Mortgage Terms Glossary: 75 Words Every Borrower Should Know

Applying for a mortgage can feel overwhelming if you’re a first-time homebuyer. This compact, alphabetized glossary will help make sure you understand key mortgage terms as you research lenders and shop around for a home loan. 

1. Ability to repay rule 

This rule requires lenders to make a reasonable effort to ensure you can repay the loan before they accept your mortgage application. The lender must look into your income, credit history, assets, and other important financial information to determine whether you can handle the repayment terms. 

If you’re applying for a mortgage with an interest rate that starts low but rises later, the lender should also check whether you can repay the higher rate.

2. Abstract of title

Abstract of title records the title history of the property you’re buying. It includes transfers of ownership, liens, building code violations, and other crucial information. This document should confirm that the title is clear of outstanding liens and back taxes. 

Make sure to view the property’s abstract of title before you proceed with the purchase. Keep a copy of this document for any future disputes or claims.

3. Account termination fee

This is a fee the lender may charge you if you terminate your mortgage early, e.g., if you decide to refinance and switch to another lender. Paying this fee releases the lien on your property and obligates the lender to update the public records accordingly.

Your mortgage agreement should outline the termination fee. Some lenders waive these fees, and some states limit them. 

4. Additional principal payment

Additional principal payment, aka principal-only mortgage payment, is a payment that applies to your loan’s principal amount. It surpasses your set monthly payment amount. These payments may cut down on interest and even enable you to pay off your mortgage early.

Keep in mind that some lenders may charge fees for additional payments and apply penalties for early loan repayments. 

5. Adjustable rate mortgage (ARM)

With an adjustable-rate mortgage (as opposed to a fixed-rate mortgage), the interest rate is tied to an index. This means your monthly payments may fluctuate throughout the loan period. This is also known as a variable or floating rate.

ARMs tend to have a lower initial interest rate, which is why this mortgage type often appeals to borrowers. ARMs typically include a rate cap limiting the maximum interest lenders may charge.

6. Annual percentage rate (APR)

The annual percentage rate (APR) is the total annual cost of your mortgage. It includes the mortgage interest rate and any other charges, such as broker fees and mortgage insurance. Mortgage agreements must disclose the APR, and lenders must follow specific guidelines to ensure APR accuracy.

As a borrower, you’ll likely look for a mortgage with the lowest APR. However, you should also consider other elements, including the loan term and prepayment penalties.

7. Appraisal

In mortgage terms, this is a valuation of the property you’re buying, usually performed by a professional appraiser. Another appraisal option is the automated valuation method (AVM), which relies on algorithms and databases to determine a property’s value. 

A home’s appraisal reflects its age, condition, location, square footage, and other important features, such as the number of bathrooms and conforming bedrooms. A conforming bedroom means the room has a closet and a safe way to exit (other than the door) in case of a fire or other emergency.

8. Automatic payment

Automatic payments (autopay) are recurring mortgage payments that go directly from your bank account to the lender on a set date. Some lenders allow borrowers to choose the payment date that works best for them. Most mortgage payments are due on the first day of the month and are considered past due after the 15th of the month.  

Autopay is a hassle-free setup that eliminates the need to process payments manually. Withdrawing the payments from your bank account is often more practical than paying your mortgage with a credit card, which most lenders will not allow

9. Balloon loan

A balloon loan, or balloon mortgage, is a home loan with low interest rates and low or no payments in its initial period. At the end of the loan term, the borrower makes one lump-sum payment to pay off the balance.

A balloon loan is almost always short-term. While somewhat risky, this type of loan may make sense in some situations, e.g., if you’re planning to sell the property soon or if you expect a large settlement or inheritance that would enable you to pay off the loan quickly.

10. Base rate

The base rate is the standard interest rate lenders typically use as a benchmark when setting mortgage interest rates. The final interest offer may be lower or higher than the base rate, depending on your credit score, the type of mortgage you’re applying for, and other factors. Economic factors—for example, inflation—may influence the base rate.

11. Biweekly payment

A biweekly payment schedule is an alternative to the traditional monthly mortgage payment. Under this arrangement, you make half your monthly mortgage payment every two weeks.

Biweekly mortgage payments can save money because you make the equivalent of 13 rather than 12 full monthly payments every year. This could help you pay off your mortgage faster and reduce the interest you pay.

12. Bridge loan

A bridge loan is a short-term loan meant to tide you over until you receive other funding. For example, you may opt for a bridge loan if you need money to buy a new home right now, while you’re in the process of selling your current house.

