Glossary of Mortgage Terms

A 10-year fixed-rate mortgage is a home loan that you pay back over ten years at a set interest rate. This is the fastest way for borrowers to fully own their home among standard fixed-rate products.

A 15-year fixed-rate mortgage is a home loan that you pay back over 15 years at a fixed interest rate that stays the same from closing to the last payment. This means your equity grows faster and you pay less interest overall.

A 30-year fixed-rate mortgage is a home loan with an interest rate that doesn't change over the course of the 30-year repayment period. This means that borrowers know exactly how much they will have to pay each month from the start to the end of the loan.

Insurance companies usually require a 4-point inspection of an older home's roof, electrical system, plumbing, and HVAC before they will issue or renew a policy on that home.

A 40-year mortgage is a home loan with a repayment period of 480 months. It has lower monthly payments than a standard 30-year loan, but it costs borrowers a lot more in total interest over the life of the loan.

A 5/1 ARM is a type of adjustable-rate mortgage that has a fixed interest rate for the first five years of the loan term. After that, the rate changes once a year based on a market index and a set margin.

A 7/6 adjustable-rate mortgage (ARM) locks your interest rate for seven years, then adjusts it every six months based on market conditions for the rest of the loan term.

An absentee owner is someone or something that owns a property but doesn't live there or take care of it on a daily basis.

An accessory dwelling unit (ADU) is a small, self-contained living space that is on the same property as a single-family home. It has its own kitchen, bathroom, and sleeping area.

An adjustable-rate mortgage is a home loan with an interest rate that stays the same for a set amount of time and then changes based on a market index. This means that your monthly payment can go up or down over time.