Mortgage Glossary
Plain-English Definitions for Every Mortgage Term You'll Encounter
All Terms A–Z
Adjustable-Rate Mortgage (ARM)
An ARM is a mortgage where the interest rate isn't set in stone — it changes over time based on market conditions. You usually get a lower rate up front for a fixed period (like 5 or 7 years), and then it adjusts annually after that. ARMs can save you money if you plan to sell or refinance before the adjustment kicks in, but they carry some risk if rates climb.
Amortization
Amortization is just a fancy word for how your loan payments are spread out over time. Early on, most of your monthly payment goes toward interest. As the years go by, more and more of each payment chips away at the actual loan balance. Your lender can show you an amortization schedule — it's basically a roadmap of every payment from start to finish.
Annual Percentage Rate (APR)
APR gives you the bigger picture of what a loan actually costs per year, not just the interest rate. It rolls in fees like origination charges and discount points so you can compare apples to apples between lenders. If two loans have the same rate but different APRs, the one with the lower APR is typically the better deal overall.
Appraisal
An appraisal is when a licensed professional visits the property and determines what it's actually worth in today's market. Your lender orders one to make sure they aren't lending more than the home is worth. If the appraisal comes in lower than the purchase price, it can affect your loan — but don't panic, there are ways to handle it.
Appreciation
Appreciation is when your home goes up in value over time. It's one of the biggest perks of homeownership — you're building wealth just by living in your house. Market conditions, neighborhood improvements, and home upgrades all play a role in how quickly (or slowly) your home appreciates.
Assumable Mortgage
An assumable mortgage means a buyer can take over the seller's existing loan — same rate, same terms, same balance. This can be a huge advantage when interest rates have gone up since the original loan was locked in. FHA, VA, and USDA loans are often assumable, while most conventional loans are not.
Balloon Mortgage
A balloon mortgage gives you low monthly payments for a set period (usually 5–7 years), and then the entire remaining balance comes due all at once. It's like making minimum payments on a credit card and then getting hit with the full bill. These are rare for regular homebuyers but sometimes used in commercial or short-term situations.
Borrower
That's you — the person taking out the mortgage. If you're applying with a spouse or partner, you may both be listed as borrowers (sometimes called co-borrowers). The borrower is responsible for repaying the loan according to the terms agreed upon at closing.
Bridge Loan
A bridge loan is a short-term loan that helps you buy a new home before you've sold your current one. It "bridges" the gap between the two transactions. They're handy when timing doesn't line up perfectly, but they come with higher rates and fees since they're meant to be temporary.
Buyer's Agent
A buyer's agent is the real estate agent who represents you, the buyer, in a home purchase. They help you find properties, negotiate offers, and guide you through the transaction. Having your own agent means someone is looking out specifically for your interests, not the seller's.
Cap
A cap is a limit on how much your interest rate can change on an adjustable-rate mortgage. There are usually caps on each individual adjustment period and a lifetime cap on the total increase. Think of it as a safety net — even if rates spike, your payment can only go up so much.
Cash-Out Refinance
A cash-out refinance lets you replace your current mortgage with a larger one and pocket the difference in cash. People use it to fund home improvements, pay off high-interest debt, or cover major expenses. You're borrowing against the equity you've built up in your home, so you'll want to make sure the math makes sense.
Clear to Close
This is the phrase every homebuyer wants to hear. "Clear to close" means the underwriter has signed off on everything and you're officially approved to close on the loan. At this point, you'll schedule your closing date, do a final walk-through, and get ready to sign a lot of paperwork.
Closing
Closing is the finish line — the day you sign all the final documents, pay any remaining costs, and the home officially becomes yours. It usually takes an hour or two. You'll sit down with a closing agent, review everything, and walk out with the keys.
Closing Costs
Closing costs are the fees and charges you pay at closing on top of your down payment. They typically run 2–5% of the loan amount and cover things like the appraisal, title insurance, lender fees, and prepaid taxes or insurance. We always try to give you a clear estimate early so there are no surprises.