Bridge financing can be risky, and lenders won’t approve every applicant. Another drawback of bridge loans is their high origination fees and interest rates.

13. Buydown

Buydown is somewhat like a mortgage subsidy that can help homebuyers unlock lower interest rates. Someone (often the seller) pays the lender a lump sum upfront to bring down the interest rate and monthly mortgage payments during the first few years of the loan term.

Buydowns may be a solid option for homebuyers who need to make smaller mortgage payments for a couple of years but can handle larger payments down the road.

14. Cash-out refinance

A cash-out refinance is a type of mortgage refinancing that allows you to get cash based on your home equity. It works like this: You take out a larger mortgage loan, repay your current mortgage with the proceeds, and get the remainder as a lump sum. You can use these funds to cover major expenses or consolidate debt. 

Reach out to cash refinance companies and use a cash refinance calculator to decide whether this financial move is right for you.

15. Closing costs

Closing costs are any expenses you cover above the price of the property you’re buying. These may include appraisal fees, loan origination fees, attorney fees, title insurance, and other costs associated with title transfer. 

On average, closing costs equal 2% to 6% of the home’s purchase price. Lenders must disclose these costs to buyers at least three business days before the closing date.

16. Compound interest

Compound interest loans mean you pay interest not only on the original loan amount (known as the principal) but also on the interest that has already accumulated. These loans grow faster and are often much harder to repay than simple interest loans, in which you only accrue interest on the principal.

Mortgages are usually simple interest loans unless they include negative amortization, i.e., adding any unpaid interest to the unpaid principal.

17. Conventional loan

A conventional homebuyer’s loan is any mortgage available through a private lender or the government-sponsored enterprises Fannie Mae and Freddie Mac. These loans are typically sold to investors in the secondary market, which means your original lender likely will not be the servicer of your loan.  

Conventional loans usually have higher interest rates and stricter eligibility requirements than government-secured mortgages, such as FHA loans. You typically need a good credit report and a minimum credit score of about 620 to qualify for a conventional loan.

18. Cosigner

A cosigner is another person who signs your mortgage agreement and commits to repaying your loan if you default. Unlike a co-borrower, a cosigner has no ownership interest in your home. A cosigner can help you qualify for a loan when a lender wouldn’t approve you otherwise. 

19. Credit history

Your credit history summarizes all your credit activity. It states how many credit cards you have, how much debt you carry, and whether you pay your loans and bills on time. Lenders will likely look into your credit history to determine whether you’re a trustworthy borrower.

20. Credit score

The credit score is a number that rates you as a potential borrower. It indicates how likely you are to make your mortgage payments on time. Borrowers with higher credit scores are more likely to qualify for mortgages and get better loan terms. 

21. Debt-to-income ratio

Debt-to-income ratio (DTI) for mortgages refers to the total debt payments you cover every month (such as credit card debt, loans, and child support payments), divided by your gross monthly income. DTI ratio is a major factor lenders will consider when deciding whether you can take on a mortgage. 

Borrowers with a DTI ratio higher than 43% may find it difficult to qualify for a mortgage. For more information, check out our complete guide to debt-to-income ratios. 

22. Default

Default, also known as delinquency, is failure to keep up with your mortgage payments. Even a single late mortgage payment will be reported to credit bureaus and can cost you up to 50 credit score points. Lenders will usually issue a default notice after three missed payments. Avoid this scenario at all costs because you may risk foreclosure. 

23. Demand feature

A demand feature allows the lender to mandate early repayment of the entire loan balance after a specific date. Your Closing Disclosure document will include a statement saying, “Your loan has a demand feature.” This statement will have either a “yes” or “no” check. 

Mortgages usually don’t have a demand feature. The demand feature is risky for borrowers, so you may consider looking for another lender if you aren’t sure you would be able to repay the loan at once. 

24. Down payment

A down payment is an initial lump sum you pay when buying a home. It covers the difference between your mortgage and the property’s purchase price. Down payments may range from 3.5% (for FHA loans) to 20% of the home’s price, depending on your lender’s policy and your credit history.

Some purchase agreements also call for “earnest money,” i.e., a smaller deposit toward the down payment made as a guarantee of good faith when signing the agreement. 

25. Down payment programs or grants

Federal, state, and other down payment programs aim to ease the path to homeownership for eligible groups. For example, several programs offer assistance to homebuyers with disabilities. 

