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Glossary
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Acceleration
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.
Actual Cash Value
An amount equal to the replacement value of damaged property minus depreciation.
An amount equal to the replacement value of damaged property minus depreciation.
Additional principal payment
A payment made by a borrower of more than the scheduled principal amount due. You might do this if you want to more quickly reduce the remaining balance owed.
A payment made by a borrower of more than the scheduled principal amount due. You might do this if you want to more quickly reduce the remaining balance owed.
Adjustable-Rate Mortgage (ARM)
Also known as a variable-rate loan, an ARM usually offers a lower initial rate than a fixed-rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market. Indexes used for ARMs include the LIBOR index and the Treasury index. ARMs also have caps or a maximum and minimum that the interest rate can change at each adjustment period. Also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.
Also known as a variable-rate loan, an ARM usually offers a lower initial rate than a fixed-rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market. Indexes used for ARMs include the LIBOR index and the Treasury index. ARMs also have caps or a maximum and minimum that the interest rate can change at each adjustment period. Also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.
Adjusted basis
The original cost of a property, plus the value of any capital expenditures for improvements, minus any depreciation.
The original cost of a property, plus the value of any capital expenditures for improvements, minus any depreciation.
Adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment interval
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment -- typically one, three or five years, depending on the index.
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment -- typically one, three or five years, depending on the index.
Adjustment Period
The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.
The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.
Affordability analysis
A detailed analysis of your ability to buy a home. This includes your income, holdings, and debts. It may also include the type of mortgage you plan to use, the location of the home, and your closing costs.
A detailed analysis of your ability to buy a home. This includes your income, holdings, and debts. It may also include the type of mortgage you plan to use, the location of the home, and your closing costs.
Amenity
A nice feature of the house, but something which isn't crucial to the house's very existence. A roof, for instance, is not an amenity; it's a necessity. An amenity might be a lovely view of the sunset over the ocean, or a swimming pool or tennis court.
A nice feature of the house, but something which isn't crucial to the house's very existence. A roof, for instance, is not an amenity; it's a necessity. An amenity might be a lovely view of the sunset over the ocean, or a swimming pool or tennis court.
Amoritization Means
Regular loan payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.
Regular loan payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.
Amortization
The period of time during which you will owe interest and principal to your lender. Paying off a loan over the period of time and at the interest rate specified in a loan document. The amortization of a loan includes the payment of interest and a part of the amount borrowed in each mortgage payment.
The period of time during which you will owe interest and principal to your lender. Paying off a loan over the period of time and at the interest rate specified in a loan document. The amortization of a loan includes the payment of interest and a part of the amount borrowed in each mortgage payment.
Amortization Schedule
Provided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases. The schedule provides a breakdown of the principal and interest payments, and the amount outstanding at any given point during the amortization period.
Provided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases. The schedule provides a breakdown of the principal and interest payments, and the amount outstanding at any given point during the amortization period.
Amortize
To repay a mortgage with regular payments, both the principal due and the interest.
To repay a mortgage with regular payments, both the principal due and the interest.
Annual membership or participation fee
An amount that is charged annually for having the line of credit available. It is charged regardless of whether or not you use the line.
An amount that is charged annually for having the line of credit available. It is charged regardless of whether or not you use the line.
Annual percentage rate (A.P.R.)
How much a loan costs annually. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.
How much a loan costs annually. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.
Application
A form used to apply for a loan, on which you'll put relevant information about yourself. Also refers to the whole process of applying for a loan. Or, for that matter, of applying to college (but that's a different story entirely).
A form used to apply for a loan, on which you'll put relevant information about yourself. Also refers to the whole process of applying for a loan. Or, for that matter, of applying to college (but that's a different story entirely).
Application Fee
The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.
The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.
Appraisal
An estimate of the value of the property, made by a qualified professional called an "appraiser". This includes examples of sales of similar properties. An appraisal is required by your bank to determine how much money it will lend you.
An estimate of the value of the property, made by a qualified professional called an "appraiser". This includes examples of sales of similar properties. An appraisal is required by your bank to determine how much money it will lend you.
Appraised value
An opinion of a property's fair market value, given by an appraiser, whose job it is to evaluate such things.
An opinion of a property's fair market value, given by an appraiser, whose job it is to evaluate such things.
Appraiser
A professional who conducts an analysis of the property, including examples of sales of similar properties in order to develop an estimate of the value of the property. The analysis is called an "appraisal."
A professional who conducts an analysis of the property, including examples of sales of similar properties in order to develop an estimate of the value of the property. The analysis is called an "appraisal."
Appreciation
An increase in the market value of a home due to changing market conditions and/or home improvements. The opposite of depreciation.
An increase in the market value of a home due to changing market conditions and/or home improvements. The opposite of depreciation.
Arbitration
A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
Asbestos
A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.
A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.
Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.
A local tax levied against a property for a specific purpose, such as a sewer or street lights.
Assessment rolls
The public record of taxable property.
The public record of taxable property.
Assessor
A public official who establishes the value of a property for purposes of taxation.
A public official who establishes the value of a property for purposes of taxation.
Asset
Everything of value an individual owns. Your assets are tallied up when the bank is trying to figure out what it can afford to lend you.
Everything of value an individual owns. Your assets are tallied up when the bank is trying to figure out what it can afford to lend you.
Assignment
The transfer of a mortgage from one individual to another. This isn't always allowed.
The transfer of a mortgage from one individual to another. This isn't always allowed.
Assumable mortgage
A mortgage (on a home) that can be taken over by the buyer of the home.
A mortgage (on a home) that can be taken over by the buyer of the home.
Assumption
The agreement between buyer and seller in which the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money, since this is an existing mortgage debt, unlike a new mortgage where closing costs as well as new, possibly higher, market-rate interest charges may apply.
The agreement between buyer and seller in which the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money, since this is an existing mortgage debt, unlike a new mortgage where closing costs as well as new, possibly higher, market-rate interest charges may apply.
Assumption fee
Fee usually paid by the buyer to a lender if the buyer assumes, or takes on, an existing mortgage.
Fee usually paid by the buyer to a lender if the buyer assumes, or takes on, an existing mortgage.
Back-end ratio, or debt ratio
The amount you pay in monthly debt (credit cards, student loans, etc.) divided by your gross monthly income.
The amount you pay in monthly debt (credit cards, student loans, etc.) divided by your gross monthly income.
Balloon Mortgage
A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). Usually a short-term fixed-rate loan which involves small payments for a certain period of time, and one large payment for the remaining amount of the principal at a time specified in the contract. The mortgage contains an option to "reset" the interest rate to the current market rate and to extend the due date if certain conditions are met.
A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). Usually a short-term fixed-rate loan which involves small payments for a certain period of time, and one large payment for the remaining amount of the principal at a time specified in the contract. The mortgage contains an option to "reset" the interest rate to the current market rate and to extend the due date if certain conditions are met.
Bankruptcy
Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.
Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.
Basis Point
One one-hundredth of one percent. Normally used in describing variances in yields or mortgage.
One one-hundredth of one percent. Normally used in describing variances in yields or mortgage.