Closing Disclosure
The Closing Disclosure is a five-page document that lays out the final terms of your loan, your monthly payment, and every fee you're paying at closing. By law, you must receive it at least three business days before closing so you have time to review everything and ask questions.
Comparable Sales (Comps)
Comps are recently sold homes in the same area that are similar in size, condition, and features to the property you're buying. Appraisers use comps to figure out what a home is worth. If three similar houses on the same street sold for around $400K, that gives a strong indication of value.
Conditional Approval
Conditional approval means the underwriter likes what they see but needs a few more things before giving full approval. Common conditions include updated bank statements, a letter of explanation, or proof that a debt was paid off. It sounds scary, but it's completely normal — most loans go through this stage.
Conforming Loan
A conforming loan meets the guidelines set by Fannie Mae and Freddie Mac, including a maximum loan amount that changes every year. Because these loans can be sold to government-sponsored agencies, lenders can offer better rates. Most conventional loans in Utah are conforming loans.
Contingency
A contingency is a condition in a purchase contract that must be met before the deal can close. Common contingencies include the home passing an inspection, the appraisal meeting the purchase price, and the buyer securing financing. If a contingency isn't satisfied, the buyer can usually back out without losing their earnest money.
Conventional Loan
A conventional loan is any mortgage that isn't backed by a government agency (like FHA, VA, or USDA). They typically require higher credit scores and bigger down payments, but they offer a lot of flexibility and don't come with the same fees — like the upfront mortgage insurance premium on FHA loans.
Credit Report
Your credit report is a detailed history of how you've handled debt — credit cards, car loans, student loans, and anything else with a balance. Lenders pull your report from the three major bureaus (Equifax, Experian, and TransUnion) to evaluate your creditworthiness. It's a good idea to review yours before applying so there are no surprises.
Credit Score
Your credit score is a three-digit number that summarizes how reliably you've managed debt. It ranges from 300 to 850, and the higher the better. Most mortgage programs require at least a 580–620 score, but a score above 740 typically unlocks the best rates and terms.
Debt-to-Income Ratio (DTI)
Your DTI compares how much you owe each month to how much you earn. Lenders use it to make sure you can comfortably handle a mortgage payment on top of your existing obligations. For most loan programs, you'll want your total DTI below 43–50%. Lower is always better in the eyes of an underwriter.
Deed
The deed is the legal document that proves you own the property. When you buy a home, the seller signs the deed over to you, and it gets recorded with the county. It's the piece of paper that officially says "this house belongs to you."
Deed of Trust
A deed of trust is similar to a mortgage — it's the document that gives your lender a security interest in the property. In Utah and many other states, a deed of trust is used instead of a traditional mortgage document. It involves a third party (a trustee) who holds the title until the loan is paid off.
Default
Default means you've stopped making your mortgage payments as agreed. It's the situation everyone wants to avoid because it can lead to foreclosure and serious damage to your credit. If you're struggling to make payments, reach out to your lender as early as possible — there are options like forbearance and loan modification.
Depreciation
Depreciation is the opposite of appreciation — it's when a property loses value over time. This can happen because of market downturns, neighborhood changes, or deferred maintenance. While no homeowner wants to see this, understanding that property values can fluctuate helps you make smart long-term decisions.
Discount Points
Discount points let you "buy down" your interest rate by paying more upfront at closing. One point typically costs 1% of your loan amount and lowers your rate by roughly 0.25%. It's a trade-off: pay more now, save more each month. It makes the most sense if you plan to stay in the home long enough to recoup the upfront cost.
Down Payment
The down payment is the chunk of the purchase price you pay out of pocket. It's not part of your loan — it's your initial investment in the property. Down payments can range from 0% (VA and USDA loans) to 20% or more. The more you put down, the less you borrow and the lower your monthly payment.
Due Diligence
Due diligence is the homework you do before committing to a property — inspections, title searches, reviewing HOA rules, and verifying everything looks good. It's your opportunity to uncover any problems before closing. Think of it as kicking the tires before you drive off the lot.
