Loan Basics
This term refers to the gradual reduction of the principal amount owed on a loan over time.
What is amortization?
A written history of all recorded transactions affecting a piece of land.
What is an abstract of title?
A loan with lower monthly payments upfront followed by one large payment at the end.
What is a balloon loan?
This document outlines monthly payments, interest rate, and closing costs—received before closing.
What is the Closing Disclosure (CD)?
A financial statement showing assets, liabilities, and net worth at a point in time.
What is a balance sheet?
This schedule shows how each monthly payment is divided between principal and interest.
What is an amortization table or amortization schedule?
This is the history of all documents affecting ownership of a property from the earliest record to today.
What is a chain of title?
A mortgage with an interest rate that can change at pre-set intervals.
What is an ARM (Adjustable‑Rate Mortgage)?
A written promise to repay a loan secured by a mortgage.
What is a mortgage note?
This ratio compares a borrower's total debt to their assets.
What is the debt‑to‑asset (D/A) ratio?
This payment type includes principal and interest only.
What is P&I?
This type of title is free of liens or legal disputes.
What is clear title?
This revolving credit product lets homeowners borrow against the equity in their property, often using their home as collateral.
What is a HELOC?
This type of legal agreement allows a lender to provide funds at interest in exchange for holding title to a borrower’s property as security—title that becomes void once the debt is fully repaid.
What is a mortgage?
This metric estimates the likelihood a borrower will default within 12 months.
What is probability of default (PD)?
This percentage compares the loan amount to the property’s appraised value.
What is the Loan-to-Value (LTV) ratio?
This legal document transfers real estate ownership from seller to buyer.
What is a deed?
This type of loan is secured by a long‑term mortgage on a property already used to secure a first mortgage—with no other mortgages in between—and may also include additional property.
What is an add‑on loan?
Used before closing to help borrowers understand key loan terms and estimated costs.
What is a Loan Estimate (LE)?
The amount of money owed to the lender that includes principal, interest, taxes, and insurance.
What is PITI?
This term refers to the final date when all loan principal, interest, and fees are due.
What is the maturity date?
A statement from a title company or attorney confirming who legally owns a property.
What is a certificate of title?
A loan where the lender originates the loan and sells portions of it to other lenders.
What is a participation loan?
A legal instrument transferring property to a trustee to secure a loan.
What is a deed of trust?
The total monthly debts used to evaluate capacity for rural home loans.
What is total monthly obligations (TMO)?