South Carolina Mortgage Glossary

Adjustable-Rate Mortgage (ARM)

A loan with an interest rate that can change after an initial fixed period. The rate adjusts based on a market index, which means your payment can rise or fall over time.

Conventional Loan

A home loan not backed by a government agency. Conventional loans usually require a solid credit score and at least 3% down, and they often offer competitive rates for buyers with strong credit.

DSCR Loan

A loan for investment properties that qualifies based on the property's rental income (Debt Service Coverage Ratio) rather than the borrower's personal income.

FHA Loan

A mortgage insured by the Federal Housing Administration. FHA loans allow down payments as low as 3.5% and are popular with first-time buyers because they're more forgiving on credit.

Fixed-Rate Mortgage

A loan with an interest rate that never changes for the life of the loan. Your principal-and-interest payment stays the same whether you have a 15-, 20-, or 30-year term.

Jumbo Loan

A mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac. Jumbo loans are used for higher-priced homes and require stronger credit and larger reserves.

Non-QM Loan

A 'non-qualified mortgage' that uses flexible income documentation — like bank statements — instead of traditional W-2s and tax returns. Common for self-employed buyers.

USDA Loan

A zero-down mortgage backed by the U.S. Department of Agriculture for homes in eligible rural and suburban areas. Income limits apply, and over 90% of South Carolina is eligible territory.

VA Loan

A zero-down mortgage backed by the U.S. Department of Veterans Affairs for eligible active-duty service members, veterans, and surviving spouses. VA loans require no monthly mortgage insurance.

APR (Annual Percentage Rate)

The yearly cost of your loan expressed as a percentage. APR includes the interest rate plus certain fees, so it's a fuller picture of what you'll pay than the rate alone.

Closing Costs

Fees paid at closing on top of your down payment — lender fees, title insurance, appraisal, taxes, and prepaid items. They typically run 2–5% of the loan amount.

Discount Points

Optional upfront fees you pay to lower your interest rate. One point equals 1% of the loan amount and can reduce your rate, saving money over the life of the loan.

Down Payment

The upfront cash you pay toward the home's purchase price. The rest is financed. Down payments range from 0% (VA/USDA) to 3–3.5% (conventional/FHA) and up to 20% or more.

Earnest Money

A good-faith deposit you make when your offer is accepted. It shows the seller you're serious and is later applied toward your down payment or closing costs.

Origination Fee

A fee charged by the lender to process your loan, usually 0.5–1% of the loan amount. It covers underwriting and the work of creating your mortgage.

Prepaids

Costs paid at closing in advance — like prepaid interest, property taxes, and the first year of homeowners insurance. They're separate from your lender fees.

Appraisal

A professional estimate of a home's market value, ordered by the lender to make sure the property is worth the purchase price before approving the loan.

Clear to Close

The final green light from underwriting. Once you're clear to close, your loan is fully approved and you can schedule the closing date.

Closing Disclosure (CD)

A five-page document you receive at least three business days before closing. It lays out your final loan terms, monthly payment, and closing costs.

Conditional Approval

An approval that's final once you satisfy a few remaining conditions, such as providing an updated pay stub or a cleared appraisal.

Debt-to-Income Ratio (DTI)

The percentage of your monthly income that goes toward debt payments, including the new mortgage. Most programs look for a DTI under 43–50%.

Escrow

A neutral third party that holds funds and documents during a transaction until all conditions are met. Earnest money and closing funds often sit in escrow.

Pre-Approval

A lender's written commitment to lend you a specific amount based on a review of your credit, income, and assets. A pre-approval strengthens your offer and tells you your budget.

Pre-Qualification

A quick, informal estimate of how much you might borrow based on basic info you provide. It's lighter than a pre-approval and not a guarantee of a loan.

Title Insurance

Insurance that protects you and the lender against claims on the property's title. It's a one-time cost paid at closing and lasts as long as you own the home.

Underwriting

The lender's process of verifying your finances and deciding whether to approve your loan. An underwriter reviews credit, income, assets, and the property.

Amortization

How your loan is paid off over time. Early payments are mostly interest; later payments shift toward principal. A 30-year loan amortizes over 360 payments.

Buydown

Paying an upfront fee to temporarily lower your interest rate, often for the first 1–3 years. A 2-1 buydown, for example, lowers the rate 2% year one and 1% year two.

Interest Rate

The percentage a lender charges you to borrow money, expressed as a yearly rate. Your rate drives your monthly principal-and-interest payment.

Mortgage Insurance (MI / PMI)

Insurance that protects the lender if you default. Conventional loans with less than 20% down require PMI; FHA loans have their own mortgage insurance premiums.

Principal

The amount you borrowed and still owe on your loan. Each monthly payment reduces your principal a little, building your ownership stake in the home.

Rate Lock

A guarantee that your interest rate won't change between approval and closing, usually for 30–60 days. Locking protects you if rates rise while you're under contract.

Cash-Out Refinance

A refinance where you borrow more than you owe and pocket the difference in cash. It taps your home equity for things like renovations or debt consolidation.

Equity

The portion of your home you actually own — your home's value minus what you still owe on the mortgage. Equity grows as you pay down the loan and as the home appreciates.

HELOC (Home Equity Line of Credit)

A revolving credit line secured by your home equity. You can draw and repay funds as needed, similar to a credit card, usually with a variable rate.

Loan-to-Value Ratio (LTV)

The loan amount divided by the home's value, shown as a percentage. A lower LTV means more equity and often better loan terms.

Rate-and-Term Refinance

A refinance that changes only the interest rate or loan term — no cash out. The goal is a lower payment, less interest, or paying the home off sooner.

Refinance

Replacing your current mortgage with a new one, usually to get a lower rate, change the term, or take cash out. A refinance pays off the old loan and starts a new one.

Escrow Account

An account your lender uses to collect and pay your property taxes and insurance on your behalf. A portion of your monthly payment funds it.

Flood Insurance

Separate coverage required if your home is in a FEMA-designated flood zone. Standard homeowners insurance does not cover flood damage.

Home Warranty

A service contract covering repairs to major home systems and appliances for a set period. It's optional and separate from homeowners insurance.

Homeowners Insurance

Insurance covering damage to your home and belongings from covered events like fire or storms. Lenders require it, and the first year is usually prepaid at closing.

Mortgage Insurance Premium (MIP)

The FHA version of mortgage insurance. It includes an upfront premium financed into the loan and a monthly premium added to your payment.

Columbia, SC

Lexington, SC

Columbia, SC