Mortgage Glossary for Homebuyers & Refinance

Mortgage Glossary: Refinance, VA & Home Loan Terms

Core Mortgage Terms A–Z

Amortization: The process of paying off a loan over time through regular payments.
APR (Annual Percentage Rate): The true cost of borrowing money, including interest and some fees.
Appraisal: A professional opinion of a property’s market value.
Assets: Anything of value owned by a borrower (e.g., savings, investments).
Assumable Mortgage: A loan that can be transferred to a new buyer under the same terms.

Basis Points: One-hundredth of one percent (0.01%). Often used when discussing interest rate changes.
Borrower: The person taking out the loan.
Bridge Loan: A short-term loan used to bridge the gap between selling and buying homes.

Cash-Out Refinance: A refinance where the borrower takes out equity in cash.
Closing Costs: Fees paid at the end of a real estate transaction (e.g., title, escrow, taxes).
Co-Borrower: A second borrower equally responsible for the loan.
Conforming Loan: A loan that meets the standards set by Fannie Mae/Freddie Mac.
Credit Score: A number representing a person’s creditworthiness.

Debt-to-Income Ratio (DTI): A percentage showing how much of a borrower’s income goes toward debt.
Deed: Legal document transferring ownership of property.
Down Payment: The initial cash payment made when buying a home.

Earnest Money: A deposit made to show a buyer's serious intent to purchase.
Equity: The difference between a home’s value and the loan balance.
Escrow: A third party that holds funds/documents until closing.

Fair Market Value: What a willing buyer would pay and seller would accept for a home.
FHA Loan: A loan insured by the Federal Housing Administration with lower credit or down payment requirements.
Fixed-Rate Mortgage: A loan with a stable interest rate over the life of the loan.
Foreclosure: The legal process where a lender takes ownership of a home due to missed payments.

Gift Letter: A document stating that money given for a down payment is a gift and not a loan.
Good Faith Estimate (GFE): An outdated term, replaced by the Loan Estimate. Previously used to estimate loan costs.

HELOC (Home Equity Line of Credit): A revolving line of credit secured by your home.
Homeowners Insurance: Insurance protecting against damages to the property.
HUD-1 Statement: Previously used settlement form before TRID; replaced by the Closing Disclosure.

Impounds: Funds collected by the lender to pay property taxes and insurance on your behalf.
Interest Rate: The cost of borrowing money expressed as a percentage.

Jumbo Loan: A loan that exceeds the conforming loan limits set by Fannie Mae/Freddie Mac.

Loan Estimate (LE): A form detailing loan terms, payments, and closing costs (replaced the GFE).
Loan-to-Value Ratio (LTV): The loan amount divided by the home's value, used to determine risk.

Mortgage: A legal agreement that allows a lender to take your property if you don’t repay the loan.
Mortgage Insurance (PMI or MIP): Insurance protecting the lender if the borrower defaults, usually required for low down payments.

Negative Amortization: When loan payments don't cover the interest, causing the balance to grow.
Non-QM Loan: A loan that doesn’t meet Qualified Mortgage standards (often for unique income types).

Origination Fee: A fee charged by a lender to process the loan.
Owner-Occupied: A home the borrower lives in as a primary residence.

Points (Discount Points): Upfront fees paid to lower the interest rate.
Pre-Approval: A lender's estimate of how much you can borrow based on documentation.
Prepayment Penalty: A fee charged if you pay off your loan early (less common today).
Principal: The amount borrowed on a loan, not including interest.
Private Mortgage Insurance (PMI): Insurance for conventional loans when the down payment is under 20%.

Qualified Mortgage (QM): A loan meeting government guidelines for affordability and borrower protection.

Rate Lock: An agreement to guarantee a specific interest rate for a set time.
Refinance: Replacing your current mortgage with a new one, often to change terms or access equity.

Second Mortgage: An additional loan taken out on a property that already has a mortgage.
Settlement Statement: See Closing Disclosure — outlines final terms and costs.
Subordination: When a second lienholder agrees to remain in second position behind a refinance.

Title Insurance: Protects against legal claims on your home from past owners.
TRID: TILA-RESPA Integrated Disclosure — the rules requiring standardized loan estimate and closing disclosures.

Underwriting: The lender's process of evaluating risk and determining whether to approve a loan.

VA Loan: A no-down-payment mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible military borrowers.

