Mortgages Made Easy
Buying a home is one of the biggest decisions you’ll ever make, and understanding common mortgage terms can make the process smoother and less stressful. Here’s a simple breakdown of what you’ll hear along the way.
- Mortgage – A loan used to buy or refinance a home. The property acts as collateral while you make monthly payments until the loan is paid off.
- Mortgage Application – The form you complete when applying for your loan. It includes your income, employment, property details, and the amount you’re requesting to borrow.
- Fixed-Rate Mortgage – A home loan with an interest rate that stays the same for the entire term, keeping your monthly payments consistent.
- Adjustable-Rate Mortgage (ARM) – A loan with an interest rate that may change over time based on market conditions. ARMs often start with a lower fixed rate that adjusts later.
- Debt-to-Income Ratio (DTI) – A comparison of your total monthly debt payments to your gross monthly income, used by lenders to assess borrowing capacity.
- Loan-to-Value Ratio (LTV) – The percentage of your home’s appraised value that you’re borrowing. A lower LTV often means better rates and no PMI requirement.
- Principal, Interest, Taxes, and Insurance (PITI) – The main components that make up your monthly mortgage payment.
- Private Mortgage Insurance (PMI) – Insurance that protects the lender if you default on your loan. Required when you borrow more than 80% of the home’s value.
- Mortgage Insurance (MI) – Another term for Private Mortgage Insurance (PMI).
- Hazard Insurance – Homeowners insurance that protects your property from fire, storm, and other covered damages.
- Flood Insurance – Separate insurance required for homes in flood zones to protect against flood-related damage.
- Escrow Account – An account managed by your lender to collect monthly amounts for property taxes, homeowners insurance, and PMI, ensuring they’re paid on time.
- Appraisal – A professional evaluation of your property’s value completed by a licensed appraiser to confirm the home’s market worth.
- Early Disclosures – Forms provided within three days of applying for a mortgage, such as the Loan Estimate, which outlines projected loan terms, payments, and estimated closing costs.
- Closing Agent – The title company or attorney who manages the final steps of your loan, including preparing paperwork, transferring ownership, and recording the mortgage.
- Closing Disclosure – A final summary of your loan terms, monthly payments, and total closing costs. You’ll receive this at least three business days before your closing date.
- Closing – The final step in the mortgage process where you sign all documents, pay any remaining costs, and officially become the homeowner.
Still Have Questions?
We know mortgages can feel overwhelming, but you don’t have to figure it out alone. Our local lending team is here to guide you every step of the way and help you find the loan that fits your needs.
Email: mortgage@priorityfirstfcu.org
Phone: 1-800-368-0739