Betterment
An improvement that increases property value, as distinct from repairs that simply maintain value. It's an upgrade, not just upkeep.
An improvement that increases property value, as distinct from repairs that simply maintain value. It's an upgrade, not just upkeep.
Bill of sale
A written document that transfers title to the property.
A written document that transfers title to the property.
Binder
A preliminary agreement, secured by an earnest money deposit, through which the buyer offers to purchase the home.
A preliminary agreement, secured by an earnest money deposit, through which the buyer offers to purchase the home.
Biweekly payment mortgage
A mortgage that requires payments to be made every two weeks (instead of monthly).
A mortgage that requires payments to be made every two weeks (instead of monthly).
Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.
A mortgage covering at least two pieces of real estate as security for the same mortgage.
Blended Payments
Payments placed in an osterizer and mixed until all the lumps are gone. Er... just kidding. Actually, it's a repayment method by which the same amount is paid each month, but the composition of the interest and principal changes with each payment. With each payment, the amount allocated to the principal increases as the amount allocated to interest decreases. Most mortgages use blended payments because it provides a consistent monthly payment amount for the borrower.
Payments placed in an osterizer and mixed until all the lumps are gone. Er... just kidding. Actually, it's a repayment method by which the same amount is paid each month, but the composition of the interest and principal changes with each payment. With each payment, the amount allocated to the principal increases as the amount allocated to interest decreases. Most mortgages use blended payments because it provides a consistent monthly payment amount for the borrower.
Blockbusting
The attempt to induce someone to sell their home because someone from a protected class is rumored to be moving into the neighborhood. The classic example of this would be a real estate agent passing out her card to neighbors while telling them that a minority family is moving in down the block and they should sell now before the neighborhood gets any worse. This is illegal.
The attempt to induce someone to sell their home because someone from a protected class is rumored to be moving into the neighborhood. The classic example of this would be a real estate agent passing out her card to neighbors while telling them that a minority family is moving in down the block and they should sell now before the neighborhood gets any worse. This is illegal.
Bona fide
In good faith, real, not fraudulent.
In good faith, real, not fraudulent.
Borrower (Mortgagor)
One who applies for and receives a loan in the form of a mortgage, with the intention of repaying the loan in full. If you don't have the intention to repay the loan, then there are other terms that you might not want to see applied to you
One who applies for and receives a loan in the form of a mortgage, with the intention of repaying the loan in full. If you don't have the intention to repay the loan, then there are other terms that you might not want to see applied to you
Breach
A violation of any legal obligation. Not to be confused with Henry V -- "Once more unto the breach, dear friends!"
A violation of any legal obligation. Not to be confused with Henry V -- "Once more unto the breach, dear friends!"
Broker
1) an individual in the business of helping to arrange funding or negotiating contracts for a client, but who does not loan the money himself. This is a mortgage broker; mortgage brokers usually charge a fee or receive a commission for their services.
1) an individual in the business of helping to arrange funding or negotiating contracts for a client, but who does not loan the money himself. This is a mortgage broker; mortgage brokers usually charge a fee or receive a commission for their services.
Building code
Local regulations having to do with design and construction of a building. This means, of course, that it's not OK to build a house made of oatmeal, no matter what that builder may tell you.
Local regulations having to do with design and construction of a building. This means, of course, that it's not OK to build a house made of oatmeal, no matter what that builder may tell you.
Buy-down
The lender and/or the home builder subsidize the mortgage by lowering the interest rate during the first few years of the loan and placing funds in escrow to compensate for lower payments during the term. While the payments are initially low, they will increase when the subsidy expires.
The lender and/or the home builder subsidize the mortgage by lowering the interest rate during the first few years of the loan and placing funds in escrow to compensate for lower payments during the term. While the payments are initially low, they will increase when the subsidy expires.
Call option
We're not talking stocks here. It's a clause your mortgage that gives the lender the right to 'call' the mortgage due and payable at the end of a given length of time, for whatever reason. In other words, you've got to come up with all the money owed at that time, and repay the lender.
We're not talking stocks here. It's a clause your mortgage that gives the lender the right to 'call' the mortgage due and payable at the end of a given length of time, for whatever reason. In other words, you've got to come up with all the money owed at that time, and repay the lender.
Capacity
Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you've paid for your housing costs, debts and other obligations.
Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you've paid for your housing costs, debts and other obligations.
Capital expenditure
The cost of an improvement made either to lengthen the useful life of a property or to add value to it. It's a fancy term for the money you pony up for improvements. See also capital improvement.
The cost of an improvement made either to lengthen the useful life of a property or to add value to it. It's a fancy term for the money you pony up for improvements. See also capital improvement.
Capital improvement
Any structure which is a permanent improvement to the property.
Any structure which is a permanent improvement to the property.
Caps (interest)
Consumer safeguards which limit the amount that the interest rate on an adjustable rate mortgage may change per year and/or during the life of the loan.
Consumer safeguards which limit the amount that the interest rate on an adjustable rate mortgage may change per year and/or during the life of the loan.
Caps (payment)
Consumer safeguards which limit the amount that monthly payments on an adjustable rate mortgage may change.
Consumer safeguards which limit the amount that monthly payments on an adjustable rate mortgage may change.
Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income-producing property (including mortgage payment, maintenance, utilities, etc.)
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income-producing property (including mortgage payment, maintenance, utilities, etc.)
Certificate of Completion
A document issued by an appraiser, an engineer or other party evidencing that all improvements to a property have been completed according to the plans and specifications provided.
A document issued by an appraiser, an engineer or other party evidencing that all improvements to a property have been completed according to the plans and specifications provided.
Certificate of Eligibility
The document issued by the Veteran's Administration evidencing the amount of entitlement a veteran has for use in purchasing a home.
The document issued by the Veteran's Administration evidencing the amount of entitlement a veteran has for use in purchasing a home.
Certificate of Occupancy
The document issued by a local municipality evidencing that the property has been completed and is suitable for occupancy.
The document issued by a local municipality evidencing that the property has been completed and is suitable for occupancy.
Certificate of Reasonable Value (CRV)
The document issued by the Veteran's Administration establishing the fair market value of a property and the maximum loan available based on the value along with any repairs or inspections required to establish that value.
The document issued by the Veteran's Administration establishing the fair market value of a property and the maximum loan available based on the value along with any repairs or inspections required to establish that value.
Chattel Mortgage
A mortgage placed on personal property.
A mortgage placed on personal property.
Clear Title
The ability to take title to a property without any other liens, judgments, exceptions or defects.
The ability to take title to a property without any other liens, judgments, exceptions or defects.
Closing
The act of signing all documents required to transfer title of a property and, if necessary, to establish the lien and create the mortgage and disburse the funds. Also referred to as settlement.
The act of signing all documents required to transfer title of a property and, if necessary, to establish the lien and create the mortgage and disburse the funds. Also referred to as settlement.
Closing (Closing Date)
The completion of the real estate transaction between buyer and seller. The buyer signs the mortgage documents and the closing costs are paid. Also known as the settlement date.
The completion of the real estate transaction between buyer and seller. The buyer signs the mortgage documents and the closing costs are paid. Also known as the settlement date.
