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Your Bank > Education and Advice > CNB University

A Glossary of Mortgage Terms

M Coco
Marie Coco is Mortgage Loan Originator and can be reached at MCoco@CNBank.com or 585-385-2370 x50953.

The process of getting a mortgage is not something you do every day.  You may encounter acronyms or terms that you are unfamiliar with, and knowing what they mean can make you more comfortable with what you are hearing or reading.  Here is a list of some mortgage terms along with what they mean.

Annual Percentage Rate (APR):  The rate of interest on a yearly basis which includes charges on the mortgage loan and the interest payment, i.e. points, mortgage insurance and per diem interest.

Adjustable Rate Mortgage (ARM):  A home loan program in which the interest rate and the monthly payment are adjusted at regular intervals according to the changes in a specific index.

Credit Score:  A numerical quality reflecting a borrower’s credit worthiness. Used by lenders to find out the risk in approving a home loan. Credit scores range from 450-850.

Closing:  The final step in the loan process when the seller transfers title to the buyer, the buyer signs the loan documents and receives the loan amount from the lender.

Closing costs:  Fees paid by the borrower at closing. These include charges for originating and processing the loan.

Contingency:  A condition that must be met before a contract is legally binding.

Down Payment:  The amount of cash in which the home buyer pays towards the purchase price at closing.

Debt-to-income ratio (DTI):  The percentage of gross monthly income that goes toward paying monthly debts.

Escrow Account:  A bank account into which the lender deposits a portion of the monthly payment made by the borrower. The account is used to make payments towards property taxes, homeowners insurance and mortgage insurance.

Fixed Rate Mortgage:  A home loan program in which the interest rate does not vary throughout the life of the loan.

Housing Ratio:  The ratio of the monthly housing costs to the gross monthly income.

Mortgagee:  Lender offering the loan.

Mortgagor:  Borrower receiving the loan.

Mortgage:  A legal process by which you can take out a loan against your own property- residential or commercial. The same property is held as security for the repayment of the debt.

Mortgage Note:  It is your written promise to pay off the loan amount on certain terms and conditions. The note also mentions what the lender is likely to do if you default.

Points:  1% of the loan amount paid as an upfront cost, typically to lower the interest rate.

Private Mortgage Insurance (PMI):  Insurance policy offered by an insurance company in order to protect the lender from losses if the borrower defaults on their loan.

Rate Lock/Lock-in:  A written commitment which guarantees a fixed rate on your loan for a certain period before closing. Usually, rates are locked for 30, 45, or 60 days prior till the closing date.

 CNB Mortgage Company is a wholly owned subsidiary of Canandaigua National Bank & Trust.