Reference

Plain-English Glossary

Every mortgage, escrow, and Texas-specific real-estate term you’ll hear — defined without jargon. Search or scan by category.

Financing

APR (Annual Percentage Rate): Your rate plus most lender fees expressed as one number - the truer cost-comparison figure when shopping lenders.
Amortization: How each payment is split between interest and principal. Early payments are interest-heavy; the curve flips around year 18 on a 30-year.
Buydown (2-1, 3-2-1): Lump sum at closing that temporarily lowers your rate. A 2-1 drops year 1 by 2% and year 2 by 1%; the rate snaps to note in year 3.
Conventional loan: A non-government-backed loan (Fannie/Freddie). 3% down available (HomeReady/Possible) up to 95% LTV.
DTI (Debt-to-Income): Monthly debt obligations ÷ gross monthly income. Most loans cap around 43–50% back-end DTI.
Escrow account: Monthly account funded with your mortgage payment that pays property tax and insurance when due.
FHA loan: Government-insured loan with 3.5% down at 580+ credit. MIP for the life of the loan unless refinanced.
LTV (Loan-to-Value): Loan amount ÷ home value. Drives PMI, rate pricing, and program eligibility.
MIP: Mortgage Insurance Premium - FHA's version of PMI. Upfront 1.75% + annual 0.55% (typical).
PITI: Principal + Interest + Taxes + Insurance - your true monthly housing cost.
PMI: Private Mortgage Insurance on conventional loans below 80% LTV. Drops automatically at 78%; can be requested at 80%.
Points (Discount points): 1 point = 1% of the loan amount paid upfront to permanently lower the rate. Typically reduces rate by 0.20–0.25%.
USDA loan: 0%-down loan for qualifying rural/suburban areas with income caps. Check eligibility.sc.egov.usda.gov.
VA loan: 0%-down loan for veterans and eligible spouses. No PMI; one-time VA funding fee instead.

Programs

AMI (Area Median Income): HUD-published income benchmark by county. Most DPA caps at 80%, 100%, or 140% AMI.
DPA (Down Payment Assistance): Grant, forgivable loan, or second lien from a state, city, county, employer, or nonprofit.
MCC (Mortgage Credit Certificate): Annual federal income tax credit equal to a share of mortgage interest set by the issuing agency. TSAHC and TDHCA both currently issue at 15%; the federal $2,000 annual cap applies only to credit rates above 20%.
TDHCA: Texas Department of Housing and Community Affairs - runs My First Texas Home / My Choice Texas Home DPA programs.
TSAHC: Texas State Affordable Housing Corporation - runs Home Sweet Texas and Homes for Texas Heroes DPA grants.
VLB: Texas Veterans Land Board. Stacks on VA loans for additional rate discounts and land/home loans.

Contract

Earnest money: Good-faith deposit (~1% of price in Texas) held by the title company, credited back at closing.
Option fee / Option period: Texas-specific paid right to terminate the contract for any reason during a short window (typically 5–10 days).
Third-Party Financing Addendum: TREC Third Party Financing Addendum, checked in Paragraph 22 of the 20-19 contract, that lets you terminate if financing falls through. The most important addendum after option period.
Seller's Disclosure: TREC-required notice of known property defects. Read it twice and ask questions.
Concession: Money the seller agrees to pay toward your closing costs, prepaids, or buydown - capped by loan type.
Survey: Property boundary map. Existing surveys (with T-47 affidavit) are often acceptable in Texas; new surveys run $450–$700.

Closing

Loan Estimate (LE): 3-page disclosure delivered within 3 business days of application. The basis for comparing lenders.
Closing Disclosure (CD): Final 5-page settlement statement. Must be delivered ≥3 business days before closing by federal law.
Funding: When the lender wires money and title records the deed. In Texas, closing = signing; funding = keys.
Title insurance: One-time premium protecting against ownership claims. Owner's policy is buyer's; lender's policy is lender's.
Prepaids: Property tax and insurance amounts collected at closing to seed your escrow account.
Homestead exemption: Texas: removes $140K of value from school district taxes on your primary residence. Apply with the county appraisal district; late filings are accepted up to two years after the delinquency date.

People

Buyer's agent: Licensed agent representing you. Texas now requires a signed Buyer Representation Agreement before showings.
Loan officer (LO): Takes your application and shepherds the loan. A mortgage broker shops multiple wholesale lenders.
Underwriter: Lender employee who reviews every document and issues the loan approval.
Title officer / Escrow officer: Handles closing, title insurance, and disburses funds. Independent of the lender.
Appraiser: Third-party licensed valuation expert hired by the lender to confirm the home is worth the loan.

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