Commonly Used Mortgage Terms 

Mortgage: A mortgage is a loan you obtain to pay for a home. The home is used for collateral on the loan.

Mortgage Pre-Approval: the lender provides the borrower with a confirmation of their qualified mortgage loan amount.

Principal: The amount you actually borrow to purchase the home.

Interest Rate: The amount the bank charges you to use their money. It is a percentage based on current economic indicators, including your credit score and the type and length of the loan.

Annual Percentage Rate: the true cost of your mortgage loan: interest plus fees and any other one-time costs.

Term: The amount of time the loan is financed for, typically between 15-30 years.

Amortization: Principal and interest together comprise most of your payment; the total is then divided into equal payments over the life of the loan using a process called amortization.

Down Payment: A portion of the home’s selling price that needs to be paid upfront. Typically a new homeowner is expected to come up with 20% of the purchase price of a home as a down payment. The down payment allows you to start building equity in the home and will reduce your monthly payments.

Earnest Money: A personal check you submit along with the purchase offer to show the seller that you are serious about buying the property.

Closing Costs: These costs may include title insurance, escrow fees, lender charges, real estate commissions, recording fees and more.

Equity: The difference between the home’s fair market value and the outstanding loans on the property.

Escrow: An account held in the borrower’s name to pay obligations such as property taxes and insurance premiums. A portion of each mortgage payment is added to this account.

Title Insurance: protects the buyer and the lender against issues with the title upon transfer of property ownership.

Mortgage Insurance: This is typically required for down payments of less than 20%.

Additional Questions? 

  • Review the Mortgage Loan Page here (including the “Homebuying Education” section)
  • Also, please contact Glass City’s Mortgage Loan Department at 419-887-1000 or via email at mortgage@glasscityfcu.com