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Adjustable Rate Mortgage (ARM)

An Adjustable Rate Mortgage (ARM) is a loan that offers an initial period of fixed interest that then changes at a specified interval. Typically, you'll see an ARM conveyed as two numbers. For example, a 5/1 ARM has a fixed interest rate for the first 5 years, then it adjusts based on where market rates are currently at every year after that. An Adjustable Rate Mortgage typially has a lower initial interest rate than a traditional fixed-rate mortgage due to it's unpredictable nature. When an ARM enters its adjustable period, its interest rate may trend up or down depending on the state of the market.


Amortization is the process of paying off the principal and interest on a loan. It's most commonly seen as an amortization schedule which is essentially a breakdown of every payment you need to make until you've paid off the balance of the loan in full. Any amount of additional payment made, will completely change what the amortization table looks like on a given loan.

Affidavit of Title

An Affidavit of Title is a statement, sworn in front of a notary public or other authorized official, by the seller or grantor of property that identifies the grantor, identifies the grantor’s marital status, and certifies that the grantor has no new judgements, liens, divorces, unrecorded deeds, or other potential title defects since the title examination was completed. It also certifies that the grantor is indeed in possessions of the property.

Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) is your interest rate plus ancillary charges and fees—such as closing costs and discount points—expressed as a yearly rate. By federal law, a loan's APR is always expressed as a percentage next to the interest rate. The APR was designed to give the best indication of the total cost of your mortgage; however, it's become misconstrued by lenders over the years.


An Appraisal is an unbiased estimate of a property's fair market value by a licensed professional. It's something that is typically required by all lenders during the mortgage process to ensure that the loan amount is within an acceptable range of the home's value. A property's appraisal is based on a number of factors—including location, condition, and sales of similar homes in the area (typically reffered to as "comps" or "comparables".

Appraisal Waiver / Property Inspection Waiver (PIW)

An Appraisal Waiver (otherwise known as a Property Inspection Wavier or “PIW” for short) is the ability to close a home loan without the need for an appraisal. An appraisal waiver is given and determined by the automated underwriting system chosen by your mortgage loan officer. Appraisal Waivers are typically given when the total risk assessment on the new mortgage is low. They’re awesome when given!


Appreciation is the increase in the value of your home over time. There is a finite amount of real estate on our planet meaning each home's value increases over time due to the diminishing supply. It can, however, be affected by all kinds of events. This is why property renovations are so popular because of how much it can speed up a specific property's appreciation.


Assemblage is process of combining two or more parcels of land into one larger parcel. Typically this is seen with raw land vs fully built homes next to each other.

Automated Underwriting System (AUS)

The Automated Underwriting System (usually referred to as AUS for short) is an algorithmic system that evaluates total risk on a specific loan application and gives a computer-generated loan decision. Most lenders base their actual underwriting conditional approval based on the findings of AUS. The two most popular automated underwriting systems are DU/DO (desktop underwriter/desktop originator) and LP (Loan Prospector) which are created and managed by Fannie Mae and Freddie Mac, respectively. There’s an additional system that can be used which is GUS (Guaranteed Underwriting System) which is designed solely for USDA loans.

Basis Points (BPs)

Basis Points (aka BPs, and pronounced "bips") are a unit of measurement. They're equal to one-hundredth of one percentage point (0.01%). Basis Points are used to remove any kind of ambiguity when referring to the specifics of an interest rate. For example: 125bps is the same as 0.0125%.


A borrower is referred to the individual who is applying for a mortgage as they will be borrowing money against a piece of real estate.

Cash Reserves

Cash Reserves are best defined as a safety blanket in case of an emergency—such as the loss of a job. Each loan program and specific financial profile may require a certain amount of cash reserves during the underwriting process. Typically, you'll hear that a specific loan needs x amount of reserves which is however much the mortgage payment is multipled by however many months are needed. For example: 2 months of reserves when your expected mortgage payment is $2,000 would equal $4,000 of cash leftover in the bank after the mortgage transaction has closed.

