Glossary of Key Mortgage Terms - Understand Real Estate Lingo
Glossary of Key Mortgage Terms
Understanding mortgage terms is crucial whether you're buying your first home, refinancing, or investing in real estate. This glossary will guide you through key mortgage terminology to help you make informed decisions.
Amortization
The gradual repayment of a loan principal and interest over a set period through regular payments.
Appraisal
A professional assessment of a property's market value, usually conducted by a certified appraiser.
Blended Payment Mortgage
A mortgage where each payment includes both principal and interest, with the interest portion decreasing and the principal portion increasing over time.
Bridge Loan
A short-term loan used to cover a temporary gap in financing, often used during a property purchase or sale.
Capital Market
A market where long-term debt and equity securities are traded, including mortgages, bonds, and stocks.
Charge
A legal claim or encumbrance placed on a property as security for a debt, often synonymous with "mortgage."
Chattel Mortgage
A loan secured by movable personal property, such as vehicles, equipment, or appliances.
Closing
The final stage of a real estate transaction where ownership of the property is legally transferred from the seller to the buyer.
Commitment
A formal agreement from a lender to provide a loan, typically subject to conditions such as property appraisal and title search.
Conventional Mortgage
A mortgage where the loan-to-value ratio is 80% or less, requiring the borrower to make a down payment of at least 20%.
Debt Service Coverage Ratio (DSCR)
A measure of a property's ability to generate enough income to cover its debt obligations, often used in commercial real estate lending.
Default
Failure to meet the terms and conditions of a loan agreement, such as missing mortgage payments.
Fixed-Rate Mortgage
A mortgage where the interest rate remains constant for the entire term of the loan.
Foreclosure
A legal process where a lender takes possession of a property due to the borrower's default on the mortgage.
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