Bridge Loan:
A refinance of your present home so that you can buy a new one and "bridge" the time between the purchase of the new home and the selling of the old one. You may not have a monthly payment on the bridge loan and so this loan is not used for the new home qualification.

Closing:
The meeting between the buyer, seller, and lender (or their agents) when the mortgage is finalized and the property and funds legally change hands. Sometimes called a "settlement."

Closing Costs:
Fees paid by the borrower when property is purchased or refinanced. These typically include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charges. Since points are generally listed separately, These fees are usually in the range of 25-30 cents per $1,000 borrowed.

Commitment Letter:
A written letter of agreement laying out all terms and conditions by which the lender will lend and the borrower borrow funds to finance a home.

Credit Rating:
Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrowers payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrowers credit, and different lenders may assign different grades to the same borrower.

Credit Report:
A report to a prospective lender on the credit standing of a prospective borrower. Used to help determine creditworthiness. Information regarding late payments, defaults, or bankruptcies will appear here.

Debt Ratio:
Monthly debt and housing payments divided by gross monthly income. Also known as Back-End Ratio.

Default:
The failure to make payments on a loan.

Down Payment:
Money paid by a buyer before acquiring the mortgage, as opposed to that portion of the purchase price which is financed.

Equity:
The difference between the current market value of a property and the principal balance of all outstanding loans on the property. Also referred to as the owner's interest.

Escrow:
A special account set up by the lender in which money is held to pay for taxes and insurance.

Good Faith Estimate:
An estimate of charges which a borrower is likely to incur in connection with a loan closing.

Mortgage:
A loan made to help the borrower buy a house or land. The lender of a mortgage then holds the title to the house until the borrower pays off the agreed upon amount.

Points:
Prepaid interest paid by the borrower to the lender at closing. A point is equal to one percent of the loan amount (e.g. 1.5 points on a $100,000 mortgage would cost the borrower $1,500). Generally, by paying more points at closing, the borrower reduces the interest rate of his loan and thus future monthly payments but he does this by paying more at closing.

Pre-Qualifying:
By pre-qualifying for a loan before looking at houses, you know how much of a loan you can get and therefore the maximum priced home you're looking for. Also you can reassure the seller that yours is an offer you can qualify for.

Qualifying:
There is usually a limit to how much lenders will loan a particular borrower depending on the borrower's income, debt ratio, net worth, assets, credit history, and other items. That limit represents the amount for which the borrower can qualify.

Truth in Lending Disclosure Statement:
This document will show you the annual percentage rate (APR) and other payment information for the loan you have applied for. The APR takes into account not only the interest rate but also the points, and fees.