Are some mortgage terms used interchangeably?

Multiple meanings in mortgage terminology

Learning mortgage terminology can feel like you’re embarking on a second language, so it’s important to make note of terms that mean the same thing or have several meanings.

There are indeed different mortgage terms that can actually mean the same thing. For example, homeowner’s insurance and hazard insurance can be essentially the same thing, although a complete homeowner’s insurance policy will also typically include liability insurance.

“Escrow” is a word that you will hear often when applying for a mortgage and it can mean a few different things. It can refer to the account that holds funds for homeowner’s insurance along with property taxes, while it can also refer to an account which holds funds in advance for closing. If you put down an earnest deposit, for instance, this will sit in an escrow account until closing (an earnest deposit, by the way, is a deposit a buyer gives a seller when bidding on a home).

Be sure to ask for clarification if a mortgage term is not clear or used in a different way than you originally thought. Terms are often used differently by different banks and mortgage brokers and thus can have different meanings in specific situations. If a term comes up and it is unclear as to its exact meaning in those circumstances, seek an explanation.