Closing Agent
The person at the title company or attorney's office supervising the closing and disbursing the funds. Also referred to as an escrow agent.
The person at the title company or attorney's office supervising the closing and disbursing the funds. Also referred to as an escrow agent.
Closing Costs
The fees paid at closing to various parties, to transfer the title of a property and, if necessary to establish the lien and create the mortgage. The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.
The fees paid at closing to various parties, to transfer the title of a property and, if necessary to establish the lien and create the mortgage. The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.
Closing Statement
The document prepared by the closing agent evidencing the receipt and disbursement of funds to all parties involved in a closing. Also known as a HUD-1 Settlement Statement.
The document prepared by the closing agent evidencing the receipt and disbursement of funds to all parties involved in a closing. Also known as a HUD-1 Settlement Statement.
Collateral
The property or personal effects pledged as security for a loan. In the case of a mortgage, the collateral would be the house and property.
The property or personal effects pledged as security for a loan. In the case of a mortgage, the collateral would be the house and property.
Commitment
The agreement issued by a lender evidencing the approval and terms of a mortgage. Also see Title Commitment
The agreement issued by a lender evidencing the approval and terms of a mortgage. Also see Title Commitment
Commitment Letter
A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.
A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.
Common Area
An area of land in a real estate project and any improvements to the land specifically for the use and enjoyment of the owners of the project and their tenants.
An area of land in a real estate project and any improvements to the land specifically for the use and enjoyment of the owners of the project and their tenants.
Community Property
A form of ownership, in some states, where property obtained during a marriage is presumed to be owned jointly by both parties unless specifically purchased as separate property.
A form of ownership, in some states, where property obtained during a marriage is presumed to be owned jointly by both parties unless specifically purchased as separate property.
Comparables
Properties recently sold that are similar to the subject property in location, size and amenities and analyzed as part of the appraisal process to determine the fair market value of the subject property.
Properties recently sold that are similar to the subject property in location, size and amenities and analyzed as part of the appraisal process to determine the fair market value of the subject property.
Concession
Something given up or agreed to in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs.
Something given up or agreed to in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs.
Conditional Commitment
The document issued by HUD through the FHA, or through a lender's appraiser approved by the FHA, establishing the value of a property, the maximum loan available, the maximum allowable closing costs and any required repairs or inspections to establish that value.
The document issued by HUD through the FHA, or through a lender's appraiser approved by the FHA, establishing the value of a property, the maximum loan available, the maximum allowable closing costs and any required repairs or inspections to establish that value.
Condominium
A form of ownership of property where each owner has title to a percentage of a project and the project's common areas and the actual ownership is of the interior surfaces established by the perimeter walls, floors and ceilings of a unit. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements
A form of ownership of property where each owner has title to a percentage of a project and the project's common areas and the actual ownership is of the interior surfaces established by the perimeter walls, floors and ceilings of a unit. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements
Condominium Declarations
The document establishing the percentages of ownership of unit owners of a condominium project and the project's common areas including the covenants, conditions and restrictions upon their ownership and their use.
The document establishing the percentages of ownership of unit owners of a condominium project and the project's common areas including the covenants, conditions and restrictions upon their ownership and their use.
Contingency
A plan for something that may occur but is not likely. For example, your offer may be contingent on the home passing a home inspection. It the home does not pass inspection, you're protected.
A plan for something that may occur but is not likely. For example, your offer may be contingent on the home passing a home inspection. It the home does not pass inspection, you're protected.
Conventional Loan
Any first mortgage loan originated that is not issued by HUD through FHA or guaranteed by the VA.
Any first mortgage loan originated that is not issued by HUD through FHA or guaranteed by the VA.
Counter-offer
An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter-offer with a slightly higher sale price.
An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter-offer with a slightly higher sale price.
Credit
The ability of a person to borrow money, or buy good by paying over time. Credit is extended based on a lender's good opinion of the person's financial situation and reliability.
The ability of a person to borrow money, or buy good by paying over time. Credit is extended based on a lender's good opinion of the person's financial situation and reliability.
Credit Bureau
A company that gathers information on consumers who use credit. These companies sell that information to credit lenders in the form of a credit report.
A company that gathers information on consumers who use credit. These companies sell that information to credit lenders in the form of a credit report.
Credit History
A record of credit use comprised of a list of individual consumer debts and a record of whether or not these debts were paid back on time or "as agreed." Credit institutions have created a detailed document of your credit history called a credit report.
A record of credit use comprised of a list of individual consumer debts and a record of whether or not these debts were paid back on time or "as agreed." Credit institutions have created a detailed document of your credit history called a credit report.
Credit Report
A document used by the credit industry to examine your use of credit. It provides information on money that you've borrowed from credit institutions and your payment history.
A document used by the credit industry to examine your use of credit. It provides information on money that you've borrowed from credit institutions and your payment history.
Credit Score
A computer-generated number that summarizes your credit profile and predicts the likelihood that you'll repay future debts.
A computer-generated number that summarizes your credit profile and predicts the likelihood that you'll repay future debts.
Creditworthy
Your ability to qualify for credit and repay debts.
Your ability to qualify for credit and repay debts.
Cul-de-Sac
A dead end residential street with ample room at the dead end to allow automobiles to turn around.
A dead end residential street with ample room at the dead end to allow automobiles to turn around.
De Minimus
Meaning to contribute little value. Most commonly in a de minimus PUD where the common areas contribute little value to the property.
Meaning to contribute little value. Most commonly in a de minimus PUD where the common areas contribute little value to the property.
Debt
Money owed from one person or institution to another person or institution.
Money owed from one person or institution to another person or institution.
Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her net effective income (FHA/VA loans) or gross monthly income (conventional loans). See housing expenses-to-income ratio. The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts such as credit cards.
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her net effective income (FHA/VA loans) or gross monthly income (conventional loans). See housing expenses-to-income ratio. The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts such as credit cards.
Deed
The legal document transferring ownership or title to a property
The legal document transferring ownership or title to a property
Deed of Trust
A legal document in which the borrower transfers the title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full the trustee transfers title back to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.In many states, this document is used in place of a mortgage to secure the payment of a note.
A legal document in which the borrower transfers the title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full the trustee transfers title back to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.In many states, this document is used in place of a mortgage to secure the payment of a note.
Deed Restriction
A legal restriction placed on a property or group of properties limiting their use or placing requirements upon their maintenance, etc.
A legal restriction placed on a property or group of properties limiting their use or placing requirements upon their maintenance, etc.
Default
Failure to meet legal obligations in a contract; specifically, failure to make the monthly payments on a mortgage. Failure to abide by the requirements of the note and the security instrument, most commonly a failure to make payments when they are due. If this happens, you can end up losing the house. A default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non-monetary. For example, when leasing a car, the lessee is usually required to properly maintain the car.
Failure to meet legal obligations in a contract; specifically, failure to make the monthly payments on a mortgage. Failure to abide by the requirements of the note and the security instrument, most commonly a failure to make payments when they are due. If this happens, you can end up losing the house. A default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non-monetary. For example, when leasing a car, the lessee is usually required to properly maintain the car.