Cash to close

Cash to Close is the total amount of money needed to bring to the closing table on closing day. It typically includes down payment, any miscellaneous fees, pre-paid taxes, homeowner's insurance, and any homeowners association fees that may be applicable. Cash to close is usually paid in the form of a wire transfer or a certified bank / cashier's check.

Cash-Out Refinance

A cash-out refinance is when you obtain a mortgage for significantly more than any outstanding balances that already exist on the home. Ultimately leading to extra cash in your pocket from your home's equity. A cash-out refinance is also very popular when paying off higher interest rate debt - thus allowing for a borrower to qualify for a higher mortgage amount (or cash-out figure).

Clear to Close (CTC)

This is the most beautiful phrase to hear in the mortgage industry as a clear to close (or a 'CTC') is given from the underwriter when a loan has been thoroughly reviewed and stamped with the final approval. It means all loan conditions have been cleared and loan documents are given the green light to be generated and sent over for signing.

Close of Escrow (COE)

The close of escrow is the point in the homebuying or refinancing process when everything is finalized. The funds held in escrow and the loan amount are transferred to the seller (or prior lien holder if it's a refinance), and all outstanding third-party costs, such as taxes and HOA fees, are settled and paid out.

Closing Costs / Settlement Costs

Closing costs (otherwise referred to as settlement costs) are paid to various third parties to complete the sale or refinance of a property. The general breakdown of closing costs can be found on the initial loan estimate and will include fees regarding loan origination (don't forget that X2 Mortgage charges $0 here), appraisal, certifications, Title & Escrow, prepaids, transfer fees, etc. eport fees, and appraisal fees, as well as property taxes and recording fees.

Closing Disclosure (CD)

A closing disclosure (CD) is a standardized document from a lender that provides final details about the mortgage loan. It's essentially a more accurate Loan Estimate (LE). It includes the loan terms, projected monthly payments, fees, and other closing costs. Lenders are required to deliver the CD at least 3 business days before the day of signing can occur.

Co-Applicant or Co-Signer

A co-signer is someone whose income and credit history are put on a joint loan application in addition to the primary borrower. These are very common when the primary borrower may not qualify for the mortgage on their own.


A co-borrower is a spouse whose income and credit history are put on the same loan application in addition to the primary borrower.


When a mortgage loan is initially approved by the underwriter, it contains a set of loan conditions that are required to be gathered and re-submitted for final approval. Think of it like a checklist of documentation and information needed to obtain the final approval for the mortgage.

Comparable Sale (Comp)

A comparable sale (also known as a "comp") is a recently sold property in the area with similar features to the home you're looking to buy. Appraisers use comparable sales to help estimate the fair market value of a home.

Condominium (Condo)

A condominium (also known as a condo) is a home within a multi-unit development. Each owner has a shared interest in the common areas of the building—such as elevators, garages, gyms, pools, etc.—which are typically maintained through monthly homeowners association (HOA) fees.

Condo Insurance

Condominium insurance (also known as an HO-6 insurance policy) protects the interior of a condo unit—usually defined as everything "walls in". There's no need for insurance to cover exterior items Since the common areas are owned and managed by the condo association. Those outside items are covered under separate policies which is why it's always best to check with the specific condo association to find out more.

Conforming Loan

A conforming loan is any type of home loan that meets certain mortgage loan limits and compliance rules set by the Federal Housing Finance Agency (FHFA). These loan limits are based on factors like property size, location, etc. and change annually with home prices. Conforming loans also require that they meet Fannie Mae or Freddie Mac lending guidelines. All other home loans that do not fall in this bucket are called non-conforming loans and have a couple of extra obstacles to overcome.


A contingency is a condition (usually seen in a purchase contract) that needs to be met by you or the seller before you're obligated to buy the home. Contingencies are designed to protect both parties in a real estate transaction and often include clauses that allow certies parties to back out of the sale if the other is unable to fulfill their end of the bargain. The most popular contingency related to a mortgage is the "financing contigency".

Conventional Mortgage

A conventional mortgage is a type of home loan that is not insured or guaranteed by the federal government (like they are with VA, FHA, and USDA loans). Instead, it's backed by a private lender. If you apply for a conventional loan with less than a 20% down payment, you'll be required to pay for private mortgage insurance (PMI).

