media. My website is and my Insta is _therealstephanieweeks. I would love to hear from you!

August 14, 2020
First-Time Home Buyers