Glossary of Mortgage Terms

Financial Information uses a language all its own which grows every time a new type of loan program or marketing campaign is added to the mix.

Understaning mortgage lingo will save you time when shopping and save you money when you close.

Mortgage Related Terms, Listed alphabetically:

• ARM - Adjustable Rate Mortgage
  
  
• APR - Annual Percentage Rate
  
  
• POINTS - a fee based on one percent of the total loan amount
  
  
• POC - Paid On Closing
  
  
• PRE - used in conjunction with several mortgage / lending / credit marketing related terms, e.g.-
  
  
  • PRE APPROVED - a marketing term which may or may not mean a line of credit is available to you. Most often, a disclaimer in fine print will state that you must meet certain financial conditions to obtain the financing.
    
    
  • PRE-QUALIFIED - a marketing term which implies the lender or broker has reviewed information about your creditworthiness and is prepared to extend credit to you.
    
    
  • PRE SELECTED - a marketing term which implies you have been selected based on some criteria, but does not mean you qualify or have been approved for credit.
    
    
  
  
  
• RATE LOCK - a service where the interest rate is set and you are guaranteed to get that interest rate regardless if published rates rise (or drop).
  
  
• ESCROW - a service which holds funds and makes payments. In real estate and mortgage escrow, most often escrow for hazard insurance and real estate taxes are included in monthly mortgage payment and escrow service in-turn makes payment to the insurance company and tax collector.