Page 11 - Pre-Approval Folder
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Mortgage Glossary
Mortgage Homeowner's insurance
A legal document between a mortgagor and a Insurance that protects the value of the home for both
mortgagee that establishes a home and/or prop- lender and borrower. Homeowner’s insurance typical-
erty as security for a home loan. ly covers the cost of replacing the home and various
parts of the same. Most mortgage lenders require
Credit score borrowers to carry a term of insurance.
A single numerical score, based on an individu-
al's credit history, that measures that individual's Adjustable-Rate Mortgage (ARM)
credit worthiness. A mortgage loan with an interest rate subject to
change over the term of the loan. The interest rate is
Debt-To-Income Ratio tied to the performance of a specified market rate.
A personal finance measure that compares an Home inspection
individual’s debt payment to his or her overall in- A comprehensive and exhaustive examination of a
come.
home by a licensed inspector. Often required as part of
Down Payment a mortgage and home loan process.
Is the amount of the purchase price that the buy- Appraisal
er is paying. Generally, lenders require a specific A written estimate of a property's current market value
down payment in order to qualify
prepared by an appraiser. An estimate of the value of
Rate lock a piece of property as of a certain date.
A short-term agreement by a lender to “hold” a
certain interest rate on a home loan while the Underwriter
buyer negotiates a sale transaction. Individual who evaluates a loan application to deter-
mine its risk level for a lender or investor; final deci-
Title Insurance sion maker on a loan application
Insurance that indemnifies against losses resulting
from undiscovered title defects and encumbrances