📈 Refinance-Specific Terms

📄 General Refinance Terms

Refinance: Replacing your current mortgage with a new one, often to change your rate, term, or access equity.
Rate-and-Term Refinance: Refinancing to change your interest rate, loan term, or both — without taking cash out.
Cash-Out Refinance: A refinance where you borrow more than you owe and take the difference in cash (often used for home improvements, debt consolidation, etc.).
Closing Costs: Fees paid to complete the refinance, usually 2–5% of the loan amount. These can often be rolled into the new loan.
Loan Payoff Amount: The total you owe on your current mortgage, including interest and any fees — paid off during refinance.
Break-Even Point: How long it takes for the savings from a refinance to cover the costs of doing it.

📊 Loan Terms and Equity

Home Equity: The difference between your home’s market value and what you owe — you must have equity to do a cash-out refi.
Loan-to-Value Ratio (LTV): The loan amount divided by the home value. Lenders use this to assess risk.
Combined Loan-to-Value Ratio (CLTV): Total of all loans (including second mortgages or HELOCs) divided by home value.
Subordination Agreement: Required if you have a second mortgage or HELOC — it ensures the new first mortgage keeps priority.
Debt Consolidation Refinance: A cash-out refinance used to pay off other high-interest debt like credit cards.

🔧 Refinance Loan Types

Rate-and-Term Refinance: Changes your interest rate, loan term, or both — without tapping equity.
Cash-Out Refinance: Allows you to refinance for more than you owe and take the difference in cash. Must have sufficient equity. Often used for renovations, debt payoff, or large purchases.
FHA Streamline Refinance: A simplified refi option for those with an existing FHA loan — typically no appraisal or income check.
VA IRRRL (Interest Rate Reduction Refinance Loan): A low-document refi for eligible veterans with current VA loans.
Cash-In Refinance: You bring money to closing to pay down the balance — often to lower the rate or remove mortgage insurance.
No-Closing-Cost Refinance: The lender covers your upfront fees, typically by offering a slightly higher rate.

🇺🇸 Veteran & VA Loan Terms

Veteran & VA Loan Terms

VA Loan: A government-backed mortgage with no down payment, no PMI, and competitive rates — available to eligible veterans and active-duty service members.
Certificate of Eligibility (COE): A document that proves you're eligible for a VA loan.
Entitlement: The amount the VA guarantees for your loan — determines how much you can borrow without a down payment.
Funding Fee: A one-time VA-required fee (can be financed into the loan); waived for many disabled vets.
Residual Income: A VA requirement that ensures you have enough income left after major expenses.
No Down Payment: One of the biggest benefits — most VA buyers don’t need to put money down.
No PMI: VA loans don’t require private mortgage insurance, even with low down payments.
VA Appraisal: Required to ensure the home is safe and worth the purchase price — includes a Minimum Property Requirements (MPR) review.
Seller Concessions: The seller can pay up to 4% of the loan amount toward your closing costs or debts.
Reusable Benefit: You can use your VA loan benefit multiple times throughout your life.
VA Streamline Refinance (IRRRL): A simplified refinance option for existing VA loans — no appraisal or income check required in most cases.

Wain Capital, LLC, Arizona - 0951257 & 1825506 Zachary Wain, 207079, Wain Capital LLC, 1825506 Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 1825506 Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 207079 or Licensed by the Department of Business Oversight under the California Finance Lenders Law, 207079 NMLS# 1825506 Wain Capital, LLC (480) 336-3737 NMLS# CO-100507291 Zachary Wain (480) 336-3737

1825506 - 207079 Wain Capital LLC, 15848 N 51st Place, Scottsdale, AZ, 85260, 1825506, Residential Mortgage Loan Company Zachary Wain, Residential Mortgage Loan Originator, 207079, Wain Capital LLC, 15848 N 51st Place, Scottsdale, AZ, 85254, Oregon Mortgage Lending License 1825506

Wain Capital | Scottsdale, AZ | 480-336-3737

Refinance & Mortgage Glossary

Mortgage Glossary: Refinance, VA & Home Loan Terms

Core Mortgage Terms A–Z

📈 Refinance-Specific Terms

📄 General Refinance Terms

💸 Rate and Payment-Related Terms

📊 Loan Terms and Equity

🔧 Refinance Loan Types

🇺🇸 Veteran & VA Loan Terms

Veteran & VA Loan Terms

Refinance & Mortgage Glossary

Mortgage Glossary: Refinance, VA & Home Loan Terms

Core Mortgage Terms A–Z

📈 Refinance-Specific Terms

📄 General Refinance Terms

💸 Rate and Payment-Related Terms

📊 Loan Terms and Equity

🔧 Refinance Loan Types

🇺🇸 Veteran & VA Loan Terms

Veteran & VA Loan Terms

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