Deferred interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See also negative amortization.
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See also negative amortization.
Deficiency Judgment
A judicial judgment obtained against a borrower after foreclosure to recap a loss suffered by a lender in foreclosure.
A judicial judgment obtained against a borrower after foreclosure to recap a loss suffered by a lender in foreclosure.
Delinquency
Failure to make payments when they are due. This can lead to foreclosure.
Failure to make payments when they are due. This can lead to foreclosure.
Department of Veterans Affairs (VA)
An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.
An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.
Depreciation
A decline in the value of property over time, due to changing market conditions or lack of upkeep on a home.
A decline in the value of property over time, due to changing market conditions or lack of upkeep on a home.
Discount Point
A fee charged to increase the yield to an investor over and above the stated interest rate. One point equals one percent of the loan amount.
A fee charged to increase the yield to an investor over and above the stated interest rate. One point equals one percent of the loan amount.
Discrimination in Advertising
Any printed or published material that uses words, no matter how subtle, that are of a discriminatory nature aren't allowed by HUD. Some of the examples that HUD gives are "adult building, Jewish home, restricted, private, integrated, or traditional."
Any printed or published material that uses words, no matter how subtle, that are of a discriminatory nature aren't allowed by HUD. Some of the examples that HUD gives are "adult building, Jewish home, restricted, private, integrated, or traditional."
Down payment
Money paid to make up the difference between the purchase price and the mortgage amount. A portion of the price of a home, usually between 3-20%, not borrowed and paid up front. Down payments usually are 10 percent to 20 percent of the sales price on conventional loans.
Money paid to make up the difference between the purchase price and the mortgage amount. A portion of the price of a home, usually between 3-20%, not borrowed and paid up front. Down payments usually are 10 percent to 20 percent of the sales price on conventional loans.
Due-On-Interest
A clause inserted in a mortgage that allows the lender, at its option, to call the loan due and payable upon the transfer of the property. Also known as "paragraph 17" in FNMA/FHLMC mortgages.
A clause inserted in a mortgage that allows the lender, at its option, to call the loan due and payable upon the transfer of the property. Also known as "paragraph 17" in FNMA/FHLMC mortgages.
Due-on-Sale-Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. Included as part of the security instrument requiring the full loan balance to be due and payable in the event the property owner sells or transfers ownership of the property.
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. Included as part of the security instrument requiring the full loan balance to be due and payable in the event the property owner sells or transfers ownership of the property.
Earnest Money
Money given by a buyer to a seller as part of the purchase price, in order to bind a transaction or to assure payment.
Money given by a buyer to a seller as part of the purchase price, in order to bind a transaction or to assure payment.
Earnest Money Deposit
The deposit to show that you're committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.
The deposit to show that you're committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.
Easement
A right of way giving people other than the owner access to a property. If there is one of these on the house you're considering, make sure you understand what it is, or you may have troops of 1953 alien-landing devotees plodding through your back yard on the way to that sacred corn field just next door. An interest in a property owned by another that entitles the holder to a specific use or enjoyment, such as a utility easement.
A right of way giving people other than the owner access to a property. If there is one of these on the house you're considering, make sure you understand what it is, or you may have troops of 1953 alien-landing devotees plodding through your back yard on the way to that sacred corn field just next door. An interest in a property owned by another that entitles the holder to a specific use or enjoyment, such as a utility easement.
Egress
The act or right of going or coming out, specifically as in "ingress and egress" to and from a property.
The act or right of going or coming out, specifically as in "ingress and egress" to and from a property.
Encroachment
1) An improvement that intrudes illegally on someone else's property. 2) defensive lineman getting overanxious in a football game.
1) An improvement that intrudes illegally on someone else's property. 2) defensive lineman getting overanxious in a football game.
Encumbrance
Anything which limits the title to a property, such as leases, mortgages, easements, or other restrictions.
Anything which limits the title to a property, such as leases, mortgages, easements, or other restrictions.
Entitlement
The VA home loan benefit is known as entitlement. It is also known as eligibility.
The VA home loan benefit is known as entitlement. It is also known as eligibility.
Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.
Equity
The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity. In other words, that portion of the property which the owner actually owns, having already paid for it. (It's also referred to as the owner's interest.) The difference between the value of a property and the unpaid loan balance.
The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity. In other words, that portion of the property which the owner actually owns, having already paid for it. (It's also referred to as the owner's interest.) The difference between the value of a property and the unpaid loan balance.
Escrow
Funds that are set aside and held in trust, usually for payment of taxes and insurance on real property. The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
Funds that are set aside and held in trust, usually for payment of taxes and insurance on real property. The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
Fannie Mae
(see Federal National Mortgage Association) Farmers Home Administration (FmHA) Organization which provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.
(see Federal National Mortgage Association) Farmers Home Administration (FmHA) Organization which provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.
Federal Home Loan Bank Board
(FHLBB) A regulatory and supervisory agency for federally chartered savings institutions.
(FHLBB) A regulatory and supervisory agency for federally chartered savings institutions.
Federal Home Loan Mortgage Corporation (FHLMC), or "Freddie Mac"
A quasi-governmental agency that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.
A quasi-governmental agency that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.
Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.
FHA loan
a loan insured by the Federal Housing Administration, open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country.
a loan insured by the Federal Housing Administration, open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country.
FHA mortgage insurance
a way of insuring an FHA loan, this insurance requires a small fee (up to 3.8 percent of the loan amount) paid at closing, or a portion of this fee added to each monthly payment of an FHA loan. On a 9.5 percent $75,000 30-year fixed rate FHA loan, this fee would amount to either $2,850 at closing or an extra $31 a month for the life of the loan. In addition, FHA mortgage insurance requires an annual fee of 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.
a way of insuring an FHA loan, this insurance requires a small fee (up to 3.8 percent of the loan amount) paid at closing, or a portion of this fee added to each monthly payment of an FHA loan. On a 9.5 percent $75,000 30-year fixed rate FHA loan, this fee would amount to either $2,850 at closing or an extra $31 a month for the life of the loan. In addition, FHA mortgage insurance requires an annual fee of 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.
FHLMC
The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac."
The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac."
Firm commitment
The agreement by a lender to make a loan to a specific borrower for a specific property. A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan.
The agreement by a lender to make a loan to a specific borrower for a specific property. A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan.
First mortgage
The mortgage which is the primary lien against a property.
The mortgage which is the primary lien against a property.
Fixed-Rate Mortgage
A mortgage with an interest rate that does not change during the entire term of the loan. This makes payments precisely predictable, but it is not always the cheapest alternative.
A mortgage with an interest rate that does not change during the entire term of the loan. This makes payments precisely predictable, but it is not always the cheapest alternative.
Foreclosure
A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage. A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.
A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage. A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.
Freddie Mac
See FHMLC, or Federal Home Loan Mortgage Corporation.
See FHMLC, or Federal Home Loan Mortgage Corporation.
Front-end ratio
Your prospective monthly mortgage payments divided by your gross monthly income. This comes out to a percentage, and a lender uses this percentage to get an idea of how much of your income will be going to pay your loan. If they like the number (say, below 29%) then they will be more inclined to sell you the loan.
