Glossary of Mortgage Terms

The mortgage interest deduction is a federal tax break that lets homeowners who itemize their deductions take the interest they paid on a qualifying home loan off of their taxable income. This lowers the amount of income tax they owe.

An investor in mortgages buys home loans from lenders on the secondary market. This gives those lenders more money to make new mortgages for home buyers.

A mortgage note is a legal document that a borrower signs at closing. It promises to pay back a home loan according to certain terms, such as the interest rate, payment schedule, and total amount owed.

A mortgage payoff statement is a document from your loan servicer that shows the exact amount of money you need to pay to close out your mortgage in full on a specific date.

A lender's conditional promise to lend you a certain amount of money to buy a home is called mortgage preapproval. This is based on a verified review of your income, credit, debts, and assets.

Mortgage prequalification is a lender's estimate of how much you can borrow to buy a home, based on basic financial details you share before you formally apply for a loan.

Mortgage protection insurance is an optional policy that helps your family keep the home by paying off part or all of your mortgage balance if you die, become disabled, or lose your job.

A mortgage recast is when a homeowner makes a big payment toward the principal of their loan. The lender then re-amortizes the remaining balance so that the monthly payment is lower without changing the interest rate or loan term.

A mortgage recast is when you make a large lump-sum payment toward your loan balance and your lender recalculates your monthly payment based on the lower amount you owe.

Mortgage reinstatement is when a homeowner pays all missed payments, late fees, and related costs in a lump sum to bring a delinquent mortgage back to current status and stop the foreclosure process.