Cooperative (Co-Op)

A cooperative (also known as a co-op) is a multi-unit development where owners technically don't "own" their units outright. Instead, owners are allotted shares in a corporation (the building), along with the right to live in one of the units. Shareholders periodically pay fees that cover everything from the door person's salary to the maintenance of common areas in the building. These operations are handled by a governing board that is also in charge of setting all the building rules and requirements for moving in, as well as screening potential residents.

Credit Score (FICO)

A credit score (also known as a FICO score) is a number generated by a series of algorithms from the three credit bureaus (Experian, Transunion, and Equifax) that reflects someone's financial fingerprint. FICO credit scores range from 300–850, with a high credit score indicating financially responsibility (consistently repaid debt on time, low debt utliization, etc). Specifically, the FICO credit score is the median of the 3 scores from each of the bureaus.

Credits: Lender Credits

A lender credit is money that the lender provides to lower your closing costs in exchange for a higher interest rate.

Credits: Seller Credits / Seller Concessions

A seller credit (also known as a seller concessions) is money that the seller of a home provides to the buyer that can be applied towards closing costs. Seller credits cannot be used towards down payment.

Debt-to-Income Ratio (DTI)

A borrower's debt-to-income ratio (DTI) is a measure of their monthly debt in comparison to their monthly income. It's calculated by monthly debt being divided by monthly gross (pre-tax) income. DTI is one of the most important factors used to determine how much a particular borrower can afford in a monthly mortgage payment.


Depreciation pertains to a decrease in the value of an asset over time.

Desktop Underwriter (DU)

The Desktop Underwriter is an algorithmic system designed by Fannie Mae to evaluate the total credit risk assessment on a home loan application. It determines whether the loan will be eligible for sale and delivery to Fannie Mae. Most lenders will require either a DU or LP approval prior to providing an initial underwriting approval in the home loan process.

Discharge of Mortgage

This is required once a borrower’s loan is paid off. The lender issues the discharge of the contract, and the borrower should record this document. It’s also called a Release of Lien or Satisfaction of Mortgage.

Down Payment

A down payment is the amount of cash a borrower pays upfront toward the purchase of a home. It's often displayed as a percentage of the selling price (or appraised value) of a home. The difference between the down payment and the acquisition price is what becomes the loan amount on the mortgage.

Earnest Money / Good Faith Deposit

Earnest money (also known as a good faith deposit) is money from the buyer that is held in a third party's account (usually the Title/Escrow company's) for the duration of the transaction. This shows the seller of the buyer's intent to purchase. Once contracts are signed, the earnest money becomes part of the down payment. If the contract falls through, the earnest money is either forfeited and the seller keeps it or the money has to be returned to the buyer (dependent on the contract).


Equity is the difference between the amount a homeowner owes on a property and its current market value. Simply put, equity is the amount of actual ownership in a property.

Escrow / Impounds

An escrow (also known as an impound account) is a third-party account where money between two or more parties is managed. Escrow accounts may be used to hold a buyer's deposits while a real estate transaction is being processed. Escrow accounts are also commonly used to hold property taxes and insurance premiums (collected as part of the monthly mortgage payment) until the payments are due.

Fannie Mae

Fannie Mae is the nickname for the Federal National Mortgage Association. This is a privately held entity that is government sponsored which provides funding to mortgage lenders by buying mortgages and selling the debt to investors. The primary purpose of Fannie Mae is to ensure that there are affordable housing options and programs for homebuyers, sellers, and renters. They do this by setting nationwide lending guidelines to ensure loans are originated fairly and that home loans are not given to those who cannot afford them.

Federal Housing Administration Mortgage (FHA)

The Federal Housing Administration (FHA) is a government agency that promotes affordable, easy-to-qualify home loans. FHA loans are only available through approved lenders. FHA loans are an attractive option for first-time homebuyers without a substantial credit history. Borrowers can qualify for an FHA loan with minimum credit and down payment. FHA loans do require an upfront mortgage insurance premium and, if there's less than a 10% down payment, require mortgage insurance for the entirety of the loan.

