Which term describes the initial sum required to secure a mortgage loan?

The initial sum required to secure a mortgage loan is known as the down payment. This is a percentage of the property's purchase price that the borrower must pay upfront when taking out a mortgage. The down payment is critical because it reduces the amount that needs to be financed through the mortgage and can demonstrate the borrower's commitment to the purchase, as well as their financial stability. Typically, a larger down payment can also lead to better loan terms, such as lower interest rates or the avoidance of private mortgage insurance (PMI).

In contrast, the appraisal value refers to the value determined by a professional appraiser, which helps lenders assess how much to lend based on the property's worth. Closing costs are the fees and expenses incurred during the finalization of the mortgage transaction, which can include loan origination fees, title insurance, and other costs associated with closing the sale. Equity represents the homeowner's interest in the property, calculated as the current market value minus any outstanding mortgage balance. Each of these terms has a distinct role in the home-buying process, but it is the down payment that specifically signifies the initial investment needed to secure a mortgage loan.