SOUTHSIDE MORTGAGE CORPORATION
Mortgage Glossary (A-Z)
A simple guide to home loan language — explained in everyday terms.
A
Amortization
How your loan is paid down over time through regular monthly payments.
Annual Percentage Rate (APR)
Your interest rate plus certain closing costs, expressed as a yearly rate. Helpful for comparing loans.
Appraisal
An estimate of a home’s value, done by a licensed appraiser.
Assets
Money or property you own (bank accounts, savings, retirement funds, etc.) used to help qualify for a loan.
Assessed Value
The value your county or city assigns your property for tax purposes.
Assumption / Assumable Loan
When a buyer takes over the seller’s loan. Some VA and FHA loans can be assumable.
B
Balloon Mortgage
A loan with small payments at first, followed by a large payment at the end. (Less common today.)
Basis Points (BPS)
Used to describe interest rate changes. 1% = 100 basis points.
Borrower
The person applying for and receiving the mortgage.
Buydown
Paying extra at closing to lower your interest rate temporarily or permanently.
C
Closing
The final step where you sign documents, pay costs, and receive the keys.
Closing Costs
Fees associated with the loan and home purchase (appraisal, title work, taxes, lender fees, etc.).
Collateral
The property used to secure your loan.
Conventional Loan
A loan not backed by the government (FHA, VA, USDA).
Credit Report
A summary of your credit history used to help qualify for a loan.
Credit Score
A number predicting how likely you are to repay a loan. Higher scores may receive better rates.
Conforming Loan
A loan that meets Fannie Mae/Freddie Mac guidelines, including loan limits.
D
Debt-to-Income Ratio (DTI)
Your monthly debt payments compared to your income — used to help determine what you can afford.
Deed
The legal document showing who owns a property.
Down Payment
Money you pay upfront toward the purchase of your home.
Delinquency
Missing loan payments.
E
Earnest Money
A deposit showing the seller you’re serious about buying their home.
Equity
The part of the home you actually own — the value minus what you owe on your loan.
Escrow Account
A special account used to pay property taxes and homeowners insurance.
Escrow Holdback
Money set aside for repairs that will be completed after closing.
F
FHA Loan
A government-backed loan known for flexible credit and low down payment options.
Fixed-Rate Mortgage
A loan where your interest rate stays the same for the entire term.
Flood Certification
A report verifying whether a home is in a flood zone.
Foreclosure
The legal process if a borrower stops making mortgage payments.
G
Gift Funds
Money given by family to help with your down payment or closing costs.
Good Faith Estimate (GFE)
An older term. Today replaced by the Loan Estimate (LE).
Government-Backed Loan
Loans like FHA, VA, and USDA supported by federal programs.
H
Homeowners Insurance
Insurance protecting your home from loss or damage.
Home Equity Line of Credit (HELOC)
A revolving line of credit based on your home’s equity.
HUD
The U.S. Department of Housing and Urban Development.
I
Interest Rate
The cost of borrowing money, expressed as a percentage of your loan.
Interest-Only Loan
A loan where you temporarily pay only the interest (less common today).
Inspection
A detailed look at the condition of a home before purchase.
J
Jumbo Loan
A mortgage that exceeds conforming loan limits.
L
Lender
The financial institution providing your mortgage.
Loan Estimate (LE)
A document showing your estimated monthly payment, interest rate, and closing costs.
Loan Term
How long you have to repay your loan (e.g., 15 or 30 years).
Loan-to-Value Ratio (LTV)
The loan amount divided by the home’s value — used to determine risk.
M
Mortgage
A loan used to buy a home.
Mortgage Insurance (MI / PMI / MIP)
Insurance required on some loans when the down payment is less than 20%.
Mortgage Note
Your promise to repay the loan.
Modular / Manufactured Home Requirements
Special guidelines for factory-built homes — important in rural Virginia.
N
Net Income
Income after taxes — sometimes reviewed during loan qualification.
Non-Conforming Loan
A loan that does not meet Fannie Mae/Freddie Mac requirements (e.g., jumbo loans).
O
Origination Fee
A lender charge for processing your loan.
Owner’s Title Insurance
Protects your ownership rights to the property.
P
PITI
Principal, Interest, Taxes, and Insurance — the main components of a monthly payment.
Points / Discount Points
Fees you can pay upfront to lower your interest rate.
Pre-Approval
A detailed lender review that determines what you can afford and strengthens your offer.
Pre-Qualification
A basic estimate of what you may be able to afford — less detailed than pre-approval.
Principal
The amount of money you borrow.
R
Rate Lock
Secures your interest rate for a set amount of time while your loan is processed.
Refinance
Replacing your current mortgage with a new one to lower payments, shorten the term, or access equity.
Reserves
Money you have left after closing — sometimes required for qualification.
S
Second Mortgage
Another loan taken out against your home’s equity.
Seller Concessions
When a seller helps pay some of your closing costs.
Settlement
Another term for closing.
T
Title Search
A review to make sure nobody else has claims against the property.
Title Insurance
Protects against potential ownership disputes.
Termite / Pest Inspection
Often required in Virginia, especially for VA loans.
U
Underwriting
The lender’s final review to approve or deny your loan.
USDA Loan
A government-backed loan offering 100% financing in eligible rural areas.
V
VA Loan
A no-down-payment loan available to eligible veterans and military borrowers.
Verification of Employment (VOE)
A check with your employer to confirm your income and job status.
W
W-2 / Tax Returns
Commonly required income documents for loan approval.
Z
Zero-Down Mortgage
Loan options like VA and USDA that require no down payment.