Decoding Mortgage Jargon: A Glossary for Homebuyers

Decoding Mortgage Jargon: A Glossary for Homebuyers

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Posted by : Moneek

Buying a home is exciting — but mortgage lingo can make it feel overwhelming fast. Here’s a quick glossary to help make sense of the most common terms:

Pre-Approval:
A lender’s estimate of how much you can borrow based on income, credit, and debts. Stronger than pre-qualification.

Interest Rate:
The cost of borrowing money, shown as a percentage. Lower is better!

APR (Annual Percentage Rate):
Includes your interest rate plus other loan costs (like fees). A better number to compare total loan expenses.

Down Payment:
The amount of money you put toward the home upfront. Typically ranges from 3% to 20%.

Closing Costs:
Fees paid at closing (like appraisal, title, and lender fees). Usually 2–5% of the home’s price.

Escrow:
A separate account where taxes and insurance are held and paid from as part of your monthly payment.

Amortization:
A fancy word for your loan payoff schedule — how each payment covers interest and principal.

Principal:
The actual loan amount you borrowed (before interest is added).

Private Mortgage Insurance (PMI):
Extra insurance you might pay if your down payment is less than 20%.

Still have questions? I’m happy to help explain anything in plain English — just ask!