Earnest Money
Earnest money is a deposit you make when your offer is accepted to show the seller you're serious. It's typically 1–3% of the purchase price and gets held in an escrow account until closing, where it's applied toward your down payment or closing costs. If you back out for a reason not covered by a contingency, you could lose it.
Equity
Equity is the portion of your home that you actually own — the difference between what the home is worth and what you still owe on the mortgage. Every payment you make and every dollar your home appreciates builds equity. It's one of the best reasons to own a home rather than rent.
Escrow
Think of escrow as a financial holding tank. When you close on a home, an escrow company holds all the money and documents until everything checks out. After closing, your lender may set up an escrow account that collects a portion of your property taxes and insurance with each monthly payment, so those big annual bills are covered automatically.
Escrow Account
An escrow account is managed by your lender to pay your property taxes and homeowners insurance on your behalf. A portion of each monthly mortgage payment goes into this account, and when those bills come due, the lender pays them for you. It's a convenient way to budget for large expenses without thinking about it.
Fair Market Value
Fair market value is the price a willing buyer and a willing seller would agree on in an open market — no pressure, no funny business. It's what the home is genuinely worth at this moment in time. Appraisals and comparable sales help establish fair market value during the mortgage process.
Fannie Mae
Fannie Mae (officially the Federal National Mortgage Association) is a government-sponsored enterprise that buys mortgages from lenders. This frees up cash for lenders to make more loans. Fannie Mae sets guidelines for conforming loans, and most conventional mortgages follow their rules. You'll never deal with them directly, but they influence your loan behind the scenes.
FHA Loan
FHA loans are insured by the Federal Housing Administration and are designed for buyers who may not have perfect credit or a large down payment. You can qualify with as little as 3.5% down and a credit score of 580. The trade-off is that FHA loans require both an upfront and a monthly mortgage insurance premium.
Fixed-Rate Mortgage
A fixed-rate mortgage locks in the same interest rate for the entire life of the loan — whether that's 15, 20, or 30 years. Your principal and interest payment stays the same from the first month to the last. It's the most predictable type of mortgage and by far the most popular choice for homebuyers.
Flood Insurance
If your property is in a designated flood zone, your lender will require flood insurance. Standard homeowners insurance doesn't cover flood damage, so this is a separate policy. Even if you're not required to carry it, it might be worth considering — just one inch of floodwater can cause tens of thousands in damage.
Forbearance
Forbearance is an agreement with your lender to temporarily reduce or pause your mortgage payments during a financial hardship. It's not forgiveness — you still owe the money — but it gives you breathing room to get back on your feet. If you're ever in a tough spot, ask about it before you miss a payment.
Foreclosure
Foreclosure is the legal process where a lender takes ownership of a property after the borrower stops making payments. It's the worst-case scenario and severely damages your credit for years. The good news is that there are usually multiple steps and options to explore before it ever gets to that point.
Freddie Mac
Freddie Mac (Federal Home Loan Mortgage Corporation) works alongside Fannie Mae to keep the mortgage market running. They buy mortgages from lenders, package them as securities, and sell them to investors. Like Fannie Mae, Freddie Mac sets guidelines that influence what conventional loans look like — you just won't interact with them directly.
Gift Letter
If a family member is helping with your down payment, your lender will need a gift letter. It's a signed document confirming the money is a gift — not a loan — and includes the donor's name, the amount, and their relationship to you. Lenders want to know you aren't secretly taking on more debt to close the deal.
Good Faith Estimate
The Good Faith Estimate (GFE) was the old-school version of what we now call the Loan Estimate. It gave borrowers an estimate of closing costs and loan terms. Since 2015, the Loan Estimate has replaced the GFE, but you might still hear the term tossed around — especially by seasoned real estate folks.
Gross Monthly Income
Your gross monthly income is your total earnings before taxes, insurance, and other deductions are taken out. It's the bigger number on your paycheck — the one you wish you actually took home. Lenders use gross income (not net) to calculate your debt-to-income ratio and figure out how much you can borrow.
Guarantee Fee
A guarantee fee (often called a funding fee) is charged on government-backed loans like USDA and VA loans. It's a one-time fee that helps keep these programs running so future borrowers can benefit too. On USDA loans, there's also a small annual fee wrapped into your monthly payment.
