Getting a mortgage is intimidating, especially the first time. Unless you work in real estate or finance, probably nobody has sat you down and explained how home loans work. That’s normal. It doesn’t mean you should walk into a Fort Worth lender’s office blind.
Financing is one half of it. The other half is representation: who represents you when you buy, what you sign before anyone unlocks a door, and which deadlines in the contract are yours.
Mortgage Terms to Know Before You Meet a Lender
You don’t need to be an expert. That’s what your real estate agent and your lender are for. But knowing the words helps you ask better questions. These are the terms you’ll hear most when you buy a home with a mortgage.
Annual Percentage Rate (APR). A broader measure of what the loan costs each year than the interest rate alone. The CFPB explains that the APR includes the interest rate plus points, broker fees and other charges you pay to get the loan, which is why it’s usually higher than the rate. Your Loan Estimate shows both.
Appraisal. An independent professional’s opinion of what the home is worth. The lender uses it to decide how much it will lend, and you have a right to a copy. The fee is on your Loan Estimate; ask your lender how long the appraisal usually takes.
Assets. What you own that has cash value: checking and savings, retirement accounts, brokerage accounts. Lenders verify your assets to confirm you can cover the down payment, closing costs and any cash reserves your loan program or lender requires.
Closing Costs. The upfront costs of getting the loan and transferring ownership, paid at closing on top of your down payment. Line items can include the appraisal, title insurance, origination and underwriting fees, property tax prorations, and prepaids like your first homeowners insurance premium. Your Loan Estimate lists them, so you see the number before you commit. Your home inspection is usually paid separately, when it’s done.
Debt-to-Income Ratio (DTI). Your monthly debt payments divided by your monthly income before taxes. There’s no single cutoff: your loan program and your lender each set one, and the lender can tell you where you stand before you apply. A lower DTI makes it easier to qualify and leaves more room in your budget.
Down Payment. The part of the purchase price you pay yourself. The usual minimums: 3% on some conventional programs for first-time buyers, 3.5% for FHA with a credit score of 580 or higher, and 0% on VA and USDA loans for buyers and homes that qualify. Put 20% down on a conventional loan and you won’t pay private mortgage insurance. Run it on a $350,000 home: 3% down is $10,500, and 20% down is $70,000.
Earnest Money. A deposit you make with the title company, acting as escrow agent, soon after you go under contract. The contract sets the amount and the deadline. If you end the contract during your option period, your earnest money comes back to you; the option fee you paid for that right does not. After the option period, you can lose it unless another part of the contract, like the financing addendum, lets you end it.
Escrow. A neutral third party, usually a title company in Texas, holding funds until a sale closes. It protects buyer and seller while each of you does what the contract requires. You’ll also hear “escrow” for the account your loan servicer uses to collect property taxes and insurance with your monthly payment.
Home Inspection. An inspection of the house, paid for by you and done by a TREC-licensed inspector after your offer is accepted, usually during your option period. It tells you what’s wrong before you’re committed and gives you something to negotiate with. Ask for the price up front, including any add-ons like a sewer scope.
Loan Estimate. A standard three-page form your lender must give you within three business days of receiving your application. It lists the loan’s estimated costs so you can compare offers from different lenders line by line. The CFPB’s Loan Estimate explainer walks through every line.
Mortgage Term. The number of years you have to pay off the loan. 30-year and 15-year fixed loans are common. A 15-year loan usually has a lower rate and a higher monthly payment, and you pay much less interest over its life.
Pre-Qualification. An estimate of what you might borrow, based on what you tell a lender about your finances, with little or no documentation. A useful first step, but it carries little weight when you make an offer.
Pre-Approval. How much a lender is willing to lend you, backed by documents: your income, credit, assets and debts. It’s the letter you’ll want in hand before you make an offer with a loan.
Principal. The amount you owe on the loan, not counting interest. It’s what your payments pay down over the term.
Private Mortgage Insurance (PMI). Insurance you pay on a conventional loan when you put less than 20% down. Your Loan Estimate shows what it costs. Under federal rules, you can ask your servicer in writing to cancel it once your balance is scheduled to reach 80% of your home’s original value, and it generally ends on its own when your balance is scheduled to reach 78%, as long as you’re current on your payments. FHA loans carry their own mortgage insurance, with different rules.
Property Taxes. In Texas, your bill depends on the appraised value, the rate each taxing unit sets (the city, the county, the school district and others) and any exemptions you claim. A homestead exemption on your primary residence lowers it. The tax on a listing is the seller’s bill, so yours can be different: here’s what changes after you buy. Your bill is often escrowed into your monthly payment.
Title. Your legal ownership of the home. The deed is the document that transfers title to you, and title insurance helps protect you and your lender against problems with it.
How to Choose a Mortgage Lender
Plenty of lenders want your loan. Here’s where to look, and how to tell a good one from one who treats you like a file number.
Where to get a mortgage:
Banks
Credit unions
Online mortgage lenders
Mortgage brokers, who shop several lenders for you
Local mortgage companies
Each has trade-offs, depending on your credit, your budget and how personal you want the experience to be. Wherever you look, the person matters as much as the rate.
Signs to keep looking:
Their answers to your questions are thin
They seem distracted when you talk
You never know what happens next
The conversation feels like a sales pitch
They push a payment you can’t comfortably afford
Signs you’ve found a good one:
They ask about your life and goals, not just your finances
They explain things until you understand them
They know how Texas property taxes and homeowners insurance will show up in your monthly payment
They call you back
They tell you when a loan doesn’t fit you, even if it would pay them more
They send a Loan Estimate quickly and go over every cost on it with you
Listen to your gut. If something feels off during any conversation with a potential lender, it probably isn’t the right relationship to pursue.
Get a Loan Estimate from at least three lenders, all on one day, so every quote prices the same market. You pick the lender: 6th Ave Homes doesn’t make loans.
