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Helping you understand mortgage terms.

Get to know your mortgage terms.

We understand that it may feel like you are drowning in alphabet soup with mortgage acronyms and finance language that may seem foreign to you. Don’t worry, we are here to help. Below are common acronyms used in the mortgage process. You can always contact a loan advisor to learn more.

APR – Annual Percentage Rate is the annual cost for obtaining a loan expressed as a percentage, it is usually higher than the interest rate because it includes the interest rate, points, mortgage origination fees and other costs charged to the borrower.


CD – a Closing Disclosure form provides final details about the mortgage loan, including terms, monthly payments, fees, and other closing costs.


Closing Costs – these are fees paid by buyers and sellers to complete a real estate transaction. Closing costs include title insurance, taxes, discount points, appraisal fees, lender-imposed fees, prepaid-interest, and other costs.


CTC – Clear To Close means the underwriter has reviewed and approved all documentation necessary, deeming that the loan is ready to close.


Down Payment – a down payment is an amount the homebuyer pays to make up the difference between the total purchase price of the house and the mortgage amount. The typical down payment on a house can vary.

DTI – represents your Debt-To-Income ratio. It’s a calculation that’s used to determine whether the percentage of monthly debt, including the new mortgage payment, exceeds a certain percentage of the borrower’s monthly gross income.


Escrow – a mortgage lender can hold a portion of the borrower’s monthly mortgage payment in escrow to pay property taxes and insurance. Each month, you pay a portion of the estimated annual costs along with your principal and interest.


Escrow Agent – is a neutral third-party that acts as the custodian for the loan documents and funds during the completion of a mortgage transaction.


Fixed vs. Variable – fixed-rate financing means the interest rate on a loan does not change over the life of the loan. Whereas a variable-rate loan, the interest can change as the index rate changes, meaning it may increase or decrease.


LE – a Loan Estimate provides important details about the loan a borrower selected including the estimated interest rate, monthly payment and total closing costs for the loan.

LTV – Loan-to-Value is the ratio between the outstanding mortgage amount as a percentage of a property’s appraised value. A loan-to-value ratio is one factor a lender considers when deciding whether or not to approve a particular mortgage transaction.


PITI – is short for Principal & Interest, Taxes and property Insurance components of a monthly mortgage payment, PITI may also include monthly mortgage insurance (MI) or homeowner’s association (HOA) dues.


PMI – Private Mortgage Insurance is generally required when a borrower takes out a conventional mortgage with a down payment of 20% or less.


Rate Lock – is a mortgage lender’s promise to have that rate available through a borrower’s scheduled closing date. It’s not a guarantee the borrower will get approved.


Right of Rescission – generally, a borrower has the right to rescind, or cancel, a non-purchase mortgage transaction on their principal residence within three business days of closing. Some exceptions apply.