Fixed Rate Mortgage

A fixed rate mortgage is a home loan that has a constant interest rate for the life of the loan. Fixed rate mortgages are the most common form of a mortgage and are usually offered in a 30 year terms-even though X2 Mortgage is capable of doing any year term of a loan to fit a borrower's exact needs (i.e. 17yr, 23yr, 26yr, etc.). These give homeowners the security of a predictable monthly payment. Shorter-term fixed-rate loans typically carry the lowest interest rates and are more desirable if you're comfortable handling a larger monthly payment.

Flood Certification

Flood certification (also known as a flood determination and certification or flood cert) is a document issued to certify whether a property is located in a flood zone based on FEMA (Federal Emergency Management Association) flood maps. A flood certification is required by lenders because they determines whether special flood insurance is needed for the home or not.

Flood Insurance

Flood insurance is special coverage that covers water damage caused by flooding. If a home is found to be located within a flood zone, lenders will likely require that the homeowner has a flood insurance policy. Premiums vary depending on how prone the property is to flooding.


Foreclosure is the process of repossessing a home after a borrower defaults on their mortgage (aka unable to make the payments).

Freddie Mac

Freddie Mac is the nickname for the Federal Home Loan Mortgage Corporation. This is a privately held entity that is government sponsored who provides funding to smaller mortgage banks and lenders by buying their loans. The primary purpose of Freddie Mac is to ensure that there are affordable housing options and programs for low-income homebuyers, sellers, and renters.

Gift Letter

A gift letter documents money that has been given to a borrower by a family member, spouse, or friend to support the down payment or closing costs during a home purchase. Its purpose is to assure the lender that the gift funds have no expectation of being repaid—otherwise it would be classified as debt and included in the debt-to-income ratio.

Guaranteed Underwriting System (GUS)

The Guaranteed Underwriting System (GUS for short) is an algorithmic system designed specifically for single family housing guaranteed loans (otherwise known as USDA loans). It’s designed to evaluate the total credit risk assessment on a home loan application which will allow lenders to make an informed approval decision. Most lenders will require GUS approval prior to providing an initial underwriting approval in the home loan process.

Home Inspection

A home inspection is an examination of a home's physical condition-mainly focused on the property's safety and identifying potentially major issues. It's the homebuyer's responsibility to organize and pay for a home inspection after their offer has been accepted to do their due diligence. The purpose is to uncover any potential issues with the home before finalizing and closing on the purchase.

Homeowners Association (HOA)

A homeowners association (HOA) oversees the development and enforcement of rules, regulations, and day-to-day operations for a community. The HOA is also responsible for maintaining community spaces which is why HOA fees may be collected on a monthly or annual basis.

Homeowners Insurance (HOI)

Homeowners insurance is a form of financial protection against loss or damage to a home in the event of burglary, fire, natural disaster, etc. Most lenders require proof of a homeowners insurance policy prior to closing to ensure the lender's investment is protected-just as much as the homeowner's investment. If something ever happens to a home, the lender wants to know that the homeowner will have the resources to pay off the loan.

Interest Rate

When a lender offers an interest rate for a mortgage, the interest rate is the cost of borrowing money, expressed as a percentage of the loan. Most consumer mortgages in the U.S. use simple interest which is defined as paying interest only on the principal balance. Some loans use compound interest which is applied to the principal and also to the accumulated interest of previous periods (this is also known as a negative amortization loan).


A lien is commonly referred to when it comes to a loan on a property; however, it's a legal claim to an item of property until an owed debt is paid off. For example when a home loan is taken out, that means that the lender now has a lien on your home. This gives the lender the right to take the home if the loan payments aren't being made.

Listing Agent or Seller's Agent

Listing agents (also known as seller's agents) work on behalf of a property owner who is selling their property. These agents are authorized to handle negotiations and meet with potential buyers on behalf of the property owner.

Loan Application (1003)

A loan application (also known as a 1003) is a specific mortgage application that borrowers fill out to apply for a loan. The application is crucial is determining what a specific borrower might qualify for as it covers personal indentifying information, income, assets, and credit. Loan applications are the basis and the starting point for anyone looking to take out a mortgage. Good news is that X2 makes the mortgage application process quick and painless by converting it into an online questionnaire that'll take about 5 minutes to complete and get the mortgage process started.

