Squeeze Glossary

APR — Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yearly cost of the loan expressed as a percentage.

Amortization — The process of paying off the principal and interest on your loan. You may see it expressed as an amortization schedule—essentially an outlook of every payment you need to make until you've paid off the balance of the loan in full.

Appraisal — An unbiased estimate of your property's fair market value by a licensed professional. It's typically required by all lenders during the mortgage process to ensure that the loan amount does not exceed the value of the home. A property's appraisal is based on a number of factors—including location, condition, and sales of similar homes in the area.

Appraisal Fee — A payment for the appraiser who assesses the value of the property you are looking to buy.

Appreciation — The increase in the value of your home over time. It can be affected by all kinds of events—from property renovations to changes in the housing market.

Broker Compensation Flat Fee — Refers to a fixed charge that a client pays a broker instead of a percentage-based commission. The term is often used to describe flat fees charged by real estate brokers for listing and selling property.

Cash-out refinance — When a mortgage is refinanced for more than the outstanding balance—converting home equity into cash. Cash-out refinancing can be a great way to free up money for outstanding debt or to make an investment in home improvements.

ClearRate™ — Is the actual price of your policy which you can get that same day! We text you when your ClearRate™ is ready, you confirm it, select a payment plan, E-sign documents and you’re on your way! We even take care of canceling your old policy!

Co-applicant — Someone whose income and credit history are put on the loan application in addition to the primary borrower. Co-applicants are a common addition when the primary borrower may not qualify for the mortgage on their own.

Co-borrower — A spouse whose income and credit history are put on the loan application in addition to the primary borrower.

Collateral — An asset, such as a car or a home, used for securing the repayment of a loan. The borrower risks losing the asset if the loan is not repaid.

Comparables (comps) — Properties similar to the property under consideration for a mortgage that have approximately the same size, location and amenities and have recently been sold. Comparables help an appraiser determine the fair market value of a property.

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

Contingency — A condition in a purchase contract that needs to be met by you or the seller before you're obligated to buy the home. Contingencies protect both parties in a real estate transaction and often include clauses that allow you to back out of the sale if you're unable to secure financing or if the home fails to pass inspections.

Courier Fee — A fee charged for the overnight services and messenger services for the transportation of documents to and from the lender and also from local courthouse where the mortgage gets recorded.

Credit Report Fee — A fee charged to obtain a credit report on the borrower or borrowing entity. A credit report is an evaluation of a persons capacity (or history) of debt repayment.

Credit for Interest Rate — This is the amount a lender charges a borrower and is a percentage of the principal, or the amount loaned.

Debt-to-income ratio (DTI) — A measure of your monthly debt compared to your monthly income, calculated by your monthly debt divided by your monthly gross (pre-tax) income. DTI is one of the factors used to determine how much you can afford in a monthly mortgage payment.

Default — When a borrower fails to pay their mortgage. At this point, the borrower risks foreclosure, whereby the lender has the option to repossess the home.

Discount Fee — Refers to an upfront closing cost on a mortgage. This one time arrangement provides a mortgage borrower with the ability to enjoy lower mortgage rates than the general market offers because the IRS counts these points as mortgage interest that is prepaid.

Discount Points — Also known as mortgage points, are fees a homebuyer pays directly to the lender (usually a bank) in exchange for a reduced interest rate. Each point you buy costs one percent of your total loan amount.

Document Stamp on Promissory Note — Serves as an agreement that the borrower will repay their mortgage loan by the maturity date.

Document Stamps on Mortgage — These are actually an excise tax on the documentation that transfer interest in real property and written obligations to pay.

Down payment — The amount of cash you pay upfront toward the purchase of a home. It's often expressed as a percentage of the selling price of a home—typically 5–20% depending on the type of loan. The difference between your down payment and the price of the home is what you finance with a mortgage. Generally, if you put less than 20% "down" on a home, private mortgage insurance (PMI) is required in addition to your monthly payment.

Equal Housing Opportunity — Refers to the idea that all persons should be granted “equal opportunities” when it comes to renting or purchasing real property.