HECM (Home Equity Conversion Mortgage)
A HECM is the most common type of reverse mortgage, backed by the FHA. It allows homeowners 62 and older to convert their home equity into cash without selling the home or making monthly mortgage payments. The loan is repaid when the homeowner sells, moves out, or passes away. It's a powerful tool for retirees, but it's important to understand the details.
HOA (Homeowners Association)
An HOA is an organization that manages a community — think condos, townhomes, or planned neighborhoods. They set rules, maintain common areas, and charge monthly or annual dues. When you're buying, your lender factors HOA fees into your monthly payment to make sure you can afford the total picture.
Home Equity
Home equity is the difference between your home's current value and what you owe on your mortgage. If your house is worth $400,000 and you owe $250,000, you have $150,000 in equity. You build equity by making payments and through appreciation. It's essentially your ownership stake in the property.
Home Inspection
A home inspection is a thorough checkup of the property's condition — roof, foundation, plumbing, electrical, HVAC, and more. It's done by a licensed inspector before closing and gives you a clear picture of any issues. An inspection isn't required by lenders, but skipping one is a gamble we don't recommend.
Homeowners Insurance
Homeowners insurance protects your property and belongings against damage from things like fire, theft, and storms. Your lender requires it because they want to make sure their investment is protected. Most policies also include liability coverage in case someone gets injured on your property.
HUD
HUD stands for the U.S. Department of Housing and Urban Development. They oversee federal housing programs, enforce fair housing laws, and regulate the FHA loan program. You'll see the HUD name pop up throughout the homebuying process — they're working behind the scenes to make homeownership accessible and fair.
Index
An index is a benchmark interest rate that adjustable-rate mortgages are tied to — common ones include the SOFR (Secured Overnight Financing Rate) and the U.S. Treasury rate. When the index goes up or down, your ARM rate adjusts accordingly. Your rate equals the index plus a set margin that doesn't change.
Interest
Interest is the cost of borrowing money. It's what the lender charges you for using their funds. On a mortgage, interest is calculated on the remaining loan balance, which is why you pay more interest in the early years when the balance is highest. Over a 30-year loan, interest can add up to a significant amount.
Interest Rate
The interest rate is the percentage the lender charges you to borrow money, expressed as an annual rate. It's one of the biggest factors in determining your monthly payment. Even a small difference — say 0.25% — can mean thousands of dollars over the life of the loan. That's why shopping for the best rate matters.
Interest Rate Lock
A rate lock guarantees your interest rate for a set period — usually 30 to 60 days — while your loan is being processed. It protects you from rate increases during that window. If rates drop after you lock, you typically can't take advantage of the lower rate unless your lender offers a float-down option.
Jumbo Loan
A jumbo loan exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. In most parts of the country, that means borrowing more than $766,550 (as of 2024 — the limit adjusts yearly). Jumbo loans often require higher credit scores, larger down payments, and more documentation, but they make high-value home purchases possible.
Joint Tenancy
Joint tenancy is a way for two or more people to own property together, where each person has an equal share. The key feature is the "right of survivorship" — if one owner passes away, their share automatically transfers to the surviving owner(s). It's common among married couples buying a home together.
Lien
A lien is a legal claim against a property, usually because of a debt. Your mortgage itself creates a lien — it gives the lender the right to take the property if you don't pay. Other liens can come from unpaid taxes, contractor work, or court judgments. A title search during closing makes sure there aren't any surprise liens on the home.
Loan Estimate
The Loan Estimate is a standardized three-page form your lender must give you within three business days of receiving your mortgage application. It shows your estimated interest rate, monthly payment, closing costs, and other key details. Use it to compare offers from different lenders side by side.
Loan Officer
A loan officer (that's us!) is the person who guides you through the mortgage process from start to finish. We help you find the right loan program, gather your documents, and keep everything moving toward closing. Think of us as your mortgage coach and advocate rolled into one.
