Mortgage Glossary

Understand Every Term Before You Sign

25 mortgage terms explained in plain English. No jargon, no fluff — just what you need to know when buying a home in Monterey County.

P

Principal

The amount you actually borrow.

I

Interest Rate

The cost of borrowing money.

A

APR (Annual Percentage Rate)

The true yearly cost of your loan.

P

Property Taxes

Annual taxes based on your home's value.

S

Supplemental Taxes

A one-time tax adjustment when you buy.

H

HOA (Homeowners Association)

Monthly dues for shared community expenses.

P

PMI (Private Mortgage Insurance)

Insurance you pay when your down payment is under 20%.

M

MIP (Mortgage Insurance Premium)

FHA loan insurance — upfront and monthly.

A

Amortization Schedule

A month-by-month breakdown of your loan payments.

C

Cash to Close

The total amount you need on closing day.

E

Earnest Money Deposit

Your good-faith deposit when making an offer.

D

Down Payment

The cash you put toward the home upfront.

C

Closing Costs

The fees and charges due when you finalize the purchase.

E

Escrow

A neutral third party that holds funds during (and after) your purchase.

L

LTV (Loan-to-Value Ratio)

How much of your home's value you're borrowing.

D

DTI (Debt-to-Income Ratio)

How much of your income goes to debt payments.

P

Pre-Approval vs Pre-Qualification

Know the difference before you start shopping.

P

PITI (Principal, Interest, Taxes, Insurance)

The four components of your total monthly payment.

P

Points (Discount Points)

Pay upfront to lower your interest rate.

T

Title Insurance

Protection against ownership claims on your property.

A

Appraisal

A professional estimate of your home's market value.

H

Home Inspection

A thorough check of the home's physical condition.

C

Contingencies

Conditions that must be met for the deal to close.

R

Rate Lock

Freeze your interest rate while you close.

R

Refinancing

Replace your current mortgage with a new one.

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