Equity — The difference between the amount you owe on a property and its current market value. In other words, your equity is the amount of ownership you have in your property.

Escrow — 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.

Estoppel Letter — A legally binding document with a purpose to find out whether the seller has any outstanding fees owed to the homeowners association (HOA). Such balances could end up with the HOA putting a lien on the property.

Federal Housing Administration (FHA) loans — A Federal Housing Administration (FHA) loan is a home mortgage that is insured by the government and issued by a bank or other lender that is approved by the agency. FHA loans require a lower minimum down payment than many conventional loans, and applicants may have lower credit scores than is usually required

Fixed-rate mortgage — A home loan that has a constant interest rate for the lifetime of the loan. Fixed-rate mortgages are typically offered in 10-, 15-, 20-, 25-, and 30-year terms—giving homebuyers 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 Life of Loan Coverage — This coverage provides a direct flood hazard monitoring system for the entire term of the loan.

Foreclosure — The process of repossessing a home after the borrower defaults on their mortgage.

Government Recording Fee — The fees are assessed by state and local government agencies for legally recording your deed, mortgage and documents related to your home loan.

HOA Fee — Homeowners association (HOA) fee refers to an amount of money that must be paid by certain types of residential property owners every month to their homeowners associations. These fees are collected to assist the association with maintaining and improving properties.

Home Inspection — An examination of a home's physical condition in connection with its sale. The purpose is to uncover any potential issues with the home before finalizing the purchase. There are no federal regulations governing home inspectors, and licensing requirements vary by state.

Home Refinance — A refinance, or "refi" for short, refers to the process of revising and replacing the terms of an existing credit agreement, usually as it relates to a loan or mortgage.

Insurance Claim — A formal request to your insurance provider for reimbursement against losses covered under your insurance policy.

Interest Rate — The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Investment property — Real estate that's purchased with the exclusive purpose of generating a profit. Unlike a primary residence or a secondary home, an investment property is not something you'd typically own for personal use. Investment properties tend to have the highest interest rates and down payment requirements of all property types.

Lender Fee — This fee encompass all items the lender utilizes in order to process, approve (or decline) and fund your mortgage loan. These include underwriting your application, recording your mortgage with the government, and any origination fees.

Lender’s Title Policy — This insurance policy protects your lender against problems with the title to your property—for example, if someone sues to say they have a claim against the home.

Lien — A legal claim to an item of property until an owed debt is paid off. When you take out a home loan, your lender has a lien on your home. This gives them the right to seize your home if you fail to repay your loan

Life of Loan Tax Service — A fee paid by mortgage borrowers to mortgage lenders to ensure that a mortgaged property's property taxes are paid on time over the life of the loan.

Loan-to-value (LTV) — Is an equation that lenders use 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. Typically, if the LTV ratio is higher than 0.8, lenders require private mortgage insurance (PMI) to offset the higher risk of default

Market value — The amount of money that a property would be sold for on the open market. This is determined by an appraiser based on its condition and comparable properties that have recently sold.

Max Loan Amount — Refers to the maximum amount you have qualified for to take out as a loan.

Mortgage — A loan you get from a lender to finance a home purchase. When you take out a mortgage, you promise to repay the money you've borrowed at an agreed-upon interest rate. The home is used as collateral.

Mortgage Balance — This balance is what you have left to pay on the mortgage principal. The difference between the original mortgage amount and the amount you've made in principal payments gives you the mortgage balance.

Mortgage insurance premium (MIP) — An upfront and annual insurance premium that's required for any Federal Housing Administration (FHA) home loan—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 reserved for conventional loans.

NMLS — NMLS, which stands for Nationwide Mortgage Licensing System, is the system of record for non-depository, financial services licensing or registration in participating state agencies.

Negative Amortization — The process that causes a loan balance to increase over time, despite regular payments being made. This occurs when your monthly payments do not cover all the interest you’ve been charged that month. The unpaid interest is added to the principal, and the following month you’ll 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.”

