Pre-qualification is an initial evaluation of your creditworthiness based on self-reported information. It gives you an estimate of how much you might be able to borrow. Pre-approval is a more detailed process that involves a credit check and verification of your financial documents, providing a more accurate loan amount and interest rate.

The required down payment varies depending on the type of mortgage and the lender. Conventional loans typically require at least 5% to 20% of the home’s purchase price, while FHA loans may require as little as 3.5%. VA loans and USDA loans often require no down payment.

Closing costs are fees associated with finalizing your mortgage, including appraisal fees, title insurance, attorney fees, and more. These costs typically range from 2% to 5% of the loan amount. It’s important to review your Loan Estimate document, which details these costs, to understand what you’ll need to pay at closing.

Private mortgage insurance (PMI) is a type of insurance that protects the lender if you default on your loan. It is typically required if your down payment is less than 20% of the home’s purchase price. PMI can be canceled once you have built up enough equity in your home, usually when your loan-to-value ratio reaches 80%.

An escrow account is a separate account used by your mortgage lender to pay property taxes and homeowners insurance on your behalf. Each month, a portion of your mortgage payment goes into this account. When the taxes and insurance premiums are due, the lender pays them from the escrow account, ensuring they are paid on time and helping you manage these expenses throughout the year.

There are several types of mortgages, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and jumbo loans. Each type has different terms and benefits, so it’s important to choose the one that best fits your financial situation and goals.