Glossary of Mortgage Terms

A mortgage banker is a person or business that makes, funds, and sometimes services home loans for the bank where they work.

A mortgage bond is a type of investment that is backed by a group of home loans. The real estate itself is used as collateral, which means that investors can get their money back if the borrowers stop making payments.

A mortgage broker is a licensed professional who is independent of lenders and who matches up home buyers and homeowners with lenders, shopping around a variety of loan sources to find the rate and terms that will work for each borrower’s financial picture.

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.