Understand your mortgage before you sign anything.
How amortization works
What escrow actually does
Fixed vs. adjustable rates
Making a competitive offer
What happens in underwriting
Closing costs explained
How to find your break-even
When NOT to refinance
Real cost of closing on a refi
Annual Percentage Rate
The true cost of your loan as a yearly rate — includes your interest rate plus lender fees, so it's always higher than the base rate. Use APR to compare loans apples-to-apples.
Loan-to-value ratio
Your loan amount divided by the home's appraised value. A $350K loan on a $400K home = 87.5% LTV. The lower your LTV, the better your rate — and the less likely you'll need PMI.
Private Mortgage Insurance
Required when your down payment is less than 20%. It protects the lender, not you — and adds to your monthly payment until your LTV drops below 80%.
Debt-to-Income Ratio
The percentage of your gross monthly income that goes toward debt payments. Most lenders cap this at 43–50%. A lower DTI signals you can comfortably carry a new mortgage payment.
Escrow Account
A separate account your lender manages to collect and pay your property taxes and homeowner's insurance. A portion of every mortgage payment goes in — bills handled automatically.
Discount Points
Fees paid upfront to lower your interest rate. One point = 1% of the loan amount. Paying points makes sense if you'll stay in the home long enough for monthly savings to outweigh upfront cost.