Your prospective monthly mortgage payments divided by your gross monthly income. This comes out to a percentage, and a lender uses this percentage to get an idea of how much of your income will be going to pay your loan. If they like the number (say, below 29%) then they will be more inclined to sell you the loan.
Gift Letter
A letter that a family member writes verifying that s/he has given you a certain amount of money as a gift and that you don't have to repay it. You can use this money towards a portion of your down payment with some mortgages.
A letter that a family member writes verifying that s/he has given you a certain amount of money as a gift and that you don't have to repay it. You can use this money towards a portion of your down payment with some mortgages.
Ginnie Mae
The Government National Mortgage Association (GNMA) created by Congress to facilitate the sale or residential loans insured by FHA or guaranteed by VA in the secondary market in the form of government securities. Since loans in the GNMA securities are insured or guaranteed by a department of the government, the securities are protected by the "full faith and credit of the United States".
The Government National Mortgage Association (GNMA) created by Congress to facilitate the sale or residential loans insured by FHA or guaranteed by VA in the secondary market in the form of government securities. Since loans in the GNMA securities are insured or guaranteed by a department of the government, the securities are protected by the "full faith and credit of the United States".
Good-Faith Estimate
A written statement from the lender itemizing the approximate costs and fees for the mortgage.
A written statement from the lender itemizing the approximate costs and fees for the mortgage.
Government mortgage
A mortgage insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS)
A mortgage insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS)
Government National Mortgage Association (GNMA), or Ginnie Mae
Provides sources of funds for residential mortgage, insured or guaranteed by FHA or VA.
Provides sources of funds for residential mortgage, insured or guaranteed by FHA or VA.
Graduated Payment Mortgage (GPM)
A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.
A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.
Grantee
The person to whom an interest or ownership in real estate is given, i.e., the buyer.
The person to whom an interest or ownership in real estate is given, i.e., the buyer.
Grantor
The person giving an interest or ownership in real estate, i.e., the seller.
The person giving an interest or ownership in real estate, i.e., the seller.
Gross Monthly Income
The income you earn in a month before taxes and other deductions. It may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.Typically the income used for qualification purposes on conventional loans.
The income you earn in a month before taxes and other deductions. It may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.Typically the income used for qualification purposes on conventional loans.
Guarantee mortgage
A mortgage that is guaranteed by a third party.
A mortgage that is guaranteed by a third party.
Guaranteed loan
Another term for 'government mortgage.
Another term for 'government mortgage.
Guaranty
Most common usage is that indicating the amount the VA will pay to a lender in the event a veteran defaults on a mortgage guaranteed by the VA. Hazard Insurance
Most common usage is that indicating the amount the VA will pay to a lender in the event a veteran defaults on a mortgage guaranteed by the VA. Hazard Insurance
Hazard Insurance
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.
Home equity line of credit
A loan against the amount of equity you may have in a property.
A loan against the amount of equity you may have in a property.
Home inspection
A complete and thorough inspection of the physical condition of a property, including all major systems and structural elements. It's conducted by someone who knows what to look for, and who will inform you of what he finds. If he turns up something you don't like and which the seller refuses to repair, you don't proceed with the purchase of the home. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
A complete and thorough inspection of the physical condition of a property, including all major systems and structural elements. It's conducted by someone who knows what to look for, and who will inform you of what he finds. If he turns up something you don't like and which the seller refuses to repair, you don't proceed with the purchase of the home. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
Homeowner's Insurance Policy
A policy whereby an insurer agrees to compensate the insured in the event of loss to the property and its contents due to multiple perils including wind damage, theft and liability for personal or property claims. An insurance policy, required when you take ownership, that combines personal liability insurance and hazard insurance for the home as well as its contents. A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances
A policy whereby an insurer agrees to compensate the insured in the event of loss to the property and its contents due to multiple perils including wind damage, theft and liability for personal or property claims. An insurance policy, required when you take ownership, that combines personal liability insurance and hazard insurance for the home as well as its contents. A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances
Homeowner's warranty
A warranty which will cover repairs to specified parts of a house for a specific period of time. It is provided by the seller (or, if the place is new, the builder) as a condition of the sale.
A warranty which will cover repairs to specified parts of a house for a specific period of time. It is provided by the seller (or, if the place is new, the builder) as a condition of the sale.
Homeowner's Warranty Program (HOW)
A program operated through the National Association of Home Builders through which participating builders provide home buyers with a warranty ion the workmanship and materials of a home and also warrants against major structural defects. A ten year HOW warranty furnished buy a builder is sufficient evidence to FHA to allow waiver of HUD inspection during construction.
A program operated through the National Association of Home Builders through which participating builders provide home buyers with a warranty ion the workmanship and materials of a home and also warrants against major structural defects. A ten year HOW warranty furnished buy a builder is sufficient evidence to FHA to allow waiver of HUD inspection during construction.
Homestead
The primary dwelling of a borrower protected by laws in some states against claims by creditors other than the mortgage lender.
The primary dwelling of a borrower protected by laws in some states against claims by creditors other than the mortgage lender.
Homestead Exemption
The exemption granted by certain taxing authorities for decreased taxes on a homestead.
The exemption granted by certain taxing authorities for decreased taxes on a homestead.
Hot Market
A market in which houses are selling fast. Otherwise known as a 'seller's market' -- the seller is going to sell their house at very close to the asking price, since there's a lot of demand.
A market in which houses are selling fast. Otherwise known as a 'seller's market' -- the seller is going to sell their house at very close to the asking price, since there's a lot of demand.
Housing Expenses-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her net effective income. The percentage of your gross monthly income that goes toward paying for your housing expenses.
The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her net effective income. The percentage of your gross monthly income that goes toward paying for your housing expenses.
HUD
The U.S. Department of Housing & Urban Development which administers the FHA and has the overall responsibility for the implementation and administration of government housing and urban development programs.
The U.S. Department of Housing & Urban Development which administers the FHA and has the overall responsibility for the implementation and administration of government housing and urban development programs.
HUD-1 Settlement Statement
A final listing of the costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller. A document which sets forth an itemized listing of whatever costs must be paid at closing, such as real estate commissions, loan fees, points, and initial escrow amounts. It's also known as the "closing statement" or "settlement sheet."
A final listing of the costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller. A document which sets forth an itemized listing of whatever costs must be paid at closing, such as real estate commissions, loan fees, points, and initial escrow amounts. It's also known as the "closing statement" or "settlement sheet."
Impound
The required monthly deposit made by borrowers in addition to principal and interest for the payment of taxes and insurance. Also known as escrows or reserves. That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.
The required monthly deposit made by borrowers in addition to principal and interest for the payment of taxes and insurance. Also known as escrows or reserves. That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.
Income Ratio
On conventional loans, this ratio of total monthly payment for PITI to gross monthly income, standardly required to be 25% to 28%. On FHA loans, the ratio of PITI to net monthly income, standardly required to be 35%.
