Glossary

The terms that appear on quotes and disclosures, in plain English.

Term	What it means
APR	Annual Percentage Rate. The interest rate plus lender fees and points, expressed as a yearly figure. The right number for comparing offers.
Amortisation	How each payment splits between interest and principal. Early payments are mostly interest; the balance shifts over the life of the loan.
Discount point	A fee of 1% of the loan paid up front to lower the rate. Worth it only if you keep the loan past the break-even period.
Origination fee	What the lender charges to process the loan. Included in APR.
Escrow	An account the servicer uses to hold and pay your property taxes and insurance.
PMI	Private mortgage insurance. Usually required below 20% down; protects the lender, not you.
LTV	Loan-to-value. Loan amount divided by property value. Lower LTV generally prices better.
DTI	Debt-to-income. Monthly debt payments divided by gross monthly income.
Rate lock	A lender's commitment to hold a quoted rate for a set period while the loan closes.
Loan Estimate	The standardised three-page disclosure lenders must provide within three business days of a mortgage application.
Prime rate	The rate banks charge their most creditworthy commercial customers. A base for many variable consumer products.
Federal funds rate	The Federal Reserve's policy rate for overnight interbank lending. Influences everything else indirectly.
Secured / unsecured	Whether the loan is backed by collateral. Secured lending prices lower because the lender can recover an asset.
Underwriting	The lender's assessment of whether, and on what terms, to lend.