Mortgage terms, translated to human

The rate is what your loan charges. The APR is the rate plus most fees, expressed as one number so you can compare offers apples-to-apples. If two lenders quote the same rate but different APRs, the higher APR is charging more in fees.

A monthly fee when you put less than 20% down on a conventional loan. It protects the lender, not you — but it also lets you buy years sooner. It cancels at 20% equity, which is its redeeming feature.

An account your lender manages that collects a bit of your property taxes and insurance with each payment, then pays those bills for you. Not a fee — just automated budgeting.

Prepaid interest. One point = 1% of the loan amount, paid at closing to lower your rate. Worth it if you keep the loan long enough to break even; not worth it if you’ll move or refinance soon. Cole runs this math with you.

Your monthly debt payments divided by your gross monthly income. This — not your credit score — is the number that most often decides how much house you qualify for.

Pre-qualification is an estimate based on what you tell a lender. Pre-approval means they verified your documents and credit. Sellers can tell the difference — always bring a pre-approval to a real offer.

Mortgage pricing moves in 20-point bands (think 680, 700, 720, 740). Sometimes raising your score just a few points into the next band meaningfully improves your rate — a favorite Cole optimization.

The verification stage where a human confirms everything in your file: income, assets, credit, property. “Conditions” are their follow-up requests — normal, expected, and usually simple.

An independent expert’s opinion of the home’s value, ordered by the lender. If it comes in at or above your price, great. If below, you have options — renegotiate, contest, or adjust. Cole walks you through each.

An escape hatch in your offer — financing, inspection, appraisal. They protect your earnest money if something goes wrong. Waiving them makes offers stronger but riskier; know the tradeoff before you sign.

Freezing your interest rate for a set window (usually 30–60 days) so market moves can’t hurt you before closing. When to lock is a judgment call — one Cole makes with you, not for you.

The fees to complete your purchase — lender, title, appraisal, prepaid taxes and insurance. Typically 2–4% of the price. Seller credits and assistance programs can cover part of them.

A good-faith deposit (often 1–3%) submitted with your offer, held safely in trust. It’s not extra cost — it applies toward your down payment and closing costs at the end.

The part of the home you actually own: value minus what you owe. It grows two ways — paying down the loan and the home appreciating. Equity is the quiet wealth-builder renting can’t give you.

The payoff schedule of your loan. Early payments are mostly interest; later payments are mostly principal. Extra principal payments early have outsized impact — even $50/month matters.

Conventional loans follow Fannie Mae/Freddie Mac rules. Government loans (FHA, VA, USDA) are federally backed with more flexible entry requirements. Neither is “better” — they fit different buyers.