What do all those acronyms and terms mean, anyway?

Don’t know what a blanket mortgage is? How about an LTV? Not sure of the difference between a home equity loan and a home equity line of credit? If some of these financial terms are foreign to you, don’t despair. The world of finance has a language all its own, but you can better understand what’s going on if you know what a few key terms mean.


An asset is a resource that a person or business owns, and which has an economic value. Assets may be money, property or land. For most individuals, their biggest financial asset is their home.


Bankruptcy is a legal proceeding that relieves individuals and businesses of their debts and repays their creditors. It’s a useful tool when you are financially unable to repay your debts. Depending on the type of bankruptcy, you may be able to retain your home while wiping other debts from the record.

Blanket mortgage

A blanket mortgage is a type of mortgage that covers multiple properties, typically used by real estate developers. The group of properties serves as collateral for the loan.

Conventional mortgage

A conventional mortgage is a home loan available through a private lender, such as a bank, mortgage company or credit union.

Credit score

A credit score is a calculation, derived from information on your credit reports, that rates your credit risk. A higher score indicates you have better credit. A lower score might hinder your ability to get a mortgage or other type of loan.

Debt-to-income (DTI) ratio

Debt-to-income ratio, or DTI ratio, is the percentage of your gross monthly income before taxes you pay on your mortgage, credit cards and other debt. In essence, the DTI ratio compares how much you owe to how much you earn.

The formula for determining DTI

FHA loan

An FHA loan is a mortgage backed by the Federal Housing Administration (FHA). These loans typically have lower down payment requirements than do conventional loans.


Foreclosure occurs when a homeowner defaults on their mortgage, and the lender attempts to recover the amount owed by taking ownership of the property.

Home equity

Home equity measures the difference between what your home’s current fair-market value (what it’s worth) and what you still owe on it. Homeowners can tap into their home’s equity to get cash from home equity loans, home equity lines of credit and home equity agreements.

Home equity agreement (HEA)

A home equity agreement (HEA) provides a homeowner with a lump sum cash payment in exchange for a portion of the home’s future value. Unlike a home equity loan or home equity line of credit, a HEA is not a loan and has more lenient eligibility requirements. For many homeowners, a HEA is an attractive alternative to a loan.

WATCH: Understanding a Home Equity Agreement

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) is a line of credit based on a property’s current home equity. Lenders often provide it as a revolving line of credit that a homeowner can tap at any time. HELOCs typically have lower interest rates than comparable personal loans.

Home equity loan

A home equity loan is a loan taken against a property’s current home equity. Homeowners receive a lump sum to use for any purpose they may have. The home itself is collateral for the loan.

Homeowner’s insurance

Homeowner’s insurance is a type of insurance that covers damage to a home from storms, fire, theft and other unplanned events. It can pay for necessary repairs, replacement of personal belongings and living expenses if you have to abandon your home for repairs.

Interest rate

The interest rate is the amount above and beyond the principal that a lender charges a borrower. Financial institutions typically state a loan’s interest rate on an annual basis as the annual percentage rate (API).

Investment property loan

An investment property loan is a mortgage used to finance the purchase of a property designed to generate income, such as a rental property.

Loan-to-value (LTV) ratio

The loan-to-value (LTV) ratio compares the loan amount to the appraised value of a home. Lenders examine the LTV ratio to assess a loan’s risk. The higher the LTV value, the higher the risk.

The formula for determining LTV.


A mortgage is a type of loan used to purchase a house or other type of real estate. Mortgage payments typically consist of the monthly interest payment and an amount used to pay down the loan principal.

Mortgage forbearance

Mortgage forbearance occurs when a homeowner gets behind on mortgage payments, and the lender agrees to a temporarily lower monthly payment or a temporary pause in payments altogether. The amount forestalled still must be paid at a later date, per terms of the forbearance agreement between the lender and the borrower.

Portfolio mortgage

A portfolio mortgage is a type of loan that stays in the lender’s portfolio and is not offloaded to a secondary mortgage holder.

Private-money loan

A private-money loan is a loan that one or more private lenders provide, versus a larger financial institution. Private-money loans are typically short-term loans used to finance large real estate investments.

Private mortgage insurance (PMI)

Private mortgage insurance, also called PMI, is a type of insurance that protects the lender in case the borrower stops making payments on their mortgage. Many mortgage lenders require PMI, typically added to the borrower’s monthly mortgage payments.


Refinancing a loan revises and replaces an existing loan with a new one, typically at a lower interest rate. Many homeowners refinance their home loans when interest rates drop.

Reverse mortgage

A reverse mortgage is a loan against the equity in a home. The borrower doesn’t have to make monthly loan payments. Instead, the lender receives ownership of the home when the borrower passes away or sells the home. Reverse mortgages are available to homeowners aged 62 or older with considerable home equity and who want to tap into the equity for living expenses in their retirement.

Seller financing

Seller financing occurs when the seller of a property agrees to handle the mortgage process themselves rather than requiring the buyer to obtain a mortgage from a financial institution. With seller financing, the buyer makes monthly payments to the seller.

VA loan

A VA loan is a mortgage loan available through the U.S. Department of Veteran’s Affairs (formerly the Veterans Administration or VA) to veterans, current members of the armed services, and their spouses. VA home loans are typically available with low or no down payment, no PMI requirements and competitive interest rates.

Let Unlock Technologies help you Unlock your home equity

When you need cash, tap into your home equity with a home equity agreement from Unlock Technologies. With an Unlock HEA, you’ll receive cash now in exchange for a share of your home’s future value. Because the HEA isn’t a loan, there aren’t any interest fees or installment payments. You get immediate cash to use as you wish.

Contact Unlock Technologies today to get started.

The blog articles published by Unlock Technologies are available for informational purposes only and not considered legal or financial advice on any subject matter. The blogs should not be used as a substitute for legal or financial advice from a licensed attorney or financial professional. Links in our blog posts to third-party websites are provided as a convenience and are for informational purposes only; they do not constitute an endorsement of any products, services or opinions of the corporation, organization or individual. Unlock Technologies bears no responsibility for the accuracy, legality, or content of external sites or that of subsequent links.