Mortgage Terminology

Mortgage and Lending with Sun Pacific Mortgage and Real Estate DRE#01014873/NMLS#361315

Mortgage Jargon

I have found that often times clients are frustrated with trying to understand financial jargon. It’s important in any real estate or loan transaction and it’s always a difficult subject to learn. So I’ve compiled a list of financial termer that every buyer or borrower should know. Hope this helps! (Terms from multiple sites including Trulia and

Adjustable rate: An interest rate that may change over time of the loan, and the essence of an Adjustable Rate Mortgage. Some rates vary according to an established financial index like COFI – adding a set “margin” of percentage points.

Appraisal: A report expressing the estimated value of a property based on a comparison of similar saleable properties. Also, the act of appraising a property to estimate it’s value.

Assumable Mortgage: A loan that can be transferred with a sold property to a new buyer.

Balloon payment: A final lump sum payment, typically larger than previous payment, due at the end of a balloon type loan.

Collateral: Property pledged as security for a debt, such as real estate that secures a mortgage. Collateral can be repossessed if the loan is not repaid.

Conventional Loan: A Mortgage loan not insured or guaranteed by a federal government entity such as Federal Housing Administration.

Deed: A document that legally transfers ownership of property from one person to another. The deed is recorded on public record with the property description.

Deed of Trust: Used in some states, it serves the same purpose as a mortgage. It conveys “title” to a real estate property to a disinterested third (a trustee), who holds the title until the owner of the property has repaid the debt.

Escrow: A third-party financial instrument to hold funds on behalf of the other two parties in a transaction. In a real estate transaction, if there are conditions to the sale such as passing an inspection, the buyer and seller may agree to use an escrow account. Once the conditions are met, the escrow transfers the payment to the seller and title is transferred to the buyer.

Fixed-rate Mortgage: A mortgage with payments that remain the same throughout the life of the loan. The interest rate is fixed (unlike an adjustable rate).

Good Faith: Refers to settlement charges paid by a by the borrower at closing. A Good Faith Estimate of the charges is required by The Real Estate Settlement Procedures Act.

Hard Money Loan: a specific type of asset based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued by private investors or companies. ( These are loans that I provide here at Sun Pacific and they are based largely on equity but you do need to be able to prove you can make the payment.  If you want 100% loanHard Money Loan will not work but you can get a loan despite poor credit, difficult-to-prove income, house is a fixer, recent foreclosure or short sale, even recent bankruptcy would still qualify you for a loan from me.

HELOC: Home Equity Line of Credit—usually a second mortgage allowing the borrower to obtain cash against the equity of a home up to a predetermined amount.

HUD: The U.S. Department of Housing and Urban Development, created to address public housing needs, improve and develop American communities, and enforce fair housing laws.

Interest Only Mortgage: A mortgage in which, for period of time, the monthly mortgage payment consists of interest only. During that period, the loan balance remains unchanged.

Jumbo Loan: Also called a non-conforming loan, it is a loan above a certain dollar amount. In 2009, the amount for single-family homes in most states was $417,000. Above that limit, the loan is ineligible to be purchased by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).

Lien: A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money and use your home as collateral for the loan.

Loan-to-loan value ratio: Expressed as a percentage, the amount of the loan divided by the value of a property. For example, if you have a $120,000 mortgage against a $200,000 home, the LTV is 60 percent.

Mortgage: The instrument used to pledge title to a property as security for repayment of a debt.

Owner-Occupied: Used to describe a home occupied by a borrower or a member of the immediate family as a primary residence—as opposed to a rental property. The distinction significantly affects mortgage rates.

PITI: Principal, Interest, Taxes, and Insurance—the four elements of a monthly mortgage payment.

Points: Mortgage industry synonym for “one percent,” typically of the principal loan amount. To pay an origination fee of two points on a $100,000 loan, for example, you’d pay $2,000 to the lender.

Quitclaim Deed: An instrument transferring ownership of a property, typically with no guarantee of an unencumbered “clear” title.

Survey: A measurement description of land prepared by a registered land surveyor. Typically it shows the property’s dimensions and its location relative to known landmarks, plus the location and dimensions of any improvements.

Title: The evidence to the right to, or ownership of property.

Title Insurance: A policy that guarantees the accuracy of a title search and protects against errors. Most lenders require the buyer to purchase title insurance to protect the lender against loss in the event of a title defect. This charge is included in the closing costs

Underwriting: The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

VA Loan: A loan guaranteed by the U.S. Department of Veterans Affairs as a benefit to military veterans.

Warranty Deed: A legal document which guarantees that the seller is the true owner of the property and has the right to sell the property.

Yield Curve: A graph that compares long-term lending rates to short-term rates. Lenders “borrow short” at lower rates to “lend long” at higher rates. A “steep” curve spells bigger profits for lenders.

Zero-Down Mortgage: A loan that finances 100% of the purchase price.

I hope this list of terms helped clear the water for all you who are trying to buy a home or are in the middle of the process right now. I am the real estate expert of Sun Pacific Mortgage and Real Estate and we provide hard money loans for those with equity and/or a downpayment. We are able to provide these loans because of investors who have taken an interest in the real estate market.

If you are interested in investing in real estate then give me a call and we can talk about safely investing your money in something that you could make 12% interest on each month!

Lynn Tardibuono – Flipper Chick- Real Estate Agent and Co-Owner of Sun Pacific Mortgage and Real Estate.  Serving Sonoma County since 1988.  Her number is (707)523-2099 and you can also visit our redesigned website at Also be sure to like us on facebook! Click this link!

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