Smart Mortgage Buyer Mortgage Terms Glossary
Understand the language of mortgage financing
Pre-approval, pre-qualification, mortgage refinancing, good faith investment….when you start learning about mortgage financing, it can be a little overwhelming! Our mortgage experts know the terms of the mortgage industry inside and out, but we know that the common person can get overwhelmed by these terms! That’s why we created this mortgage terms glossary, so that you can better understand your mortgage options.
Pre-qualification is an initial estimate of how much you may be able to borrow based on basic information you provide. Pre-approval goes further — the lender reviews your credit, income, and finances to give you a conditional commitment. A pre-approval carries more weight with sellers because it shows you’re a serious, qualified buyer.
Refinancing may make sense if interest rates have dropped, your credit has improved, or you want to change your loan terms. It can also help you consolidate debt, lower your monthly payment, or tap into your home’s equity.
Pre-qualification is a quick review of your income, assets, and debts to give you a general idea of how much you might qualify for. It’s a useful first step, but not a guarantee of financing.
Points are upfront fees you can pay to lower your mortgage interest rate. One point typically equals 1% of your loan amount. Paying points can save you money over the life of the loan if you plan to stay in the home long term.
A jumbo mortgage is a loan that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. These loans are used for higher-priced homes and often have different requirements for credit, income, and down payment.
A conforming loan meets the standards set by Fannie Mae and Freddie Mac, including loan limits, documentation, and borrower requirements. These loans typically offer competitive rates and easier approval.
A Loan Estimate is a standardized three-page form lenders must provide within three business days of your mortgage application. It shows your estimated interest rate, projected monthly payment (including principal, interest, taxes, and insurance), and estimated closing costs. The format makes it easy to compare offers from different lenders.
A Closing Disclosure is a five-page form that gives the final details of your loan, including terms, monthly payments, and all closing costs. Lenders must provide this at least three business days before closing, giving you time to compare it to your Loan Estimate and ask questions before signing.
In addition to conventional mortgages, there are government-backed loans like FHA, VA, and USDA, as well as jumbo, construction, and renovation loans. Each option is designed to fit different needs and financial situations.
A fully documented loan requires proof of income, employment, assets, and debts — usually through pay stubs, tax returns, and bank statements. This is the most common type of mortgage.
Not necessarily. While going direct can seem simpler, working with a company like Patriot gives you access to multiple loan options, guidance, and support to find the right fit for your situation.
A lender provides the funds for your loan directly. A broker works as a middleman, comparing loan products from multiple lenders to help you find the best match. Patriot Home Mortgage acts as your guide, making sure you get the right option for your needs.
A rate lock guarantees your interest rate for a set period while your loan is processed. This protects you from market fluctuations, giving you peace of mind as you move toward closing.
Still Have Questions? We’re Here to Help.
VEvery situation is unique, and our team is happy to walk you through your options. Whether you’re buying, refinancing, or just exploring, we’ll make sure you have the answers you need.