Other home purchase plans sponsor firefighters, law enforcement officers, or first-time homebuyers below a specific income threshold. Active-duty service members and veterans may qualify for home loans that don’t require a down payment. 

26. Equity

Home equity is the gap between your property’s market value and what you owe on a mortgage. Basically, it defines how much of your property you own. Your home equity will grow as you pay down your mortgage and may also increase if your home’s value rises.

27. Escrow

Escrow is an agreement under which a third party holds funds or property until both sides of the transaction meet certain agreed-upon conditions. In real estate sales, once the buyer and seller agree, they open an escrow account. 

This neutral account, managed by the escrow agent, holds the purchase funds. Once both sides fulfill their obligations as stated in the purchase agreement, the escrow agent will forward the purchase money to the seller and transfer the title to the buyer.

28. Fair market value

Fair market value (FMV) is the price the property will likely fetch in an open market. FMV is a somewhat fluid concept that doesn’t follow a rigid formula. Basically, it’s a reasonable amount the buyer and seller agree upon based on an appraisal, a comparison to similar properties in the area, and market trends. 

29. FHA loan

FHA loans are mortgages issued by FHA-approved lenders and backed by the Federal Housing Administration. The FHA insures the loans to reduce lenders’ risk. This can allow bad-credit or low-income homebuyers to access mortgages they wouldn’t qualify for otherwise. 

You can use an FHA loan not just to buy property but also to refinance or renovate your home. These loans come with modest requirements, namely a credit score of 500 and down payments starting at 3.5%. 

30. FHA mortgage insurance

An FHA mortgage insurance premium (MIP) comprises an upfront premium and an annual fee homebuyers must pay. MIP covers losses in case the borrower defaults on a loan, which makes it possible for lenders to approve higher-risk borrowers and lower down payments. 

The upfront mortgage premium for FHA loans is 1.75% of the total loan amount, while the annual MIP can hover between 0.45% and 1.05%, depending on loan terms.

31. First mortgage

The first mortgage is the primary lien on a house. Unlike what the term may imply, it’s not the mortgage on your first home, but rather, the original mortgage you take on any house. In contrast, a second mortgage is another loan you take against home equity. 

The primary loan on a property takes priority over any other claims in case of a default or a home sale. For instance, if you sell your home, the proceeds will first cover the original mortgage and only then the second mortgage.

32. First-Time Homebuyers (FTHB) loan programs

FTHB loan programs allow first-time homebuyers to access mortgages on easier terms. These programs often also help with closing costs and down payments. The FHA, VA, and USDA all offer home loan programs based on various requirements. For example, the USDA assists buyers who purchase homes in rural areas.

33. Fixed-rate mortgage 

A fixed-rate mortgage has a constant interest rate throughout the loan’s term. The main advantage of fixed-rate mortgages is their predictability; you’ll pay the same rate even if interest rates rise. 

On the other hand, fixed interest rates are often higher than variable ones. Moreover, if interest rates fall, you’ll keep paying the higher rate.

34. Forbearance 

Forbearance is an approach that can allow you to survive financially during hard times when you struggle to keep up with your mortgage payments. It means you negotiate with your lender and work out a plan for pausing or reducing your payments. 

You will still need to repay the full loan amount. However, since your lender accepts the adjusted repayment plan, you’ll be able to avoid consequences like foreclosure or harming your credit score while your finances recover.

35. Foreclosure

Foreclosure is an action lenders can take if the borrower defaults on their mortgage payments. Under this process, the lender will seize and sell the mortgaged home to recoup their losses. 

Lenders usually turn to foreclosure as a last resort after trying other solutions, including negotiating with the borrower to work out a payment plan. 

As a homeowner, you should try hard to avoid foreclosure even if you struggle financially. Besides losing your property, you’d face tremendous damage to your credit score. Foreclosure will usually stay on your credit report for seven years.

36. Government recording charges

Government recording charges are the fees local and state government agencies charge for registering the ownership transfer of a real estate property. 

Recording charges may vary between counties. Either the buyer or the seller may cover these fees, which are part of the closing costs. 

37. Hazard insurance

Hazard insurance is part of your homeowners insurance policy. It covers your losses in case your home is damaged in a natural disaster—for instance, a storm, fire, or earthquake. 

Mortgage loans will typically require a certain amount of hazard insurance coverage. The cost of hazard insurance may depend on where you live: homeowners in higher-risk areas will usually pay bigger premiums. 

