Every term you'll hear from application to closing, explained the way a real loan officer would explain it. If you have questions beyond the glossary, we're one call away.
An adjustable-rate mortgage carries a fixed rate for an introductory period, commonly 5, 7, or 10 years, and then adjusts on a set schedule against an index such as SOFR. Each adjustment is capped, and there is a lifetime ceiling written into the note. The trade-off is a lower starting payment in exchange for future rate uncertainty.
WestFi Tip
Compare initial terms, adjustment risk, costs and expected time in the loan. Future refinancing is not assured. Explore hypothetical payments in our payment calculator.
Amortization is the schedule that splits every mortgage payment between interest and principal. Early payments are interest-heavy; over time the balance tips toward principal. A shorter term amortizes faster, costing more per month but far less in total interest.
WestFi Tip
Want to see how a lower rate or a shorter term reshapes your schedule? Model it in the WestFi calculator before you talk to anyone about a refinance.
APR is a cost-of-credit measure expressed as an annual rate. It reflects the note rate plus certain lender fees and finance charges, so it is not the same as the note interest rate and is not a complete measure of every cost in a transaction. It can help compare offers, but two loans with the same rate may show different APRs depending on which charges are included.
WestFi Tip
Compare written loan terms, applicable APR and included charges. APR is not a complete measure of every transaction cost.
An appraisal is an independent valuation of the property performed by a licensed appraiser and ordered through the lender. It confirms the collateral supports the loan amount and sets the value used for loan-to-value calculations. Options range from an automated valuation to a full interior inspection.
WestFi Tip
Appraisal turn times are the number one reason files slip. We order early and use appraisal waivers or exterior-only reports where the program allows, which may shorten timelines where permitted.
Assets are the verified funds you can use for a down payment, closing costs, and reserves: checking and savings, brokerage accounts, retirement balances, and sometimes gifted money. Underwriters want to see the funds seasoned in your accounts, usually across two months of statements. Large unexplained deposits must be sourced.
An AUS is the software engine, Desktop Underwriter or Loan Product Advisor for conventional loans, that runs your credit, income, and asset data against agency guidelines. It returns an eligibility finding plus a documentation list. A strong AUS finding can reduce paperwork and even waive an appraisal.
A balloon payment is a large lump sum owed at the end of a loan term that was not fully amortized. Payments during the term cover interest and perhaps a little principal, leaving the bulk due at maturity. Balloons appear mostly in bridge, hard money, and some private financing structures.
A bank statement loan qualifies self-employed borrowers on 12 or 24 months of business or personal deposits instead of tax returns. The lender applies an expense factor to arrive at usable income. It is built for owners whose write-offs make their tax returns look far leaner than their cash flow.
WestFi Tip
Explore general alternative-documentation options on our Non-QM page.
One basis point equals one hundredth of a percentage point, so 25 bps equals 0.25 percentage points. Lenders price rate, credits, and fees in basis points because the increments matter. A 12.5 bps improvement on a large loan can be thousands of dollars over the hold period.
Bridge financing is generally short-term. The linked WestFi overview describes qualifying business-purpose real estate financing only, not consumer-purpose owner-occupied credit. Timelines vary by lender, loan purpose, documentation, property, appraisal, and title requirements. Costs, risks and exit strategy require careful review.
A cash-out refinance replaces an existing mortgage with a larger loan; net proceeds depend on payoffs and costs. Available amounts and eligibility vary by borrower, property, occupancy, lender, documentation and current program requirements.
WestFi Tip
Run your numbers first, then decide. Our cash-out walkthrough shows illustrative equity assumptions, not available credit or approval.
Clear to close is a lender milestone indicating that the file can proceed toward closing under its requirements. It does not guarantee a funding or closing date; final documents, applicable waiting periods, title, insurance and other closing conditions may still apply.
Closing costs are the one-time charges required to originate and record the loan: lender fees, title and escrow, appraisal, recording, and prepaid items such as taxes and insurance. In California they commonly run 2% to 4% of the loan amount. Some can be covered with lender credits or seller concessions.
