Debt-to-Income Ratio (DTI)
A ratio comparing a buyer’s total monthly debt obligations to their gross monthly income, used by lenders to evaluate borrowing capacity.
Escrow
A neutral third-party account holding funds during the transaction until all conditions are met. Also used post-closing to collect and pay property taxes and insurance.
Down Payment
The portion of a home’s purchase price paid upfront by the buyer, not financed through a mortgage.
Pre-Approval
A lender’s preliminary assessment of a buyer’s borrowing capacity based on income, assets, debts, and credit score. Strengthens a buyer’s position before beginning the homebuying process.
Mortgage
A loan secured by real estate, used to finance the purchase of a home, repaid over time through monthly principal and interest payments.
Net Sheet
An estimate of net proceeds from a home sale after outstanding mortgage balance, closing costs, commissions, and other expenses.
Loan Origination Fee
A fee charged by a lender for processing a new mortgage application, typically expressed as a percentage of the loan amount.
Contingency
A condition in a purchase agreement that must be satisfied for the transaction to proceed, commonly financing approval or sale of a buyer’s current home.
Construction Loan
A short-term loan financing the construction of a home, typically converted or refinanced into a permanent mortgage upon completion.
Rate Lock
An agreement guaranteeing a specific interest rate for a set period during loan processing and closing.