Loan Officer (LO)

A Loan Officer (also known as a Mortgage Expert or Mortgage Loan Officer) is a lender representative who structures a mortgage and determines the best loan programs for a specific borrower's situation. They also serve as the primary point of contact to walk borrowers throught the entire mortgage process.

Loan Estimate (LE)

A loan estimate (also known as an LE) is a standardized document that displays the interest rate, term, loan program, monthly payment, and closing costs associated with a specific borrower's loan. Lenders are required by law to provide borrowers with a loan estimate within three days of a application that has recieved the 6 main pieces of a loan application. Our loan estimates at X2, show $0 in origination fees or lenders fees because we don't have them.

Loan Processor

A Loan Processor (also known as a Processing Expert) is the person responsible for preparing a mortgage application and documentation before it goes to the Underwriter-then gathering any additional documentation once the Underwriter finishes their initial review. A processor's job is to collect and review income, credit, and asset documentation to ensure everything matches the loan application.

Loan Prospector (LP)

The Loan Prospector (sometimes referred to as the Loan Product Advisor) is an algorithmic system designed by Freddie Mac to evaluate the total credit risk assessment on a home loan application. It determines whether the loan will be eligible for sale and delivery to Freddie Mac. Most lenders will require either a DU or LP approval prior to providing an initial underwriting approval in the home loan process.

Loan Term

A loan term is the length of time over which the loan is is repaid. For example, 30 years.

Loan-To-Value (LTV)

A loan-to-value (LTV) ratio is simple equation used to assess the amount of risk associated with a home loan. LTV is calculated by dividing the total home loan amount by the appraised market value of the home. For example, a home loan of $80,000 with the value of that home being $100,000 = 0.8 (or 80%) LTV. Typically, if the LTV ratio is higher than 80%, lenders require private mortgage insurance (PMI) to offset the higher risk of default.

Market Value

Market value is the amount of money that a property would be sold for based on an appraiser's valuation report. These reports are based on a property's condition and comparable properties that have recently sold in the area. Market value may not always match the purchase price.

Mortgage Insurance Premium (MIP)

Mortgage insurance premium (MIP) is an upfront and annual insurance premium that's required for any Federal Housing Administration (FHA) home loans—regardless of the size of the down payment. It protects the lender in case the borrower defaults on the loan. MIP differs from private mortgage insurance (PMI), which is designed for conventional loans.

Mortgage Note

A mortgage note (also known as a "note") is a document signed at closing outlining the complete terms of a new home loan. A mortgage note states how much is being borrowed from the lender, whether the loan has a fixed or adjustable interest rate, and when it is expected to be repaid. It's the official paper version of the entirity of the mortgage.

Negative Amortization

Negative amortization describes the process that causes a loan balance to increase over time, despite regular payments being made. This occurs when monthly payments do not cover all of the interest that's being charged that month. The unpaid interest is added to the principal, and the following month the borrower will be charged interest on the new, higher balance (the principal plus the previous month's unpaid interest). Negative amortization may also be referred to as “NegAm” or “deferred interest” or “compound interest.” Loans with NegAm is rarer in the residential mortgage space.

Non-Occupying Co-Borrower (NOCB)

A non-occupying co-borrower is similar to a co-signer/co-borrower; however, this individual is not planning on occupying the home and is solely being added to the loan to help the primary applicant/applicants qualify.

Nonconforming Loan

Nonconforming loans do not meet the mortgage guidelines set by Fannie Mae and Freddie Mac. As such, they’re considered higher risk and tend to have higher interest rates than conforming loans. The most popular type of nonconforming loan is the jumbo loan, which is for a property that is more expensive than the mortgage limits set by Fannie Mae and Freddie Mac. Jumbo loans usually come with fairly stringent credit score, down payment, and debt-to-income ratio (DTI) requirements. Other types of nonconforming loans include government-backed loans, such as FHA loans, USDA loans, and VA loans in addition to special loans like bank statement loans, DSCR loans, etc.

