Mortgage Basics
This is the term for the initial amount of money borrowed on a mortgage.
What is the Principal
A government-backed loan program popular with first-time buyers, requiring as little as 3.5% down.
What is an FHA loan?
The first major step a buyer takes with a lender before house hunting, showing sellers they are serious.
What is getting pre-approved?
The typical minimum down payment required for a conventional loan.
What is 3%? (Some conventional loans allow as low as 3% down.)
This founding father helped establish the first building and loan associations, early forms of mortgage lending
Who is Benjamin Franklin? (Early supporter of building societies.)
The legal process by which a lender takes ownership of a property when a borrower defaults.
What is Foreclosure
A loan insured by a government agency for military service members, veterans, and eligible spouses.
What is a VA loan?
The stage where a lender checks employment, income, assets, and credit history before issuing a final approval.
What is underwriting?
These recurring costs for taxes and insurance are often bundled into a monthly mortgage payment.
What are escrow items? (Or accept: taxes and insurance.)
The Latin word for "mortgage" roughly translates to this two-word phrase about the seriousness of the debt.
What is "death pledge"? (Literal Latin translation.)
The document that outlines the final terms and costs of a mortgage loan.
What is the Closing Disclosure
This type of loan allows borrowers to only pay interest for a set period before starting principal payments.
What is an interest-only loan?
A borrower must sign this at closing to agree to repay the mortgage loan.
What is the promissory note?
This upfront cost pays for the lender's assessment of the property's market value.
What is the appraisal fee?
Before the Great Depression, mortgage terms often lasted only this many years before a balloon payment.
What is 5 years? (Mortgages used to balloon after 3–5 years.)
The person who evaluates a home's value for a lender during the loan process.
Who is the Appraiser
A loan exceeding the conforming loan limit set by Fannie Mae and Freddie Mac.
What is a jumbo loan
This term describes the day when ownership of a home officially transfers from seller to buyer.
What is the closing? (or settlement)
A mortgage insurance premium is typically required for loans with less than what percent down?
What is 20%?
This U.S. government program was created in 1934 to insure home mortgages and stabilize the housing market.
What is the Federal Housing Administration (FHA)?
The term for a loan where the interest rate stays the same throughout the term of the loan.
What is a fixed-rate mortgage
This adjustable-rate mortgage option typically offers a fixed rate for the first 5 years before adjusting annually.
What is a 5/1 ARM? (5-year fixed, then adjusts annually)
A third-party account where funds are held until closing conditions are met.
What is escrow?
Name for the money that covers lender fees, title fees, appraisal, and other services at closing.
What are closing costs?
The year when the fixed 30-year mortgage became a widespread standard in the U.S. housing market.
What is 1954? (30-year fixed became widespread after WWII but really standardized by the mid-1950s.)