The Closing Disclosure is a federal form describing the final loan terms, projected payments and itemized closing costs. For transactions subject to the TRID rule, the creditor generally must ensure the consumer receives the initial Closing Disclosure at least three business days before consummation. Compare it with the Loan Estimate and ask about material differences.
A co-borrower applies alongside you, shares ownership of the property, and is equally responsible for repaying the loan. Their income can strengthen qualification, and their credit and debts also count. This differs from a co-signer, who guarantees the debt without taking title.
A conforming loan meets Fannie Mae and Freddie Mac guidelines, including the annual loan limit set by the FHFA. Conforming loans generally carry the most competitive pricing because the agencies will buy them. Amounts above the county limit move into high-balance or jumbo territory.
A conventional mortgage is not insured or guaranteed by a federal agency. Low-down-payment options may be available for eligible borrowers. Mortgage-insurance rules vary; conventional PMI cancellation depends on legal and loan-specific requirements.
Credit history and score are part of mortgage underwriting and pricing. Scoring methods, program requirements and participating-lender criteria vary. No score alone determines eligibility or a particular rate.
DTI compares your monthly debt obligations to your gross monthly income. Front-end DTI counts only the proposed housing payment; back-end DTI adds credit cards, auto loans, student loans, and other installment debt. DTI guidelines vary by program, lender, and borrower profile, and there is no universal approval threshold.
WestFi Tip
If back-end DTI is the obstacle, paying off one small installment loan often does more than a larger credit card paydown. We will tell you which dollar helps most before you spend it.
In California, the security instrument recorded against your property is a deed of trust rather than a mortgage. It involves three parties: you, the lender, and a neutral trustee holding title as security. It is what allows a non-judicial foreclosure if the loan defaults.
One discount point equals 1% of the loan amount. Its effect on the interest rate varies. Compare the upfront cost, monthly-payment difference and expected time in the loan, alongside total costs and other terms.
The down payment is the portion of the purchase price paid from the buyer’s funds. Eligible purchase programs may offer as little as 3% down for conventional financing or 3.5% down for FHA; eligible VA borrowers may have zero-down options. Requirements vary. A larger down payment generally lowers the loan-to-value ratio and may affect pricing and mortgage insurance.
DSCR programs may evaluate eligible investment-property rental cash flow relative to a program-defined debt-service payment. Calculation methods and required coverage vary. Credit, reserves, property and other underwriting requirements still apply; a ratio alone does not establish approval.
WestFi Tip
Portfolio, property and borrower requirements vary by lender. Explore general options on our Non-QM page.
Earnest money is the good-faith deposit a buyer wires to escrow after an offer is accepted, often 1% to 3% of the price. It is credited toward your down payment at closing. If you cancel outside your contract contingencies, the deposit can be at risk.
Equal Housing Opportunity reflects the federal Fair Housing Act, which prohibits discrimination in housing and lending based on race, color, religion, sex, national origin, familial status, or disability. Lenders display the logo to affirm compliance. Every WestFi program is offered on that basis.
Equity is your home's current market value minus everything owed against it. It grows through appreciation and through principal paydown. Equity is what you access with a cash-out refinance, a HELOC, or a closed-end second mortgage.
Escrow has two meanings in a transaction. During the purchase, a neutral third party holds funds and documents until the terms are met. After closing, an escrow or impound account collects a portion of property taxes and insurance with each payment and pays those bills when due.
An FHA loan is insured by the Federal Housing Administration and may allow down payments as low as 3.5% for eligible purchase borrowers. Credit, income, debt, property and participating-lender requirements apply. FHA financing generally includes upfront and annual mortgage insurance, with rates and duration determined under applicable FHA rules.
WestFi Tip
Check your county limit and run the illustrative payment, UFMIP and monthly MIP included, on our FHA loan page and FHA calculator.
A fixed-rate mortgage keeps the same note rate and scheduled principal-and-interest payment for the loan term, typically 15, 20 or 30 years. The total payment may still change when property taxes, homeowners insurance, mortgage insurance, assessments or other escrowed charges change. Whether a fixed-rate or adjustable-rate mortgage is appropriate depends on the borrower’s circumstances and complete loan terms.
