Glossary Terms

A formal commitment letter issued after a lender pulls credit, verifies income documents, and runs automated underwriting, establishing an exact borrowing limit for home offers.

A contractual fee charged by certain specialized lenders if a borrower pays off, refinances, or makes substantial extra principal payments on a mortgage within an initial window.

An insurance policy required on conventional loans with less than a 20% down payment that protects the lender if the borrower defaults on payments.

A binding commitment from a lender guaranteeing a specific interest rate for an agreed period (usually 30 to 60 days) while the loan is processed and underwritten.

An FHA-insured loan allowing homeowners age 62 and older to convert accumulated home equity into cash or a credit line without making monthly mortgage payments.

Closing cost credits agreed upon in the purchase contract where the seller pays a portion of the buyer’s settlement fees, rate buydown points, or prepaid escrow reserves.

An indemnity insurance policy that protects homebuyers and lenders against financial loss resulting from title defects, liens, or ownership disputes dating back to prior owners.

The formal vetting phase where a lender evaluates a borrower’s credit, income, assets, and property appraisal to determine overall risk and issue loan approval.

A government-backed mortgage offering 0% down payment financing for eligible low-to-moderate-income buyers purchasing homes in designated rural and suburban-fringe areas.

A military mortgage guaranteed by the U.S. Department of Veterans Affairs offering 100% financing (0% down) and no monthly private mortgage insurance (PMI).