APR
Annual Percentage Rate: the interest rate plus most fees, expressed as a yearly percentage. A closer apples-to-apples number than the note rate alone.
Home money terms, in plain English.
One-sentence definitions of every finance term we use — with links to the deeper explainer when there is one.
Break-even
The number of months it takes for your monthly refinance savings to pay off the closing costs. Refinance only makes sense if you stay past this point.
Cap rate
Annual net operating income divided by property value. A quick way to compare rental returns across properties.
Cash-on-cash return
Your annual pre-tax cash flow divided by the cash you put in. Measures the actual return on your out-of-pocket investment.
Closing costs
Lender fees, title, escrow, and taxes paid at closing — typically 2–5% of the loan amount for a refinance.
Depreciation recapture
When you sell a rental, the IRS taxes back the depreciation you deducted — currently at up to 25%.
Equity
The portion of your home you actually own — current market value minus what you still owe on the mortgage.
Escrow
A neutral account holding money (or documents) until closing conditions are met. Your monthly payment often includes escrow for taxes and insurance.
LTV
Loan-to-value: your mortgage balance divided by your home's value. Below 80% LTV means no PMI.
Net proceeds
What actually lands in your bank account after a sale: sale price minus mortgage payoff, agent commissions, and closing costs.
PMI
Private Mortgage Insurance — a monthly fee lenders charge when your loan-to-value is above 80%. It drops off automatically at 78%.
Points
An upfront fee equal to 1% of the loan, paid to lower the interest rate. Whether they pay off depends on how long you keep the loan.