Interest Rate
The percentage of the loan amount charged annually by the lender for borrowing money. Significantly impacts monthly payments and total cost of ownership.
Private Mortgage Insurance (PMI)
Insurance required when a buyer’s down payment is less than 20%, protecting the lender in the event of default.
Title Insurance
Insurance protecting the buyer and lender against claims from defects in the property’s title, including undisclosed liens or ownership disputes.
Appraisal
A professional assessment of a home’s fair market value. Lenders require appraisals to ensure the home’s value supports the loan amount requested.
Closing Costs
Fees and expenses paid at closing, separate from the home’s purchase price, including lender fees, title insurance, appraisal, escrow, attorney fees, and prepaid taxes and insurance.
VA Loan
A mortgage program for eligible veterans, active-duty service members, and surviving spouses. Typically requires no down payment and no private mortgage insurance.
FHA Loan
A mortgage insured by the Federal Housing Administration, designed to help buyers with lower credit scores or smaller down payments access homeownership.
Conventional Loan
A mortgage not insured by the federal government. Typically requires a stronger credit profile but offers flexibility and competitive rates for qualified buyers.
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that adjusts periodically based on a market index after an initial fixed period.
Fixed-Rate Mortgage
A mortgage with an interest rate that remains constant for the entire loan term, providing predictable monthly payments.