APR (Annual Percentage Rate)
The all-in cost of borrowing, expressed as a yearly rate. APR includes the interest rate plus most lender fees, so it lets you compare loans more apples-to-apples than rate alone.
LTV (Loan-to-Value)
The loan amount divided by the property value (or purchase price, whichever is lower). LTV affects program eligibility, mortgage insurance, and pricing.
DTI (Debt-to-Income)
Monthly debt obligations divided by gross monthly income. Lenders look at both front-end (housing only) and back-end (housing plus all other debts) DTI.
Escrow
An account held by the servicer to pay property taxes and homeowners insurance as they come due. Funded by monthly payments collected with principal and interest.
Discount points
Optional fees paid up front to reduce the interest rate. Typically 1 point = 1% of the loan amount, with rate reduction varying by lender and market.
Rate lock
A commitment by a lender to honor a specific interest rate for a defined period. Locks can expire if the loan doesn't close in time; extensions usually have a cost.
Underwriting
The credit-and-document review process where the lender confirms the loan meets program guidelines and lender policy. Final approval is issued by underwriting.
Title insurance
Coverage that protects against losses from defects in the property's title. Lender's title insurance protects the lender; owner's title insurance protects you.
Closing Disclosure
A federally required document delivered at least 3 business days before closing that finalizes the loan terms, fees, and cash-to-close figure.