Loan-to-Value Ratio (LTV)
LTV compares how much you're borrowing to how much the home is worth. If you're buying a $300,000 home with a $30,000 down payment, your loan is $270,000 — that's a 90% LTV. The lower your LTV, the less risk the lender takes on. Getting below 80% LTV means you can avoid paying private mortgage insurance.
Lock-In Period
The lock-in period is the window of time during which your interest rate is guaranteed not to change. Common lock periods are 30, 45, or 60 days. If your closing gets delayed beyond the lock period, you may need to extend it (sometimes for a fee) or accept the current market rate.
Margin
On an adjustable-rate mortgage, the margin is a fixed percentage that gets added to the index to determine your rate. For example, if the index is 3% and your margin is 2%, your rate would be 5%. The margin is set at closing and never changes — it's the index that moves.
Market Value
Market value is what a property would sell for under normal conditions — a willing buyer, a willing seller, and reasonable time on the market. It's not what the seller hopes to get or what the buyer wishes they could pay. Appraisals help pin down market value so everyone is on the same page.
Maturity Date
The maturity date is the day your mortgage is scheduled to be fully paid off. For a 30-year loan taken out in 2025, your maturity date would be in 2055. If you make extra payments or refinance, you can hit maturity much sooner. It's the light at the end of the tunnel.
Mortgage
A mortgage is a loan you use to buy a home, with the property itself serving as collateral. You borrow money from a lender, make monthly payments over a set number of years, and when the loan is paid off, the home is 100% yours. It's the financial tool that makes homeownership possible for most people.
Mortgage Broker
A mortgage broker is a middleman who shops your loan across multiple lenders to find you the best deal. Unlike a loan officer who works for one lender, a broker has access to many. The trade-off is that brokers charge a fee for their service, but the rate savings can often outweigh the cost.
Mortgage Insurance (MI/PMI/MIP)
Mortgage insurance protects the lender if you default on your loan. On conventional loans, it's called PMI (Private Mortgage Insurance), and on FHA loans, it's called MIP (Mortgage Insurance Premium). You typically pay it when your down payment is less than 20%. PMI can be removed once you reach 20% equity; FHA MIP often sticks around for the life of the loan.
Mortgage Note
The mortgage note is the legal document you sign promising to repay the loan. It spells out the loan amount, interest rate, payment schedule, and what happens if you don't pay. The deed of trust secures the property as collateral, but the note is your personal promise to pay.
Negative Amortization
Negative amortization happens when your monthly payments aren't enough to cover the interest due, so the unpaid interest gets added to your loan balance. Your loan actually gets bigger over time instead of smaller. This can occur with certain adjustable-rate or payment-option loans. It's generally something you want to avoid.
Non-Conforming Loan
A non-conforming loan is any mortgage that doesn't meet Fannie Mae or Freddie Mac guidelines — either because the loan amount is too high (jumbo) or the borrower's situation is unusual. These loans may have different rates and requirements, but they serve an important role for borrowers who don't fit neatly into the standard box.
Note Rate
The note rate is the interest rate stated on your mortgage note — the actual rate you're charged on the loan balance. It's different from the APR, which includes fees and gives a fuller cost picture. When people say "my rate is 6.5%," they're usually talking about the note rate.
Origination Fee
The origination fee is what your lender charges for processing and underwriting your loan. It usually runs between 0.5% and 1% of the loan amount. This fee covers the administrative work of putting your mortgage together — reviewing documents, verifying information, and getting you to the finish line.
Owner-Occupied
Owner-occupied means you, the borrower, plan to live in the property as your primary home. This distinction matters because lenders offer better rates and terms for owner-occupied properties compared to investment properties or second homes. Most first-time buyer programs require the home to be owner-occupied.
PITI (Principal, Interest, Taxes, Insurance)
PITI is the total monthly cost of owning a home: your loan principal, the interest on the loan, property taxes, and homeowners insurance. When we talk about your monthly mortgage payment, we're usually talking about PITI — not just the loan itself. It gives you the true picture of what homeownership costs each month.
Points
Points are upfront fees paid to the lender at closing, where one point equals 1% of the loan amount. Discount points buy down your interest rate, while origination points cover lender fees. Paying points can make sense if you're staying in the home long-term and want to save on interest over time.
