Mortgage glossary

Understand the language before you sign the documents.

Mortgage and real estate decisions are easier when the terminology is clear. Use this glossary as a quick reference for common concepts.

APR

Annual Percentage Rate is a disclosure measure that reflects interest plus certain finance charges over the life of the loan.

Debt-to-income ratio compares qualifying monthly debt obligations with qualifying gross monthly income.

Loan-to-value compares the loan amount with the property's value or applicable purchase-price calculation.

Private mortgage insurance can apply to certain conventional loans with higher loan-to-value ratios.

Escrow can refer to the settlement process or to an account used to collect taxes and insurance with the mortgage payment.

Discount points are upfront charges used in certain pricing structures to obtain a different interest rate.