On conventional loans, this ratio of total monthly payment for PITI to gross monthly income, standardly required to be 25% to 28%. On FHA loans, the ratio of PITI to net monthly income, standardly required to be 35%.
Index
The published index of interest rates used to calculate the interest rate for an ARM. The index is usually an average of the interest rates on a particular type of security such as the LIBOR. The standard by which adjustable rate mortgages are adjusted, normally a trackable moving scale. The most common indexes are the weekly average of all U.S. Government securities adjusted to a constant maturity of one year and the Federal Home Loan Bank Board's 11th District cost of funds. A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments. These other investments may include one-, three-, and five-year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average costs-of-funds incurred by savings and loans. This information is then used to adjust the interest rate on an adjustable mortgage up or down.
The published index of interest rates used to calculate the interest rate for an ARM. The index is usually an average of the interest rates on a particular type of security such as the LIBOR. The standard by which adjustable rate mortgages are adjusted, normally a trackable moving scale. The most common indexes are the weekly average of all U.S. Government securities adjusted to a constant maturity of one year and the Federal Home Loan Bank Board's 11th District cost of funds. A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments. These other investments may include one-, three-, and five-year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average costs-of-funds incurred by savings and loans. This information is then used to adjust the interest rate on an adjustable mortgage up or down.
Individual Retirement Account (IRA)
A tax-deferred plan that can help you build a retirement nest egg.
A tax-deferred plan that can help you build a retirement nest egg.
Inflation
An increase in prices.
An increase in prices.
Ingress
The act of right of going in or entering. See Egress.
The act of right of going in or entering. See Egress.
Initial interest rate
The interest rate of the mortgage at the time of closing. This rate will change for an adjustable-rate mortgage (ARM). Also known as the "start rate" or "teaser."
The interest rate of the mortgage at the time of closing. This rate will change for an adjustable-rate mortgage (ARM). Also known as the "start rate" or "teaser."
Interest
The amount of money, expressed as a percentage of the principal, charged for the use of the money borrowed. The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.
The amount of money, expressed as a percentage of the principal, charged for the use of the money borrowed. The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.
Interest Adjustment
If the closing (the date on which the buyer takes possession of the property) occurs at a time of the month other than the date on which the mortgage payment is due, the borrower will pay an amount to cover interest from the "interest adjustment date."
If the closing (the date on which the buyer takes possession of the property) occurs at a time of the month other than the date on which the mortgage payment is due, the borrower will pay an amount to cover interest from the "interest adjustment date."
Interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum rate to which your loan can climb.
For an adjustable-rate mortgage (ARM), the maximum rate to which your loan can climb.
Interest rate floor
For an adjustable-rate mortgage (ARM), the minimum interest rate to which your loan can sink.
For an adjustable-rate mortgage (ARM), the minimum interest rate to which your loan can sink.
Interim Financing
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion of the project.
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion of the project.
Investor
A money source for a lender.
A money source for a lender.
Joint Tenancy
A form of ownership where two or more persons share equal interest and equal rights in the property, including the rights of survivorship.
A form of ownership where two or more persons share equal interest and equal rights in the property, including the rights of survivorship.
Jumbo Loan
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.
Junior Mortgage
Any mortgage loan that is subordinated to the first purchase money mortgage, also referred to as a second liens.
Any mortgage loan that is subordinated to the first purchase money mortgage, also referred to as a second liens.
Keogh Funds
A tax-deferred retirement-savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax-deductible.
A tax-deferred retirement-savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax-deductible.
Late charge
The penalty that must be paid by the borrower when a payment is late. This must be spelled out; make sure you know when you would incur such a charge. The penalty incurred for failing to make payments when due, normally 5% of the payment amount but may vary from state to state and depending on the loan plan.
The penalty that must be paid by the borrower when a payment is late. This must be spelled out; make sure you know when you would incur such a charge. The penalty incurred for failing to make payments when due, normally 5% of the payment amount but may vary from state to state and depending on the loan plan.
Lease-purchase mortgage loan
A financing option for low- and moderate-income home buyers, by which they can lease a home, with an option to buy, from a nonprofit organization. Each month's rent payment consists of principal, interest, taxes and insurance, plus an extra amount that is sent to a savings account in order to accumulate money for a down payment. Legal Description
A financing option for low- and moderate-income home buyers, by which they can lease a home, with an option to buy, from a nonprofit organization. Each month's rent payment consists of principal, interest, taxes and insurance, plus an extra amount that is sent to a savings account in order to accumulate money for a down payment. Legal Description
Liabilities
Your debts and other financial obligations.
Your debts and other financial obligations.
Lien
A claim upon a piece of property for the payment or satisfaction of a debt or obligation. A claim or charge on property for payment of a debt. The legal claim of one person on the property of another as security for a debt, established by the security instrument. With a mortgage, the lender has the right to take the title to your property if you don't make the mortgage payments.
A claim upon a piece of property for the payment or satisfaction of a debt or obligation. A claim or charge on property for payment of a debt. The legal claim of one person on the property of another as security for a debt, established by the security instrument. With a mortgage, the lender has the right to take the title to your property if you don't make the mortgage payments.
Limited Common Area
The common area of a project assigned to a specific homeowner for the homeowner's exclusive use.
The common area of a project assigned to a specific homeowner for the homeowner's exclusive use.
Liquidity
Cash assets available upon demand.
Cash assets available upon demand.
Listing Price
The price at which the house is listed; the asking price.
The price at which the house is listed; the asking price.
Loan Guaranty Certificate
The document provided by VA establishing the amount of guaranty given a loan.
The document provided by VA establishing the amount of guaranty given a loan.
Loan Origination Fees
Fees paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.
Fees paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.
Loan Submission
The act of submitting a processed loan to an approved loan underwriter for determination of acceptance on behalf of the lender of the borrower and the property.
The act of submitting a processed loan to an approved loan underwriter for determination of acceptance on behalf of the lender of the borrower and the property.
Loan-to-Value Ratio
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. The ratio expressed as a percentage of the loan amount to the sales price or appraised value, whichever is less.
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. The ratio expressed as a percentage of the loan amount to the sales price or appraised value, whichever is less.
Lock-in
Most commonly used in referring to the guarantee issued by a lender for a specific period of time prior to closing a mortgage loan, guaranteeing the terms at which the loan, if approved, will close. A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time. A written agreement from the lender to offer a specified interest rate if the mortgage goes to closing within a set period of time.
Most commonly used in referring to the guarantee issued by a lender for a specific period of time prior to closing a mortgage loan, guaranteeing the terms at which the loan, if approved, will close. A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time. A written agreement from the lender to offer a specified interest rate if the mortgage goes to closing within a set period of time.
Loss Payable Clause
The clause in an insurance policy indicating to whom a claim will be paid other than the insured.
The clause in an insurance policy indicating to whom a claim will be paid other than the insured.
Low-Down-Payment Feature
A feature of some mortgages, usually fixed-rate mortgages, that helps you buy a home with as little as a 3% down payment.
A feature of some mortgages, usually fixed-rate mortgages, that helps you buy a home with as little as a 3% down payment.
Par
A situation where the yield on a loan is based solely on the interest rate with no additional discount or premium.