Pre-Approval
Pre-approval is a step up from pre-qualification. The lender actually pulls your credit, verifies your income and assets, and gives you a letter stating how much they're willing to lend. It tells sellers you're a serious, qualified buyer. In a competitive market, a pre-approval letter can be the difference between winning and losing an offer.
Pre-Qualification
Pre-qualification is an initial assessment of what you might be able to borrow based on the financial information you provide. It's quick, usually doesn't require a hard credit pull, and gives you a ballpark number to work with. It's a great first step before you start house hunting.
Prepayment Penalty
A prepayment penalty is a fee some lenders charge if you pay off your mortgage early — either through a lump sum or refinancing. Most modern mortgages don't include this, but it's always worth checking. Nobody should be penalized for paying off their debt faster.
Principal
The principal is the actual amount of money you borrowed — not including interest. Each monthly payment reduces your principal a little bit. Early in the loan, most of your payment covers interest, but over time, a larger share goes toward paying down the principal. That's amortization in action.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance is a monthly fee your lender adds when you put less than 20% down on a conventional purchase loan. It protects the lender (not you) if you stop making payments. The good news? Once you build 20% equity in your home, you can usually get it removed — and your monthly payment drops.
Property Tax
Property tax is a local government tax based on the assessed value of your home. It funds things like schools, roads, and emergency services. The amount varies by location, and it's typically collected as part of your monthly mortgage payment through an escrow account. In Utah, property tax rates are relatively low compared to the national average.
Qualifying Ratios
Qualifying ratios are the debt-to-income calculations lenders use to determine whether you can handle a mortgage payment. There are two: the front-end ratio (housing costs divided by gross income) and the back-end ratio (total debts divided by gross income). Lenders have maximum thresholds for each, and staying well below them strengthens your application.
Rate Lock
A rate lock secures your interest rate for a specific number of days while your loan is being processed. It means if rates jump up tomorrow, yours stays the same. Most locks run 30–60 days. We always help you decide when the right time to lock is based on market conditions and your closing timeline.
Real Estate Agent
A real estate agent is a licensed professional who helps you buy or sell a home. They handle the property search, negotiations, contracts, and coordination with other parties involved in the transaction. Having a good agent on your side makes the whole process smoother and less stressful.
Refinance
Refinancing means replacing your current mortgage with a new one — usually to get a lower interest rate, change your loan term, or switch from an adjustable to a fixed rate. It's like hitting the reset button on your mortgage. We help homeowners evaluate whether refinancing makes financial sense based on their specific situation.
Reverse Mortgage
A reverse mortgage allows homeowners 62 and older to borrow against their home equity without making monthly payments. Instead, the loan is repaid when the homeowner sells, moves, or passes away. It can be a valuable tool for supplementing retirement income, but it's important to understand the long-term implications.
Right of Rescission
The right of rescission gives you three business days after closing on a refinance to change your mind and cancel the deal — no questions asked. It's a consumer protection that applies to refinances on your primary residence but does not apply to purchase transactions.
Second Mortgage
A second mortgage is an additional loan you take out on a property that already has a mortgage. Home equity loans and HELOCs are common types of second mortgages. They sit "behind" your primary mortgage, meaning if the home is sold, the first mortgage gets paid off before the second.
Seller Concessions
Seller concessions are when the seller agrees to cover some of the buyer's closing costs. It's a negotiation tool that can save you thousands of dollars out of pocket at closing. There are limits on how much a seller can contribute depending on the loan type, but it's always worth asking about.
Settlement
Settlement is another word for closing — the final step where all documents are signed, funds are transferred, and ownership changes hands. In some parts of the country people say "closing," in others they say "settlement." Same thing, different word.
Short Sale
A short sale happens when a homeowner sells their property for less than what they owe on the mortgage. The lender has to approve the sale since they're taking a loss. It's an alternative to foreclosure that can be less damaging to the seller's credit, though the process tends to be slower and more complicated than a traditional sale.
