Mortgages can feel like a foreign language—and let’s be honest, no one wants to feel lost when it comes to their money. Whether you’re buying your first home or refinancing, understanding a few key terms can go a long way in making confident, informed decisions.
Here are the top mortgage terms to know before you sign on the dotted line:
1. Loan Estimate (LE)
A three-page document you receive after applying for a loan. It outlines your estimated interest rate, monthly payment, closing costs, and more. Read it carefully—this is your home loan at a glance.
2. Interest Rate vs. APR
- Interest Rate is what you’ll pay to borrow money.
- APR includes the interest plus lender fees. It’s your true cost of borrowing.
3. Fixed-Rate vs. Adjustable-Rate Mortgage (ARM)
- Fixed = same interest rate for the life of the loan.
- ARM = rate can change after an initial fixed period (usually lower upfront, more risk later).
4. Escrow
An account that holds money for your property taxes and insurance. Your lender collects this with your monthly payment and pays those bills for you.
5. Amortization
This is how your loan gets paid down over time. Early on, most of your payment goes toward interest—later, it shifts more toward principal.
6. Points
Optional fees you can pay upfront to lower your interest rate. (One point = 1% of the loan amount.)
Bottom line?
The more you understand, the more empowered you’ll feel. And if you ever need help translating the fine print—we’re just a call away.