Christina Cutolo · Investor Toolkit

Real Estate & Mortgage Glossary

Every term you'll hear from a lender, agent, or investor — defined in plain English. Search it, or jump by letter.

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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Adjustable-Rate MortgageARM
A loan whose interest rate is fixed for an initial period, then adjusts periodically based on market indexes. Lower upfront, less predictable later.
Amortization
The schedule by which a loan is paid off over time. Early payments are mostly interest; later payments are mostly principal, even though the total payment stays the same.
Annual Percentage RateAPR
The yearly cost of a loan including the interest rate plus certain fees. A truer comparison number than the rate alone when shopping lenders.
Appraisal
A licensed appraiser's professional opinion of a property's market value. Lenders require one to confirm the home is worth what you're paying.
Assessed Value
The value a local government assigns to a property for tax purposes — often different from market value.

C

Cap Rate
Net Operating Income divided by purchase price, expressed as a percentage. A quick gauge of a property's unleveraged return, ignoring financing.
Cash-on-Cash ReturnCoC
Annual pre-tax cash flow divided by the total cash you invested. Measures the return on the actual dollars out of your pocket.
Closing Costs
One-time fees to finalize a purchase or refinance — lender, title, escrow, appraisal, and prepaids. Typically 2–5% of the price.
Closing DisclosureCD
The standardized final statement of your loan terms and costs, provided at least three business days before closing.
Comparable SalesComps
Recently sold properties similar to the one in question, used to estimate market value.
Contingency
A condition that must be met for a contract to proceed — common ones are financing, appraisal, and inspection contingencies that protect the buyer.

D

Debt-Service Coverage RatioDSCR
A property's net operating income divided by its debt payment. A DSCR loan qualifies you on this ratio rather than your personal income — popular with investors.
Debt-to-Income RatioDTI
Your monthly debt payments divided by gross monthly income. Lenders use it to gauge how much new mortgage payment you can handle.
Down Payment
The cash you pay upfront toward a purchase, expressed as a percentage of price. The rest is financed by your loan.

E

Earnest Money
A good-faith deposit you put down when making an offer, held in escrow and applied toward your purchase at closing.
Equity
The portion of a property you actually own — its market value minus what you owe on it. Grows as you pay down the loan and the property appreciates.
Escrow
A neutral third party that holds funds or documents until conditions are met. Also the account your lender uses to collect and pay your taxes and insurance.

F

FHA Loan
A mortgage insured by the Federal Housing Administration, allowing lower down payments and credit scores. Comes with its own mortgage insurance.
Fixed-Rate Mortgage
A loan with an interest rate that never changes for the entire term, keeping principal and interest payments predictable.

G

Gross Rent MultiplierGRM
Purchase price divided by gross annual rental income. A fast screening ratio — lower generally signals better value.

H

Hard Money Loan
Short-term financing from private lenders based mainly on the property's value, not your credit. Fast and flexible but higher cost — used for flips and bridges.
Home Equity Line of CreditHELOC
A revolving credit line secured by your home equity that you can draw from as needed, often used to fund renovations or the next investment.

L

Loan-to-Value RatioLTV
The loan amount divided by the property's value. Lower LTV means more equity and usually better terms; over 80% on a conventional loan typically triggers PMI.

M

Mortgage InsurancePMI/MIP
Insurance that protects the lender if you default, required when your down payment is under 20% (PMI on conventional, MIP on FHA loans).

N

Net Operating IncomeNOI
A property's income after operating expenses but before the mortgage. The foundation for cap rate and many investor metrics.

O

Origination Fee
A fee a lender charges to process and underwrite your loan, usually a percentage of the loan amount.

P

PITI
The four parts of a typical mortgage payment: Principal, Interest, Taxes, and Insurance.
Points
Optional upfront fees paid to lower your interest rate. One point equals 1% of the loan amount.
Pre-Approval
A lender's verified commitment, after reviewing your finances, to lend up to a certain amount. Stronger than pre-qualification and taken seriously by sellers.
Principal
The amount you borrow, and the balance still owed. Your payment chips away at it over time alongside interest.
Private Mortgage InsurancePMI
Monthly insurance on a conventional loan with less than 20% down. Removable once you reach 20% equity; drops automatically at 22%.

R

Refinance
Replacing your current mortgage with a new one — usually to lower the rate, change the term, or tap equity. Carries its own closing costs.
RevPAR
Revenue Per Available Rental night: total rental revenue divided by available nights. A core short-term-rental performance metric.

S

Seller Concession
Money the seller agrees to credit the buyer at closing, often to cover closing costs — more common in slower markets.

T

Title Insurance
Protects you and the lender against defects in the property's ownership history, like liens or competing claims.

U

Underwriting
The lender's process of verifying your income, assets, credit, and the property to decide whether to approve the loan.

V

VA Loan
A mortgage guaranteed by the Department of Veterans Affairs for eligible service members and veterans, often with no down payment and no PMI.