38. Home equity line of credit (HELOC)

A home equity line of credit allows you to borrow cash up to a certain limit against your home’s equity. HELOCs are split into two periods: draw and repayment. During the draw period (usually five to 20 years), many lenders will only require you to repay interest. Once you reach the repayment period (often five to 30 years), you’ll begin making full principal and interest payments.

Homeowners often turn to HELOCs to consolidate debt or cover major home repairs. However, they can be risky because your home serves as collateral.

39. Home equity loan

A home equity loan is a lump sum you borrow against your home’s equity, i.e., the gap between your property’s market value and what you still owe in a mortgage. These are usually fixed-rate loans with regular payments that cover principal and interest. 

Like any loan in which your home acts as collateral, home equity loans carry risks. Nevertheless, this type of loan can make sense if you can handle repayments and use the money responsibly.

40. Home inspection

A home inspection, or home appraisal, assesses a home’s condition before you close on the loan. An appraiser will usually examine the home’s foundation, roof, plumbing and HVAC systems, and electrical work. They’ll check for fire and inspect damage and other defects that may influence the home’s price. 

41. Index

In adjustable-rate mortgages, the index is a reference point that lenders use to calculate the interest rate on a home loan. Once the initial low-interest period ends, your total interest rate is the index and margin combined. 

For example, let’s say you have a 7/1 ARM with an initial 3.5% interest rate and a 2.5% lender’s margin. You’ll pay a fixed 3.5% interest for the first seven years. 

Now, imagine the index is 2% by the time this period ends. Your new interest rate will then be 4.5%: 2% (index) + 2.5% (margin). 

42. Interest rate

Your mortgage interest rate is what you pay a lender for borrowing from it, calculated as a percentage of your loan amount. The interest rate determines both your monthly payments and the total cost of your loan, so make sure you compare offers to find the best mortgage rates.

Adjustable-rate mortgages usually include interest rate caps limiting how much you’d pay in case of a sharp interest rate increase. 

43. Investment property

Investment property is land or real estate you purchase to create a return, either by reselling or by leasing. Investment property loans may involve higher interest rates than conventional home loans. However, as with a home loan, the lender will review your application based on your credit history and other financial documentation. 

44. Jumbo loan

A jumbo loan is a type of nonconforming mortgage that surpasses Fannie Mae and Freddie Mac limits. As such, these loans don’t have government backing and are inherently riskier for lenders. 

Since jumbo loans aren’t standardized, their terms may vary widely. Make sure you do your homework and research the best jumbo loan mortgage lenders. 

45. Lender

Your lender is the mortgage company that provides you with funding to buy, build, or improve a home. Some lenders also offer refinancing and second mortgages. 

Examine each lender’s loan terms to find the best mortgage lender for your needs. Also, check out our review of LendingTree mortgage lenders and rates to see how a loan marketplace can make choosing a lender easier and more convenient. 

46. Loan assumption

Loan assumption, also known as assumable mortgage, allows a buyer to take over the seller’s mortgage when they buy a home. Buyers can profit from this arrangement if the seller took on a fixed-rate mortgage and interest rates have risen since.

47. Loan-to-value ratio (LTV)

Loan-to-value ratio (LTV) is your loan amount divided by the value of the property you’re buying. For example, if your mortgage is $120,000 and the property is worth $150,000, the LTV would be:

$120,000 / $150,000 = 80%

Lenders typically view loans with lower down payments and LTVs above 80% as high-risk. If you opt for such a loan option, you may need to pay a higher interest rate and purchase mortgage insurance.

48. Manufactured housing

Manufactured housing is a modular or mobile home built off-site and later placed in its permanent location. These prefabricated houses tend to be much cheaper per square foot than traditionally constructed homes. However, it may be more difficult to find a lender that offers financing on modular and mobile homes. 

49. Monthly payment

Your mortgage payment is the amount you forward to your lender each month to cover your home loan. It comprises four elements, commonly known as PITI: principal, interest, taxes, and insurance. Some mortgage plans don’t include insurance or taxes. 

If you’re preparing to take on a mortgage, this simple calculator can help you estimate monthly payments. 

50. Mortgage insurance

Private mortgage insurance (PMI) protects the lender in case the borrower can’t meet their payments or passes away. You’ll need mortgage insurance if you’re taking on an FHA mortgage or a conventional mortgage with a down payment of under 20%. 

Mortgage insurance premiums used to be tax-deductible for taxpayers who itemized deductions. However, as of the end of 2021, this deduction no longer applies.

