| Term | Meaning |
|---|---|
| Preapproval | A lender’s written estimate of what it will lend, after checking your documents and credit |
| Prequalification | A quick, informal estimate; less reliable than preapproval |
| Earnest money | A deposit showing you are serious, held in escrow and applied at closing |
| Contingency | A condition in your offer that lets you cancel, such as inspection or financing |
| Escrow | A neutral account or party that holds money and documents until closing; also the account your lender uses to pay taxes and insurance |
| Appraisal | An independent estimate of the home’s value for the lender |
| PMI | Private mortgage insurance on conventional loans with less than 20% down |
| MIP | Mortgage insurance on FHA loans |
| Points | Fees paid upfront to lower your interest rate |
| Rate lock | A lender’s promise to hold a rate for a set period |
| Loan Estimate | A standard form showing your loan terms and costs, given within 3 business days of applying |
| Closing Disclosure | The final terms and costs, given at least 3 business days before closing |
| Title insurance | Protects against problems with ownership records |
| HOA | Homeowners association, which may charge monthly fees |
| PITI | Principal, interest, taxes and insurance: the main parts of a monthly payment |
Home buying glossary
The words you will hear from lenders, agents and title companies.
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