Glossary of Mortgage Terms

A mortgage buydown is a deal in which a fee paid upfront lowers the interest rate on a home loan. This can be for the first few years or for the entire loan term.

A mortgage commitment letter is a letter from your lender that says they have looked over your loan application, approved it, and are ready to close on the loan once the final conditions are met.

A mortgage constant is the percentage of a loan's total value that is paid off each year in principal and interest payments.

If the buyer can't get approved for a home loan within a certain amount of time, a mortgage contingency in a real estate purchase contract lets them back out of the deal and get their earnest money back.

A mortgage credit certificate (MCC) is a federal tax credit issued by state or local housing finance agencies that lets eligible home buyers claim a portion of their annual mortgage interest as a dollar-for-dollar reduction in federal income taxes.

Mortgage curtailment is the practice of making extra payments toward your loan’s principal balance, which reduces the total interest you owe and shortens the time it takes to pay off your home.

A mortgage default happens when you break the terms of your home loan agreement, most commonly by missing monthly payments, and it can trigger serious consequences including foreclosure if left unresolved.

When a borrower misses one or more monthly mortgage payments, they are in danger of defaulting on the loan and possibly losing their home.

Mortgage forbearance is a short-term deal between you and your loan servicer that lets you stop or lower your monthly mortgage payments when you're having trouble making ends meet.

A mortgage grace period is the time after your payment is due when you can still pay without having to pay a late fee or hurt your credit.