Mortgage words, translated.

Annual Percentage Rate — your interest rate plus most lender fees, expressed as a yearly rate. It’s the apples-to-apples number for comparing two loan offers. It is not your payment rate.

Optional upfront money paid to lower your interest rate. One point is 1% of the loan amount. Points are a choice, not a requirement — ask what the break-even is before paying any.

Private mortgage insurance, charged on most conventional loans with less than 20% down. It protects the lender, and it cancels once you reach 20% equity. FHA has its own version called MIP.

The account your servicer uses to collect property taxes and homeowners insurance with your monthly payment, then pays those bills for you. In Cook County, the tax portion is often the biggest surprise for new buyers.

Lender, title, appraisal, recording and prepaid items (taxes, insurance, interest) paid at closing. Typically 2–3% of the loan amount in Illinois. Sellers can contribute toward them in many cases.

Among the highest effective rates in the country, often 2%+ of value. Homeowner and senior exemptions reduce the bill; assessments are done by township on a rotating schedule. Always look at the actual tax history for a specific address.

A written commitment from the lender to hold your interest rate for a set period (commonly 30–60 days) while your loan closes. Locks protect you from rate movement between contract and closing.

A lender-reviewed evaluation of your credit, income and assets resulting in a letter stating what you’re approved to borrow. Stronger than a pre-qualification, which is usually just a conversation.

Your monthly debt payments divided by your gross monthly income. Most programs cap it somewhere between 43% and 50%. It’s the number that most often determines your budget.

The maximum loan size Fannie Mae and Freddie Mac will buy, set annually by the FHFA. Loans above it are “jumbo” and follow stricter guidelines. Cook County uses the baseline limit.

Down payment or closing cost money given by a family member. Allowed on conventional, FHA and VA loans with a simple gift letter and a paper trail showing the transfer.

Money left in your accounts after closing, measured in months of mortgage payments. Required on some jumbo and investment loans; a good idea on all of them.

The Illinois Housing Development Authority — the state housing finance agency that offers forgivable, deferred and repayable down payment assistance loans for qualified buyers within income and price limits.

The standardized three-page form you receive within three business days of applying. It lays out your rate, payment, closing costs and cash to close so you can compare lenders line by line.

The final five-page version of the Loan Estimate, delivered at least three business days before closing. Compare it to your LE; the numbers should be close and any differences should be explainable.

An independent opinion of the home’s value, ordered by the lender after you’re under contract. If it comes in low, you renegotiate, bring more cash, or walk — Arthur walks you through the options.

The stage where an underwriter verifies every part of your file against program guidelines. “Conditions” are the normal follow-up requests before final approval.

The moment underwriting has signed off completely and the closing can be scheduled. The best three words in the process.

In Illinois, buyers typically use a real estate attorney and a title company. Title insurance protects your ownership; the attorney reviews the contract and closing documents on your behalf.