Streamline Refinance
A streamline refinance is a simplified refi option available for FHA, VA, and USDA loans. It typically requires less documentation, no appraisal, and faster processing. The goal is to lower your rate or payment with minimal hassle. If you already have a government-backed loan, this is often the easiest path to a better deal.
Survey
A survey is a professional measurement of a property's boundaries, structures, and features. It confirms exactly where your property lines are and identifies any encroachments or easements. Some lenders and title companies require a survey before closing, especially in rural areas.
Title
Title refers to your legal right to own and use the property. When you buy a home, the title is transferred from the seller to you. A clean title means there are no outstanding claims, liens, or legal issues attached to the property. That's why title searches are done before closing.
Title Insurance
Title insurance protects you and your lender against any problems with the title that weren't found during the title search — things like forged documents, unknown heirs, or recording errors. You pay for it once at closing, and it covers you for as long as you own the home. It's one of those things you hope you never need, but you'll be grateful to have.
Title Search
A title search is a deep dive into public records to confirm the seller actually owns the property and has the right to sell it. It also checks for any liens, judgments, or other claims against the property. If anything comes up, it needs to be resolved before closing can proceed.
Truth in Lending (TILA)
TILA is a federal law that requires lenders to clearly disclose the terms and costs of a loan before you commit. It's the reason you receive detailed documents like the Loan Estimate and Closing Disclosure. The whole point is to make sure you know exactly what you're agreeing to — no hidden surprises.
Trustee
In states that use a deed of trust (including Utah), the trustee is the neutral third party who holds legal title to the property on behalf of the lender until the loan is paid off. Once you pay off your mortgage, the trustee releases the deed to you. If you default, the trustee has the authority to initiate foreclosure proceedings.
Underwriting
Underwriting is the process where a lender thoroughly reviews your entire loan application — credit, income, assets, employment, and the property itself — to decide whether to approve the loan. The underwriter is essentially the final gatekeeper. It can feel like a lot of scrutiny, but it exists to make sure the loan is a good fit for everyone involved.
USDA Loan
USDA loans are backed by the U.S. Department of Agriculture and are designed for buyers in eligible rural and suburban areas. The biggest perk? Zero down payment required. They also offer competitive rates and lower mortgage insurance costs. Many parts of Utah qualify for USDA financing — you might be surprised at how many areas are eligible.
Upfront Mortgage Insurance Premium (UFMIP)
UFMIP is a one-time fee charged on FHA loans, currently 1.75% of the loan amount. It's usually rolled into the loan balance so you don't have to pay it out of pocket at closing. In addition to UFMIP, FHA loans also carry an annual mortgage insurance premium that's split into monthly payments.
VA Loan
VA loans are guaranteed by the Department of Veterans Affairs and available to eligible service members, veterans, and surviving spouses. They offer zero down payment, no PMI, and competitive interest rates — it's one of the best mortgage benefits out there. If you've served, you've earned it, and we're honored to help you use it.
Variable Rate
A variable rate (also called an adjustable rate) is an interest rate that changes over time based on market conditions. It's the opposite of a fixed rate. Variable rates usually start lower but carry the risk of increasing. How much and how often they can change depends on the specific terms of your loan.
Verification of Employment (VOE)
VOE is the process your lender uses to confirm that you actually work where you say you work and earn what you say you earn. They'll contact your employer directly or use a third-party verification service. It's routine, but heads up — switching jobs during the loan process can complicate things.
Walk-Through
The walk-through is your final chance to inspect the property before closing — usually within 24 hours of signing. You're checking that any agreed-upon repairs were completed, nothing new is damaged, and the home is in the condition you expected. It's not a full inspection, just a quick gut check before you take ownership.
Warranty Deed
A warranty deed is the strongest type of deed a seller can provide. It guarantees that the seller holds clear title to the property and has the right to sell it. If any title issues arise later, the seller (or their title insurance) is legally responsible. In most home purchases, a warranty deed is what you'll receive at closing.
Still Have Questions? Ask Us.
Mortgage jargon shouldn't stand between you and your dream home. If anything on this page is still unclear, give us a call or start your application — we're here to help.