Notice of Default

A notice of default is a public notice that a borrower is behind on their mortgage payments. (Also known as being in default on their loan.) It’s typically filed with a court and regarded as the first step in the foreclosure process. If the borrower comes to a payment agreement with the lender or pays the outstanding balance within 14 days, the lender will stop foreclosure proceedings. However, if the borrower does not take these steps, the default is registered with the credit reporting agencies and the lender will continue proceedings to repossess the home.

Occupancy Date

The occupancy date is the day the home buyer is able to move into the new home. It may not align with closing day, despite the transfer of ownership that is taking place. Some counties require the title deed to be recorded in court before the new homeowner can move in.

Origination Fee / Loan Origination Fee

Origination fees are the one-time costs a borrower pays to a lender for processing and creating the home loan. These fees may be itemized but it's just as likely that they'll be bundled into one ambiguous line item. At X2, we don't charge any origination fees, processing fees, application fees, or underwriting fees of any kind.

Pest Inspection

In the due diligence process, a pest inspection is performed by a certified pest inspector to determine whether a property has an active or previous infestation-typically searching for termites. Pest inspections are a part of closing costs but may be paid for by either the buyer or seller. VA loans are the only loans that require a clean pest inspection.


PITI is short for Principal, Interest, Taxes, and Insurance which are the four main aspects of a monthly home loan payment. Principal and interest are based on the loan amount and terms of the mortgage while taxes and insurance are typically related to the value of the property and jurisdiction of local government.

Planned Unit Development (PUD)

A planned unit development (PUD) is a cohesively designed community that consists of townhouses, detached homes, or condos, as well as public spaces and commercial real estate. Typically any home with an HOA payment is considered a PUD.


Points (also known as discount points and mortgage points) are a way to lower the interest rate on a home loan by agreeing to pay more at closing. One mortgage point is equal to 1% of the loan amount; however, the impact of paying a point in regards to the interest rate will vary depending on that lender's rate sheet. The more points paid, the lower the payment and rate will be.

Pre-Qualification / Pre-Approval Letter

A pre-qualification or pre-approval letter is a document from a lender that states the exact amount a buyer is approved to borrow once the information on the loan application has been verified. Getting a pre-qualification / pre-approval letter is an essential time-saving first step in the home shopping process. Whether it's referred to as a pre-qualification vs a pre-approval, will depend on the specific location of housing market a buyer is in.

Prepaid Costs

Prepaid costs are payments made at closing for upcoming line items of a new home loan. They're called "prepaid" costs because a borrower is paying for them before they are technically due. The most common kinds of prepaid costs are homeowners insurance, property taxes, and mortgage interest. These are paid into an escrow account to ensure that the borrower has money to pay these bills when they become due.

Prepayment Penalty

A prepayment penalty is a fee that's charged when a borrower pays off their mortgage early. Majority of residential home loans do not have any prepayment penalties.

Principal Balance

When referring to a home loan, the principal is the amount of money borrowed excluding taxes, interest, or homeowners insurance.

Private Mortgage Insurance (PMI)

Private mortgage insurance (PMI) is insurance required by lenders supplied by a third party for when a borrower puts less than 20% down on a conventional home loan. It's meant to protect the lender in the event that the borrower defaults. PMI can be cancelled once the borrower has at least 20% equity in the property. The PMI amount is determined by many factors such as FICO score, loan-to-value ratio, debt-to-income ratio, property type, amount of borrowers, occupancy, etc.

Purchase Contract / Purchase Agreement

A purchase contract (also known as a contract to purchase real estate) is a legal written agreement between a buyer and seller. Purchase contracts can vary state to state depending on local law. When both the buyer and seller finish negotiating terms and stipulations, they sign the purchase contract and it becomes legally binding—contingent upon the terms in the contract being met.

Rate Lock

A rate lock is a guarantee from a lender that the offered interest rate with the associated points and credits for a mortgage is the rate that a borrower will receive, so long as their financial information matches what was provided during the rate lock process. Rate locks are good for a pre-set length of time, such as 15, 30, 45, 60, 75, 90, etc. days.