A float down lets you capture a lower rate after you have already locked, usually once and within defined limits. Lenders require a minimum improvement in market pricing and may charge a fee. It protects you against locking right before rates fall.
Forbearance is a temporary agreement to pause or reduce mortgage payments during a hardship. It is not forgiveness; the missed amounts are repaid later through a lump sum, a repayment plan, or a loan modification. Recent forbearance can affect eligibility for a new loan.
Foreclosure is the legal process a lender uses to take back and sell a property after sustained default. California is largely a non-judicial state, so the process runs through the trustee named in the deed of trust. A completed foreclosure typically requires a waiting period before agency financing is available again.
Gift funds are money from an eligible donor, usually a family member, applied to your down payment or closing costs. The donor signs a gift letter confirming no repayment is expected, and the transfer must be documented from their account to yours. Program rules dictate who may give and how much.
The Good Faith Estimate was the pre-2015 disclosure of estimated loan terms and settlement charges. For most consumer mortgages it has been replaced by the Loan Estimate. The phrase survives in conversation and still appears on reverse mortgages and some commercial transactions.
Private-money financing may place substantial emphasis on the property and transaction. The linked WestFi overview is limited to qualifying business-purpose financing. Timelines vary by lender, loan purpose, documentation, property, appraisal, and title requirements. Terms, risks and repayment plans vary.
WestFi Tip
Consider the risks and a feasible exit strategy. Review the business-purpose overview on our Bridge & Private Money page.
A HELOC is a revolving credit line secured by your home. You are approved for a maximum, draw only what you need, and available credit replenishes as you repay. Rates are usually variable, with an interest-only draw period followed by a fully amortized repayment period.
WestFi Tip
A HELOC lets you reach equity without disturbing the low first-mortgage rate you already have. Compare standalone, piggyback, and closed-end options on our HELOC page.
A home equity loan, also called a closed-end second, delivers a single lump sum at a fixed rate with one predictable payment. Unlike a HELOC, there is no revolving access once funded. It suits a known, one-time expense such as a renovation or a debt payoff.
Homeowners insurance covers damage to the dwelling and liability on the property, and lenders require it for the life of the loan. Coverage must at least equal the replacement cost or the loan amount, depending on the policy. In California, wildfire exposure can affect availability and premium.
The HUD-1 was the itemized settlement statement showing all charges to buyer and seller at closing. For most consumer mortgages it was replaced by the Closing Disclosure in 2015. You will still see it on reverse mortgages and certain cash or commercial closings.
The interest rate is the annual cost of borrowing the principal, expressed as a percentage and used to calculate your principal-and-interest payment. It excludes lender fees, which is why APR is usually higher. Rates move daily with the bond market and vary by credit, loan-to-value, occupancy, and product.
An interest-only loan requires only the interest portion for an initial period, commonly 5 to 10 years, before recasting into a fully amortizing payment. The early payment is much lower, but no principal is retired during that window. It is a cash-flow tool, not a savings tool.
A jumbo loan exceeds the applicable county conforming loan limit. For 2026, the one-unit baseline is $832,750 and the high-cost ceiling is $1,249,125. Credit, reserves, documentation, loan amounts and other requirements vary by lender and program.
WestFi Tip
Jumbo pricing varies widely between investors, which is exactly where a broker earns their keep. See tiers and reserve requirements on our jumbo loan page.
Lender credits are money the lender applies toward your closing costs in exchange for a slightly higher interest rate. They are the mirror image of discount points. Credits are useful when you are short on cash or expect to refinance or sell within a few years.
The Loan Estimate is a federal disclosure describing estimated loan terms, projected payments and closing costs. For transactions subject to the TRID rule, it generally must be delivered or placed in the mail no later than the third business day after the creditor or mortgage broker receives the six items that constitute an application. Fee tolerances and permitted revisions depend on the applicable rules and circumstances.
A loan officer is the licensed professional who structures your loan, presents options, and shepherds the file through underwriting to closing. Broker-side loan officers hold an individual NMLS license and must pass state and federal testing. The quality of this one person shapes your entire experience.
