Preapproval
A lender's more thorough review of your documented finances and credit, resulting in a conditional letter about the amount you may be able to borrow. It is not a final approval.
More terms to know
- Adjustable-Rate MortgageA mortgage whose interest rate can change over time based on a benchmark index, usually after an initial fixed period. Payments can rise or fall when the rate adjusts.
- AmortizationThe schedule that shows how each mortgage payment is split between interest and principal over the life of the loan. Early payments go mostly toward interest.
- Annual Percentage RateA yearly cost figure that combines the interest rate with certain lender fees, so it is often higher than the interest rate alone. It is meant to help compare loan offers.
- AppraisalA licensed appraiser's independent opinion of a home's market value, ordered by the lender to confirm the home supports the loan amount.
- Area median incomeThe midpoint household income for a metropolitan area or county, published annually and used to set income limits for assistance programs.
- ClosingThe final step of a purchase, where documents are signed, funds are transferred and ownership moves to the buyer. Some areas call it settlement or escrow closing.