Real Estate Agent

Real estate agents are state specific licensed officials that are authorized to act as a buyer's agent in the negotiation and purchase of a home, or as a listing/seller's agent who act on behalf of the seller.


A refinance (also known as a refi) is the process of applying for a new home loan to replace an existing home loan. Homeowners generally refinance to change the rate or term of their home loan (rate/term refinance) or to take cash out of the equity that they've built (cash-out refinance).

Short Sale

A short sale is when a homeowner sells their home for a price less than the balance of their current mortgage. If a lender agrees to a short sale, the homeowner will typically owe the bank or lender the remaining balance due on their home loan after the sale. If a borrower has had a short sale in the past, there are specific waiting periods that must be met when that borrower goes to qualify for a new mortgage.


A survey is a drawing of a property that details the location of the lot, property lines, home, and any other structures within its bounds. The purpose of a survey is to confirm land boundaries in the event of a legal dispute. Surveys are typically held by the local county tax collector and can be part of the closing costs associated with buying a free-standing home. Some states require surveys and some do not.

Third-Party Fees

Third-party fees are fees that are not paid to the lender to complete the mortgage transaction of a property. Depending on the lender, these fees may cover items like the credit report, appraisal, land survey, recording fee for the county, and transfer taxes.


Title is the legal concept of property ownership. States and counties require legal recording of property ownership for tax purposes. Having a record of ownership also ensures that the person holding the deed is the uncontested legal owner.

Title Insurance (Owner's Title Insurance)

Title insurance (also known as owner's title insurance) protects borrowers and lenders against financial loss from past defects or problems with the ownership of a property. Typically these include back taxes, liens, and conflicting wills. Most lenders require a "lender's title insurance policy" to protect their interest in the property until the home loan is paid off. While it's not popular, a buyer can also purchase optional "borrower's title insurance" to protect themselves for a double layer of protection.

Title Vesting

Title vesting defines who owns a certain property and thus who is liable for property taxes and other legal matters, as well as how the property can be sold. There can be multiple individual owners or entities of a single property.

Transfer Taxes

A transfer tax is a real estate tax usually paid at closing to facilitate the transfer of the property deed from the seller to the buyer. Depending on where the home is located, there may or may not be transfer taxes at the city, county, and state level. In special circumstances—such as the inheritance of a property—there may also be transfer taxes at a federal level.


An Underwriter is a member of the mortgage process who assesses the loan application, all documenation, and the appraisal of the property that is being financed. It's their job to dot the i's and cross the t's to ultimately determine whether or not the borrower/borrowers qualify for a home loan.


Underwriting is the process of evaluating a complete and verified home loan application as well as the appraisal of the property being financed. Underwriting is the assessment of risk in a home loan and a borrower's ability to repay. The process ends with a final approval (CTC) or denial of a home loan.

VA Loans

VA loans are home loans with lenient qualifying guidelines and incredibly favorable terms for active and retired military service members, veterans, and eligible military spouses. Because VA loans are backed in part by the federal government, lenders and banks are able to offer reduced interest rates.

Verification of Employment (VOE)

A verification of employment or more commonly referred to as a "VOE", is used to not only verify that the employment information matches the application, but more importantly used to obtain a detailed breakout of a borrower's pay over the last 2 to 3 years. This allows underwriting to determine the max qualifying income usable when considering overtime, bonus, commission, etc.

Wire Transfer

A wire transfer is an electronic transfer of money between two banks. It is often used when completing a large financial transaction, such as making an earnest money deposit, a down payment, or to receive cash-out from a refinance. Domestic wire transfers are typically processed on the same day they’re initiated while international wire transfers are usually delivered to the recipient within 2 days. Always consult with the recipent before sending any wires due to the recent increase in wire fraud.

Year-End Statement (Form 1098)

A year-end statement is the annual summary of a mortgage account. It breaks down the previous 12 months of mortgage payments, taxes, and interest. Lenders are required to send out year-end statements by January 31 of the proceeding year. For tax purposes, a year-end statement is also referred to as form 1098 and it allows homeowners to receive great tax incentives on the interest that's been paid throughout the year.