WestFi Tip
At WestFi, one experienced licensed mortgage professional owns your file from first call to closing. No handoffs, no call center. Book a call and talk to that person directly.
LTV is the loan amount divided by property value, expressed as a percentage. An $800,000 loan on a $1,000,000 home is 80% LTV. Pricing, mortgage-insurance treatment and eligibility depend on program, applicable law and loan-specific requirements; the ratio is not an approval rule.
Lock and shop programs let a buyer lock a rate before they are in contract on a specific property. You get protection from rising rates while you house hunt, typically for 60 to 90 days. Terms, fees, and float-down rights vary by investor.
A mortgage lender funds loans. A licensed mortgage broker helps compare available participating-lender options for a documented scenario. Broker compensation depends on transaction structure and is disclosed in the applicable loan documents.
WestFi Tip
WestFi compares available participating-lender options for your complete scenario, including terms, costs and documentation requirements.
FHA mortgage insurance generally includes upfront and annual components. The standard UFMIP assumption for most forward FHA purchase and refinance loans is 1.75% of the base loan amount, although exceptions apply. The annual MIP rate and duration depend on the loan term, base loan amount, loan-to-value ratio and applicable FHA rules.
WestFi Tip
Compare the complete estimated payment and costs of FHA and conventional alternatives. Mortgage-insurance treatment, pricing and eligibility depend on the complete scenario.
The note is the promissory document in which you agree to repay the loan under stated terms: amount, rate, payment, and maturity. The deed of trust secures that promise with the property. If the two ever conflict, the note governs what you owe.
A Non-QM loan sits outside the Qualified Mortgage rules, which allows alternative income documentation and more flexible credit treatment. It is not subprime; it is different paperwork for solid borrowers. Common users are self-employed owners, real estate investors, borrowers with recent credit events, and foreign nationals.
WestFi Tip
Bank statement, P&L, DSCR, asset depletion, and 1099-only programs all live here. See who qualifies on our Non-QM page.
The NMLS number is the unique identifier assigned to every licensed mortgage company and loan originator in the Nationwide Multistate Licensing System. You can look up any company or individual for free through NMLS Consumer Access to verify licensing and disciplinary history.
WestFi Tip
WestFi operates under NMLS #2890320 and CA DRE #02443798. Look us up before you ever send a document.
An origination fee is the charge for processing and underwriting the loan, typically stated as a percentage of the amount borrowed. It appears in section A of your Loan Estimate. Some structures replace it with lender-paid compensation, which is disclosed either way.
In owner financing, the seller acts as the lender and the buyer makes payments directly to them under a private note. It can bridge a gap when conventional financing is unavailable or too slow. Terms are negotiable, and balloon maturities are common.
A P&L loan qualifies a self-employed borrower on a profit and loss statement covering 12 or 24 months, often prepared by a CPA or licensed tax preparer. Some programs pair it with a few months of bank statements for support. It is the cleanest option when deposits are irregular but the business is profitable.
WestFi Tip
P&L and bank statement programs use different documentation and income calculations. Explore general options on our Non-QM page.
A preapproval means a lender has reviewed your credit and documentation and issued a conditional letter. It is not a final approval or a commitment to lend unless expressly stated in writing, and it is subject to full underwriting, verification, and program requirements. Letters generally expire after a set period.
A prequalification is a preliminary assessment based on information you provide, often without verification. It is not a final approval or a commitment to lend unless expressly stated in writing, and it should be treated as an early budgeting starting point.
A prepayment penalty is a fee charged for paying off a loan early, usually within the first one to five years. Owner-occupied consumer mortgages in California generally do not carry them. They do appear on some DSCR, investor, and hard money loans, often in a step-down structure.
Occupancy affects eligibility, pricing, down payment and reserves. Primary residences, second homes and investment properties have different requirements. Compare available terms for the complete borrower and property scenario.
Conventional PMI protects the lender and its costs and payment methods vary. Cancellation and termination depend on applicable law, payment history, property value, loan terms and other requirements. Reaching an estimated equity percentage does not automatically cancel PMI.