A situation where the yield on a loan is based solely on the interest rate with no additional discount or premium.
Party Walls
A wall built between two adjoining properties and used by both property owners.
A wall built between two adjoining properties and used by both property owners.
Percolation Test
The test given to soil to determine its water seepage capacity when the use of a septic tank is being considered.
The test given to soil to determine its water seepage capacity when the use of a septic tank is being considered.
Permanent Loan
A long-term mortgage, usually ten years or more. Also called an "end loan."
A long-term mortgage, usually ten years or more. Also called an "end loan."
PITI
The abbreviation for principal, interest, taxes and insurance comprising a monthly payment.
The abbreviation for principal, interest, taxes and insurance comprising a monthly payment.
Plat
A map identifying how a piece of land is subdivided into lots and showing the streets, easements and boundary dimensions of each. Points
A map identifying how a piece of land is subdivided into lots and showing the streets, easements and boundary dimensions of each. Points
Pledged account mortgage (PAM)
Money is placed in a pledged savings account and this fund, plus earned interest, is gradually used to reduce mortgage payments.
Money is placed in a pledged savings account and this fund, plus earned interest, is gradually used to reduce mortgage payments.
Points (loan discount points)
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).
Power of Attorney
A legal document authorizing one person to act on behalf of another.
A legal document authorizing one person to act on behalf of another.
Prepaid Expenses
Money necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.
Money necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.
Prepaid Interest
The interest due on a loan from the date of closing to the first day of the following month.
The interest due on a loan from the date of closing to the first day of the following month.
Prepaid Items
Those fees paid at closing for items required to be paid in advance; including prepaid interest, current taxes, first year insurance premiums and the amounts required to establish impounds for taxes and insurance.
Those fees paid at closing for items required to be paid in advance; including prepaid interest, current taxes, first year insurance premiums and the amounts required to establish impounds for taxes and insurance.
Prepayment
A privilege in a mortgage which permits the borrower to make payments in advance of their due date.
A privilege in a mortgage which permits the borrower to make payments in advance of their due date.
Prepayment Penalty
The penalty required for paying a loan in full prior to the maturity or for paying more than the amount scheduled, now considered illegal in many states on mortgage loans. Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.
The penalty required for paying a loan in full prior to the maturity or for paying more than the amount scheduled, now considered illegal in many states on mortgage loans. Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.
Primary Mortgage Market
Lenders making mortgage loans directly to borrowers such as savings and loan association, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.
Lenders making mortgage loans directly to borrowers such as savings and loan association, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.
Principal
The amount of debt, not counting interest, left on a loan. The actual amount of loan as established by a note
The amount of debt, not counting interest, left on a loan. The actual amount of loan as established by a note
Private Mortgage Insurance (PMI)
The insurance obtained on a conventional loan to protect the lender in the event of default by a borrower. In the event that you do not have a 20 percent down payment, lenders will allow a smaller one - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of 1.0 percent to 5.0 percent of your mortgage amount and may require an additional monthly fee depending on you loan's structure. On a $75,000 house with a 10 percent down payment, this would mean either an initial premium payment of $2,025 to $3,375, or an initial premium of $675 to $1,130 combined with a monthly payment of $25 to $30.
The insurance obtained on a conventional loan to protect the lender in the event of default by a borrower. In the event that you do not have a 20 percent down payment, lenders will allow a smaller one - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of 1.0 percent to 5.0 percent of your mortgage amount and may require an additional monthly fee depending on you loan's structure. On a $75,000 house with a 10 percent down payment, this would mean either an initial premium payment of $2,025 to $3,375, or an initial premium of $675 to $1,130 combined with a monthly payment of $25 to $30.
Processing
The act of gathering information to confirm the date provided on a loan application and obtaining appraisals, credit reports, title commitments and surveys on a mortgage transaction.
The act of gathering information to confirm the date provided on a loan application and obtaining appraisals, credit reports, title commitments and surveys on a mortgage transaction.
PUD
A planned unit development where the property owners own individual lots and share in ownership or maintenance of the common areas which are reserved for the use and enjoyment of the property owners.
A planned unit development where the property owners own individual lots and share in ownership or maintenance of the common areas which are reserved for the use and enjoyment of the property owners.
Quitclaim Deed
A legal instrument used to release a person's right, title and interest in a property to another without providing a guarantee or warranty that title is valid.
A legal instrument used to release a person's right, title and interest in a property to another without providing a guarantee or warranty that title is valid.
Radon
A radioactive gas which seeps up from the ground. It may be found in some homes, and if it is in sufficient concentration, then it can cause health problems. A radon test is often part of the home inspection.
A radioactive gas which seeps up from the ground. It may be found in some homes, and if it is in sufficient concentration, then it can cause health problems. A radon test is often part of the home inspection.
REALTOR
A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.
A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.
Recision
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract (in some cases) once it is signed, if the transaction uses equity in the home as security.
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract (in some cases) once it is signed, if the transaction uses equity in the home as security.
Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Redlining
The illegal practice of refusing to make mortgages or issue insurance policies in specific areas for reasons other than the economic qualifications of the applicant.
The illegal practice of refusing to make mortgages or issue insurance policies in specific areas for reasons other than the economic qualifications of the applicant.
Refinance
Obtaining a new mortgage loan on a property already owned, often to replace existing loans on the property.
Obtaining a new mortgage loan on a property already owned, often to replace existing loans on the property.
Release of Liability
The release given a seller when a property is sold by assumption of any further obligation to pay a note secured by a lien against the property. Unless specifically given, properties sold by assumption do not release original mortgagors of the liability to pay.
The release given a seller when a property is sold by assumption of any further obligation to pay a note secured by a lien against the property. Unless specifically given, properties sold by assumption do not release original mortgagors of the liability to pay.
REO
The abbreviation for Real Estate Owned used to indicate any property owned by a lender usually obtained through foreclosure.
The abbreviation for Real Estate Owned used to indicate any property owned by a lender usually obtained through foreclosure.
RESPA
The Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only. A law requiring lenders provide borrowers a complete estimate of known and anticipated closing costs within three days of the loan application
The Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only. A law requiring lenders provide borrowers a complete estimate of known and anticipated closing costs within three days of the loan application
Reverse Annuity Mortgage (RAM)
A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as collateral.
A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as collateral.
Sale Price
The price at which the house actually sold. By noting the difference between the sale price and the listing price in houses that have recently sold, comparable to the one you're interested in, you can get an idea of how much below the asking price you might be able to offer.
The price at which the house actually sold. By noting the difference between the sale price and the listing price in houses that have recently sold, comparable to the one you're interested in, you can get an idea of how much below the asking price you might be able to offer.
Satisfaction of Mortgage
The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."
The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."
Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first one.
A mortgage made subsequent to another mortgage and subordinate to the first one.
Secondary Financing
A loan obtained in addition to a first mortgage for the purchase of a property, may be provided by the lender or a third party such as the seller.
A loan obtained in addition to a first mortgage for the purchase of a property, may be provided by the lender or a third party such as the seller.
