Mortgage words, translated to human

A lender’s verified statement of how much you can borrow, based on your actual documents. Stronger than pre-qualification, and it’s what makes sellers take your offer seriously.

A rough estimate based on what you tell a lender, without document verification. Fine for daydreaming; get pre-approved before you shop for real.

A neutral holding account. During purchase, it holds your earnest money; after closing, part of each payment lands there so your property taxes and insurance get paid automatically.

A monthly fee on conventional loans with less than 20% down. It protects the lender, not you — and it goes away once you reach 20% equity. Not a reason to wait years to buy.

Your monthly debt payments divided by gross monthly income. Lenders use it to gauge how much payment you can carry. Most programs like to see it under roughly 43–50%.

The fees to complete the purchase — lender, title, appraisal, prepaid taxes and insurance. Typically 2–3% of the price. Sometimes negotiable with the seller, sometimes rollable into the loan on a refinance.

A good-faith deposit (often 1–2% of price) you put down with your offer. It sits in escrow and counts toward your down payment at closing. You get it back if the deal falls apart under contract contingencies.

Freezing your interest rate for a set window (usually 30–60 days) so market moves can’t change your deal while your loan closes.

Optional prepaid interest: 1 point = 1% of the loan amount, paid at closing to lower your rate. Worth it if you’ll keep the loan long enough to break even — Alexis runs that math with you.

The rate plus most loan costs, expressed as a yearly rate. Useful for comparing offers apples-to-apples; your monthly payment is still driven by the note rate.

The lender’s verification stage: a human (plus software) confirms your income, assets, credit, and the property all meet program rules. Requests for extra documents here are normal, not alarming.

An independent professional’s opinion of the home’s value, ordered by the lender. It protects you from dramatically overpaying and the lender from over-lending.

An exit ramp built into your purchase agreement — inspection, financing, appraisal. If the condition isn’t met, you can walk away with your earnest money.

A mortgage that follows Fannie Mae/Freddie Mac guidelines. The most common loan type; first-time buyer versions start at 3% down.

A government-insured loan with friendlier credit requirements (scores from 580) and 3.5% down. A workhorse program for buyers building credit.

A benefit earned through military service: $0 down, no monthly mortgage insurance, and competitive rates. If you’re eligible, it’s usually the first program to check.

Replacing your mortgage with a larger one and using the difference to pay off higher-interest debt. Powerful when the math works; Alexis will tell you honestly when it doesn’t.

The payoff schedule of your loan. Early payments are mostly interest; later payments mostly principal. Extra principal payments early have outsized impact.