The purchase agreement is the signed contract between buyer and seller setting price, deposit, contingencies, and closing date. Your lender works from its dates and terms, so amendments must be sent to the loan file. Contingency deadlines are the clock your financing runs against.
A rate lock holds a quoted rate and pricing for a set number of days while the loan is processed, subject to the lender's lock terms. Lock length, extensions, and changes to the property, loan amount, program, occupancy, or borrower profile can affect pricing or require a new lock. If a lock expires before closing, extension costs may apply.
WestFi Tip
Every WestFi lock is timestamped and shown to you in writing, so you can see exactly when your rate was captured and what pricing produced it.
A rate-and-term refinance changes your interest rate, your loan term, or both without taking meaningful cash out. It is the cleanest refinance to underwrite and usually prices better than cash-out. Borrowers use it to lower payments or to shorten from 30 years to 15.
WestFi Tip
See break-even math and current structures on our refinance page.
A refinance replaces your existing mortgage with a new one on different terms. The goal might be a lower rate, a shorter term, removal of mortgage insurance, or access to equity. The decision comes down to break-even: total cost divided by monthly savings.
WestFi Tip
Start with the numbers, not the pitch. Our refinance page walks through when it makes sense and when it does not.
Certain consumer-credit transactions secured by a borrower’s principal dwelling generally provide a right to cancel until midnight of the third business day after consummation, delivery of the rescission notice, or delivery of the required material disclosures, whichever occurs last. It generally does not apply to a residential mortgage transaction used to acquire or construct the principal dwelling, and other exceptions can apply. The closing team will confirm whether it applies to the transaction.
Reserves are eligible liquid assets remaining after closing, often measured against housing payments. Required amounts, eligible assets and valuation methods vary by borrower, property, occupancy, lender and program.
A second mortgage is any loan recorded in second lien position behind your existing first. It can be a revolving HELOC or a fixed closed-end second. Because it is subordinate, the rate is higher than a first, but you keep the first mortgage untouched.
WestFi Tip
A second mortgage may leave your first mortgage in place. Compare combined payments, fees, variable-rate risks and total costs with replacing the entire mortgage. Compare options on our HELOC & Second Mortgages page.
Seller concessions are closing costs the seller agrees to pay on the buyer's behalf, negotiated into the purchase contract. Programs cap them by occupancy and down payment, commonly 3% to 6%. They can also fund a temporary rate buydown.
A soft inquiry generally does not affect credit scores. A hard inquiry associated with a credit application may affect a score. Mortgage-shopping inquiry treatment and windows vary by scoring model; there is no universal treatment for every borrower.
WestFi Tip
Starting a conversation does not require a credit inquiry. A credit inquiry may be required later for prequalification, underwriting, or approval.
Title insurance protects against defects in ownership history such as liens, forged documents, or missed heirs. A lender's policy is required and covers the loan amount; an owner's policy is optional and covers your equity. Both are one-time premiums paid at closing.
A title search examines public records to confirm the seller can convey clear ownership and to surface liens, judgments, or easements. Issues found must be cleared before closing. It is the research step that makes title insurance possible.
Underwriting is the lender's formal review of your credit, income, assets, and the property against program guidelines. The underwriter issues an approval with conditions, and clearing those conditions produces the clear to close. Clean, complete documentation is what keeps this stage short.
A USDA loan is a zero-down mortgage guaranteed by the Department of Agriculture for buyers in eligible rural and semi-rural areas. Household income limits apply, and the property must fall inside a designated map boundary. Guarantee fees replace traditional mortgage insurance.
VA-guaranteed mortgages may offer eligible borrowers no-down-payment financing with no monthly private mortgage insurance, subject to entitlement, appraisal and lender underwriting. A funding fee may apply unless exempt. Rates and other costs vary.
WestFi Tip
Zero down, no PMI, and reusable entitlement. Eligibility details and current terms are on our VA loan page.
A wholesale lender offers financing through mortgage brokers. Brokers may compare available participating-lender options for a documented scenario. Wholesale access does not guarantee the lowest pricing or approval.
WestFi Tip
WestFi compares available participating-lender terms for your scenario. Book a call and see the spread for yourself.