Occupancy — Refers to the action of inhabiting a place, the occupancy clause mandates that you occupy your home as your primary residence. This doesn't, of course, mean that you can never leave, but your mortgage agreement may require that you notify the bank if you intend to be out of your home for a certain period of time.

Owner-occupancy — The concept of living in the home that you own. It is crucial information from the lender's point of view because if you weren't planning to live at the home you were purchasing or refinancing, you would be classed as an absentee owner. In that instance, the home may be considered an investment property and you would not be eligible for the same types of home loan products or rates available for a primary residence.

Part-time Rental — A furnished living space available for short periods of time, from a few days to weeks on end.

Prepayment penalty — A fee that's charged when you pay off your mortgage early.

Prequalification — Refers to an estimate for credit given by a lender based on information provided by a borrower. Pre-qualifications are conditional and involve the lender reviewing a borrower's creditworthiness before granting a pre-approval.

Primary residence — A home in which you live for the majority of the year. Home loan rates tend to be lower for primary residences, so it's important that you let your lender know this information in your application. The interest that you pay on a home loan for a primary residence may also be tax deductible. You can only have one primary residence.

Private mortgage insurance (PMI) — PMI is insurance required by lenders when a borrower puts less than 20% down on a conventional 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 different factors, similar to your interest rate—including FICO score, loan-to-value ratio, debt-to-income ratio, property type, and occupancy.

Purchase agreement — A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Qualified Interest Rate — This is defined as the amount of net interest paid or accrued to a related member in a taxable year.

Realtor Transaction Fee — Or a commission, is what homeowners pay real estate agents for their part in the sales transaction.

Recording Fee - Deed — These fees cover the costs of the services provided by the clerk or recording agency that must complete official deed documents.

Recording Fee - Deed — These fees cover the costs of the services provided by the clerk or recording agency that must complete official deed documents.

Recording Fee - Mortgage — These fees cover the costs of the services provided by the clerk or recording agency that must maintain complete official mortgage documents.

Reverse Mortgage Loan — If you’re 62 or older – it allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.

Secondary home — Simply put, is a vacation home. You must have sole control over the property, meaning that it cannot be a full-time rental, timeshare, or managed by a property management company. Secondary homes must be suitable for year-round occupancy. If you intend to rent out a secondary home for the majority of the year, it may be considered an investment property.

Settlement of Closing Fee — A charge from the title company to cover the administrative costs of closing.

Short sale — 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 is a 4-year waiting period to qualify for a new mortgage.

Single-family home — A single-family home has no shared property but is built on its own parcel of land

Survey & Elevation Certificate — According to FEMA (Federal Emergency Management Agency) an elevation certificate is a document that provides details like building's location, lowest elevation points and flood zone. Flood elevation certificates can be used while determining flood insurance rates for your building. If your property is present in a flood prone zone, you'll be needing a flood elevation survey done on your property.

Tax Certification Fee — This is a non negotiable fee a town or county may charge to certify that you have paid your property taxes. Also, title companies may charge their own fee for this, either separately or in addition to what the taxing authority charges.

Title - ALTA Endorsement — ALTA endorsements can be defined as extensions or add ons to the lender’s title policy to provide insurance cover for special cases.

Title - Abstract — This document is a brief history of a piece of land, and it is used to determine whether or not there is any kind of claim against a property.

Title - Lenders Title Policy — Title insurance is a form of insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property.

Title - Lien Search — This exploration examines public records on the property to confirm the property's rightful legal owner.

Title - Settlement or Closing Fee — A charge from the title company to cover the administrative costs of closing.

Title - Wire Fee — For each disbursement relating to a Closing Transaction, a fee payable to Buyer by the Seller as set forth in the Confirmation.

Title - Wire Fee for Closing Agent — A closing agent is the individual that performs the “closing” pursuant to the terms of the contract, and the fee associated with compensating that agent.

Townhouse — A multi-level, independently-owned home that shares walls with other homes on one or both sides

Transfer Taxes — A local or state tax that is charged as a percentage of the property value in any real estate transfer.

Underwriting Fee — A payment that a firm receives as a result of taking on the risk.