51. Mortgage protection insurance

Mortgage protection insurance (MPI) acts as a safety net for you and your family in case you lose your income, become disabled, or pass away. Your insurer will cover the remaining balance if you can’t pay off your mortgage. 

MPI cost depends on your loan amount, age, and health. The premiums will decrease as you pay down your mortgage balance.

52. Mortgage refinance

Mortgage refinancing means replacing your original home loan with a new one. Homeowners typically refinance their mortgages to improve loan terms, save money, or both. This handy calculator can help you estimate how much money you could potentially save with a mortgage refinance. 

On average, refinancing a mortgage costs approximately 2% to 6% of the outstanding principal, so make sure the potential gains outweigh this amount. Shop around for the best mortgage refinance companies to find the right loan provider.

53. Mortgage term

Your mortgage term is the period during which you’ll pay off your home loan. First-time homebuyers often choose a fixed-rate 30-year mortgage. However, if you can handle higher monthly payments, you may opt for a 15-year mortgage and enjoy lower interest costs. Keep in mind that it’s usually more difficult to qualify for a home loan with a 15-year term. 

54. No-doc mortgage

A no-documentation (no-doc) mortgage is a home loan that doesn’t require you to show proof of income, such as pay stubs and tax returns. These loans can work for people with unconventional or irregular incomes. 

However, no-doc mortgages often involve higher interest rates and are much riskier than a conventional home loan. These loans are uncommon under current regulations: Only applicants with verified assets and high credit scores would qualify.

55. Origination fee

The origination fee is what the lender charges you for the administrative tasks connected with processing your loan. This fee is usually 0.5% to 1% of your loan amount. Your loan estimate should disclose the origination fees. 

56. Payoff amount

Your payoff amount is the sum you’d need to pay to cover whatever remains of your mortgage debt. The payoff amount isn’t the same as your current balance. It may include unpaid fees and interest through the intended payment day. 

57. Physician mortgage loans

Physician mortgage loans are mortgage products designed for doctors. These mortgages help physicians qualify for a home loan even if they have a high amount of student debt and little savings.

Physician mortgages usually have more flexible criteria, including low or no down payment options. Some lenders may not count doctors’ student loans as part of the debt-to-income ratio, which makes approval easier. However, these mortgages often come with higher interest rates.

58. Preapproval

Preapproval is a preliminary check a lender runs on you to find out whether it’s likely to approve you for a mortgage. While preapproval doesn’t guarantee the lender will accept you, its outcome will help you figure out how much house you can afford. Keep in mind that mortgage preapproval usually affects your credit score because it involves a hard inquiry into your credit.

59. Prepayment penalty

A prepayment penalty is a fee lenders may charge if you pay off your mortgage before its term, especially during the loan’s first years. These fees are an important element to consider when you decide whether to pay off your mortgage early.

The fee structure varies by lender: The prepayment penalty may be a percentage of your remaining loan balance, a fixed amount, or a sliding-scale fee that declines with the length of your mortgage.

60. Principal

The principal is the amount you borrow on a mortgage. Your mortgage principal equals your home’s purchase price minus your down payment. 

Principal and interest make up most of your mortgage payments throughout the life of your loan. As you keep making payments, the amount of principal you owe will gradually decline. 

61. Qualified mortgage

A qualified mortgage is a home loan that follows certain guidelines to protect lenders and borrowers. Under these rules, the lender must make a good-faith attempt to ensure you can repay the loan. Qualified mortgages limit your loan price and can’t include risky features, such as balloon payments or interest-only periods.  

In contrast, nonqualified mortgages are inherently riskier as they don’t need to meet these lending criteria. Lenders can offer these loans to borrowers with lower credit scores or nontraditional incomes. 

62. Rate lock

A rate lock is an agreement between you and your lender to freeze your mortgage or HELOC interest rate for a predetermined period, usually 30 to 60 days. During this time, the “lock” protects you against any interest rate hikes. 

When the rate lock expires, your interest rate will open to market fluctuations, and you’ll need to contact your lender if you want to set a new lock date. Lenders may charge fees for rate locks.

63. Rate reduction option

A rate reduction option is a provision included in some fixed-rate mortgages. It allows you to lower your interest rate down the road without mortgage refinancing. You can take advantage of this option if interest rates fall during your loan term. 

Lenders may charge fees for a rate reduction. It’s usually a one-time rate improvement provision, so make sure you use it at the right moment. 