Secondary Mortgage Marker
A network of investors willing to purchase mortgage loans originated by mortgage bankers. The network consists of saving and loans, banks, mortgage bankers and quasi-government agencies such as FNMA or FHLMC.
A network of investors willing to purchase mortgage loans originated by mortgage bankers. The network consists of saving and loans, banks, mortgage bankers and quasi-government agencies such as FNMA or FHLMC.
Secondary Mortgage Market
The market in which primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders.
The market in which primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders.
Security Instrument
The legal document used to secure a lien for a note against the promised collateral. Either a mortgage or deed of trust depending upon what state the collateral is in.
The legal document used to secure a lien for a note against the promised collateral. Either a mortgage or deed of trust depending upon what state the collateral is in.
Security interest
An interest that a lender takes in the borrower's property to assure repayment of a debt.
An interest that a lender takes in the borrower's property to assure repayment of a debt.
Servicing
All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like. The act of collecting monthly payment from borrowers, passing on principal and interest payments to the noteholder, and collecting and paying any taxes and insurance on individual loans.
All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like. The act of collecting monthly payment from borrowers, passing on principal and interest payments to the noteholder, and collecting and paying any taxes and insurance on individual loans.
Settlement
Also known as closing the act of signing all documents and payment of all fees necessary to effect the sale of real estate from one party to another and/or the establishment of a mortgage loan and the disbursement or proceeds of that loan.
Also known as closing the act of signing all documents and payment of all fees necessary to effect the sale of real estate from one party to another and/or the establishment of a mortgage loan and the disbursement or proceeds of that loan.
Settlement Costs
See closing costs.
See closing costs.
Shared Appreciation Mortgage (SAM)
A mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. It may also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
A mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. It may also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
Simple Interest
Interest which is computed only on the principal balance.
Interest which is computed only on the principal balance.
Soft Market
A market where not much is selling, the sales price is likely to be significantly lower than the asking (listing) price. So, the price is 'soft' -- you can push it down, like a squishy sponge.
A market where not much is selling, the sales price is likely to be significantly lower than the asking (listing) price. So, the price is 'soft' -- you can push it down, like a squishy sponge.
Steering
The effort to maneuver home buyers into, or away from, a particular area of town because they won't "fit in." Telling a white couple, "You don't want to live in Mount Pleasant because that's where all the Latinos are" is an example. Or not telling a black family that a house that would otherwise be perfect for them is available in an all-white neighborhood. Both of these are illegal.
The effort to maneuver home buyers into, or away from, a particular area of town because they won't "fit in." Telling a white couple, "You don't want to live in Mount Pleasant because that's where all the Latinos are" is an example. Or not telling a black family that a house that would otherwise be perfect for them is available in an all-white neighborhood. Both of these are illegal.
Subordination
The act of acknowledging through a recorded document that one loan is inferior to another and that the inferior loan may only be collected in the event of foreclosure after the complete payment of the superior loan. Normally required by junior or second mortgages.
The act of acknowledging through a recorded document that one loan is inferior to another and that the inferior loan may only be collected in the event of foreclosure after the complete payment of the superior loan. Normally required by junior or second mortgages.
Subsidy
Funds paid by a party to lower the cost of a property or of a loan, primarily used in reference to funds paid on a buydown loan to lower the initial payments or in reference to subsidized housing where assistance is given a purchaser to lower the amount paid for the property.
Funds paid by a party to lower the cost of a property or of a loan, primarily used in reference to funds paid on a buydown loan to lower the initial payments or in reference to subsidized housing where assistance is given a purchaser to lower the amount paid for the property.
Survey
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.
Sweat Equity
Equity created by a purchaser performing work on a property being purchased. The idea is that you're improving the property through all the sweaty work you're putting into it. The value of ownership given a borrower for work performed on a property to increase the value through improvements.
Equity created by a purchaser performing work on a property being purchased. The idea is that you're improving the property through all the sweaty work you're putting into it. The value of ownership given a borrower for work performed on a property to increase the value through improvements.
Tenants in Common
A type of ownership where two or more have equal rights of possession in the property.
A type of ownership where two or more have equal rights of possession in the property.
Title Commitment
The contract issued by a closing agent giving the terms to be included in a title insurance policy.
The contract issued by a closing agent giving the terms to be included in a title insurance policy.
Title Policy
The document issued by a title insurance agency, insuring the holder against any defects in the title, such as claims to title from previous owners.
The document issued by a title insurance agency, insuring the holder against any defects in the title, such as claims to title from previous owners.
Titles
The evidence of the right to, or ownership in a property.
The evidence of the right to, or ownership in a property.
Townhouses
A type of property joined to a similar property on at least one side, and ownership includes the dwelling and the lot underneath. Normally the type of property in a Planned Unit Development.
A type of property joined to a similar property on at least one side, and ownership includes the dwelling and the lot underneath. Normally the type of property in a Planned Unit Development.
Transfer Tax
The tax charged by some state and local governments for the conveyance of real estate.
The tax charged by some state and local governments for the conveyance of real estate.
Underwriting
The act of reviewing the credit documents and the appraisals and agreeing to bind or not to bind the lender to grant a loan. Direct Endorsement or delegated underwriting involves binding an agency (FHA or VA) through a lender.
The act of reviewing the credit documents and the appraisals and agreeing to bind or not to bind the lender to grant a loan. Direct Endorsement or delegated underwriting involves binding an agency (FHA or VA) through a lender.
Usurv
The act of contracting an interest rate higher than a rate allowed by legal limits.
The act of contracting an interest rate higher than a rate allowed by legal limits.
VA
The Veteran's Administration, established by the government to grant benefits to Veterans returning to civilian life including entitlement for purchase of homes.
The Veteran's Administration, established by the government to grant benefits to Veterans returning to civilian life including entitlement for purchase of homes.
Vendor's Lien
A seller's right to superior lien on a property until the purchase price is paid.
A seller's right to superior lien on a property until the purchase price is paid.
Warehousing
Borrowing of funds by a mortgage banker using a mortgage note as collateral until the note is sold to a permanent investor in the secondary market.
Borrowing of funds by a mortgage banker using a mortgage note as collateral until the note is sold to a permanent investor in the secondary market.
Warranty Deed
The document conveying title from one party to another and guaranteeing that the title is good, as opposed to a quitclaim deed.
The document conveying title from one party to another and guaranteeing that the title is good, as opposed to a quitclaim deed.
Wraparound Mortgage
A means of financing where the existing loan of the seller remains intact and the borrower makes payments to a wraparound noteholder that in turn pays the existing mortgage, the wraparound note being inferior to the existing mortgage.
A means of financing where the existing loan of the seller remains intact and the borrower makes payments to a wraparound noteholder that in turn pays the existing mortgage, the wraparound note being inferior to the existing mortgage.
Yield
The effective amount of income derived from a note comprised of interest rate and financing charges.
The effective amount of income derived from a note comprised of interest rate and financing charges.
Zero Lot Line
A type of real estate in which the dwelling is built on the property line boundary, typically used in patio home developments for space conservation.
A type of real estate in which the dwelling is built on the property line boundary, typically used in patio home developments for space conservation.
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