64. Reverse mortgage 

A reverse mortgage is a type of loan that allows qualifying homeowners aged 62 and up to borrow cash against their home equity. Unlike regular mortgages, reverse mortgages are only due for repayment when the borrower sells their home, moves permanently (e.g., to a nursing home), or passes away.

The three types of reverse mortgages are: federally insured, proprietary, and single-purpose. Reverse mortgage terms vary between lenders, so make sure to shop around for the right provider.

65. Second mortgage

A second mortgage is an additional mortgage you take before you finish paying off your original home loan. In case of a default, the primary mortgage takes priority in receiving any proceeds from selling the property. 

You usually need a good amount of home equity to qualify for a second mortgage. These mortgages also tend to have higher interest rates. 

66. Secured loans 

Secured loans are loans backed by collateral, such as a house or a car. A mortgage is usually a secured loan with your home serving as collateral. The lender may seize the house and sell it to recoup its losses if you fail to repay your mortgage. 

67. Subprime mortgage

A subprime mortgage is a home loan you may qualify for if you have bad credit (a FICO score below 620) or a problematic credit history. Lenders typically charge higher fees on subprime mortgages to offset the extra risk. 

It may be better to wait until you’re eligible for a mortgage with better rates. However, a subprime mortgage may be an option if you need urgent funding and have poor credit.

68. Title

In real estate terms, “title” represents all the rights associated with home ownership, such as the right to possess, use, rent out, or sell the property. 

A title check is an important part of a home sale. It verifies that the seller is the property’s legal owner and has the right to sell it. It also proves that the property is free of liens. Title insurance could protect you from outstanding title debts, including unpaid property taxes. 

69. Total interest percentage (TIP)

The total interest percentage (TIP) represents the amount of interest you’ll pay throughout your mortgage term compared to your loan amount. It helps you understand how much your mortgage will actually cost. You can find this number in your loan estimate or disclosure documents.

For example, if you’re borrowing $200,000, and your TIP is 50%, you’ll pay $100,000 in interest during your loan term. TIP is often much lower for 15-year mortgages compared to 30-year mortgages. 

70. Unsecured loan 

An unsecured loan is a loan that doesn’t require collateral. The main advantage of unsecured loans is that you don’t risk losing your assets if you can’t repay loan debt. The downside is that these loans often involve higher rates as they’re riskier for the lender. 

Mortgages are considered secured loans because they use your house as collateral. A second mortgage is likewise a secured loan tied to your home equity. 

71. USDA loan

A USDA loan is a type of financing you may apply for if you plan to buy a home in a rural area. USDA’s Rural Development Loan Program offers low-interest, affordable loans to eligible homeowners in certain locations, provided that the home will be their primary residence.

USDA loans require no down payments and include no prepayment penalties. Check out the USDA eligibility map to find out whether your target location is in a qualifying rural development area.

72. VA loan

VA loans are mortgages for active duty service members, veterans, and their spouses. Buying a house with a VA loan is similar to using a conventional mortgage, except for a one-time VA funding fee you’ll need to pay at closing. 

Because VA loans have federal backing, lenders may offer lower interest rates on these loans. However, VA mortgage rates vary between lenders, so do your research and compare providers before you sign a loan agreement. 

73. W-2

A W-2 is a standard tax form for salaried and hourly workers. The employer must provide this form for each employee, reporting their annual wages and any withheld taxes.

When you apply for a mortgage, lenders will usually ask for your W-2 forms from the previous two years as proof of income. If you’re self-employed, you’ll need to provide other income verification, such as bank statements and tax returns. 

74. Walk-through

A walk-through is a final inspection of the home you’re buying. It gives you a chance to survey the property one more time before closing. 

You should verify that no new visible issues have appeared, that the seller has fixed any known problems as agreed upon, and that the house is free of the seller’s belongings (except for any furniture or appliances included in the property sale). If you uncover any new damage during the walkthrough, make sure the seller fixes it before the closing date.

75. Year-end statement

Your annual mortgage statement breaks down the transactions in your loan account during the previous 12 months. The statement specifies your payments, any interest paid, and the remaining loan balance. 

Year-end statements can help you make wiser financial choices, including paying off your mortgage early or refinancing. You’ll also need these documents if you plan to claim tax deductions on your mortgage interest.

Final word

Taking on a mortgage is one of the most important financial decisions you’ll make. Do your research, compare lenders and loan terms, and make sure you understand how a home loan will affect your future.

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