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A B C D E F G H I J K L M N O P Q R S T U V W X V Y Z

  • Acceptance
    A buyer's or seller's agreement to enter into a contract and be bound by the terms of the offer. Back to Top
  • Additional Principal Payment
    A payment made by a borrower of more than the scheduled principal amount due, in order to reduce the outstanding balance on the loan, to save on interest over the life of the loan and/or pay off the loan early. Back to Top
  • Adjustable Rate Mortgage (ARM)
    stands for Adjustable Rate Mortgage, also referred to as a Variable Rate Mortgage. They both mean the same thing. An ARM is a mortgage with an interest rate that adjusts periodically to reflect changes in market conditions. Your mortgage payments are adjusted up or down (usually on an annual basis) as the interest rate changes. To protect you in a rising interest market, rate increases are limited (usually 2 percentage points annually; 6 percentage points over the life of the loan). Back to Top
  • Amenity
    A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction, although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views, etc. Man-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities. Back to Top
  • Amortization
    The gradual repayment of a home loan by periodic installments. Back to Top
  • Amortization Schedule
    A timetable for payment of a home loan. An amortization schedule shows the amount of each payment applied to interest and principal and the remaining balance after each payment is made. Back to Top
  • Amortization Term (period)
    The amount of time it takes to pay off the loan. The amortization term is expressed as a number of months. For example, for a 30 year fixed rate loan, the amortization term is 360 months. Back to Top
  • Amortize
    To repay a loan with regular payments that cover both principal and interest. Back to Top
  • Annual Percentage Rate (APR)
    stands for Annual Percentage Rate. This refers to the interest rate that reflects the actual cost of a mortgage as a yearly rate. Because APR includes points and other costs associated with the mortgage, it's usually higher than the advertised simple interest rate. The APR more accurately reflects what you'll be paying and allows you to compare different mortgages based on actual costs. Back to Top
  • Application Fee
    A fee usually paid at the time an application is given to a lender for helping to complete and review an application. Some lenders collect fees for a property appraisal and a credit report, instead of an application fee, at the time of application. Back to Top
  • Appraisal
    An estimate of the value of a home, made by a professional appraiser. The maximum amount of the mortgage is usually based on the appraisal. Back to Top
  • Appraised Value
    The dollar figure for a property's estimated fair market value, based on an appraiser's knowledge, experience, and analysis of the property and comparable properties near by. Back to Top
  • Appraiser
    A person qualified by education, training, and experience to estimate the value of real property. Back to Top
  • Appreciation
    An increase in the value of a property due to changes in market conditions or other causes. Inflation, increased demand, home improvement, and sweat equity are all causes of appreciation. The opposite of depreciation. Back to Top
  • Assessed Value
    The value used to determine property taxes, based on a public tax assessor's opinion. Contrast with appraised value. Back to Top
  • Assessment
    The amount of tax due to local government. May also refer to the amount due to local government or to common owners of a property (e.g., a homeowner's association) for a special payment to cover expenses for improvements or maintenance, such as new sewers or roads. Back to Top
  • Assessment Rolls
    A public record of the assessed value of property in the taxing jurisdiction. Back to Top
  • Assessor
    A public official who establishes the value of a property for taxation purposes. Back to Top
  • Asset
    Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on). Back to Top
  • Assumable Loan
    A home loan that allows a new purchaser of the home to take over ("assume") the loan obligations of the seller when a home is sold. Back to Top
  • Assumption Clause
    A provision in an assumable loan that allows a buyer to assume responsibility for the home loan from the seller. The loan does not need to be paid in full by the original borrower (seller) upon sale or transfer of the property. Back to Top
  • Assumption Fee
    The fee paid to a lender (usually by the buyer) for the lender's agreement to start collecting payment from the buyer instead of the original borrower (seller). Back to Top
  • Balance Sheet
    A financial statement that shows an individual's assets, liabilities, and net worth as of a specific date.

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  • Balloon Loan
    A loan that has level monthly payments that will amortize it over a stated term (e.g., 30 years) but that requires a lump sum payment of the entire principal balance at the end of a shorter term (e.g., 10 years). Back to Top
  • Balloon Payment
    The final lump sum payment that is made at the end of the shorter term for a balloon loan and pays the loan in full. Back to Top
  • Bankrupt
    A person, firm, or corporation that is financially unable to pay debts when due. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee. Back to Top
  • Bankruptcy
    A proceeding in a federal court in which a debtor who is financially unable to pay debts when due seeks relief to work out a payment schedule or erase debts. Back to Top
  • Bill Of Sale
    A written document that transfers title to personal property from seller to buyer. Back to Top
  • Biweekly Payment Loan
    A loan that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30 year fixed rate loan, and they are usually drafted from the borrower's bank account. The result for the borrower is faster amortization leading to substantial interest savings from faster principal
    reduction.     Back to Top
  • Bond
    An interest-bearing certificate of debt with a maturity date. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

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  • Breach
    A violation of terms of any legal obligation. Back to Top
  • Break Even Point
    Point at which total income equals total expenses. Back to Top
  • Bridge Loan
    A type of mortgage financing between the termination of one loan and the start of another loan. For example, a mortgage secured by the borrower's present home (which is usually up for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as a "swing loan." Back to Top
  • Broker
    A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction or negotiating the terms of a home loan. See mortgage broker. Back to Top
  • Budget
    A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.

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  • Building Code
    Local regulations that specify minimum structural requirements for design of, construction of, and materials used in a home or office building. Building codes are based on safety and health standards. Back to Top
  • Buydown Account
    An account in which funds are held so that they can be applied as part of the monthly loan payment as each payment comes due during the period that an interest rate buydown plan is in effect. For example, if a seller agrees to help reduce a buyer's monthly payment during the first year of a loan, the seller may put money in a buydown account which is then paid to the lender each month to reduce the buyer's monthly payment. This is more commonly done through a buydown paid directly to the lender at closing. Back to Top
  • Buydown
    A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan. Back to Top
  • Call Option
    A provision in a loan that gives the lender the right to accelerate the debt, and require for full payment of the loan immediately, at the end of a specified period or for specified reason. Back to Top
  • Cap
    A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap. Back to Top
  • Capital
    (1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities. Back to Top
  • Capital Expenditure
    The cost of an improvement made to extend the useful life of a property or to add to its value, such as adding a room. The cost of repairing a property is not a capital expenditure. Capital expenditures are appreciated over their useful life; repairs are subtracted from income for the current year. Back to Top
  • Capital Improvement
    Any structure or component erected as a permanent improvement to real property that adds to its value and useful life. See Capital Expenditure. Back to Top
  • Cash Available For Closing
    Borrower funds available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes or that the down payment come from certain sources, borrower's cash available for closing does not include cash reserves or money from other sources. Back to Top
  • Cash Flow Basis
    This calculation shows when your monthly payment savings exceed your estimated closing costs and discount points. It does not consider the tax impact or differences in principal balance reduction between your current loan and the refinance suggestions. You can use the Amortization Schedule Calculator to compare principal reduction. Back to Top
  • Cash For Transaction
    Enter the amount your want to use toward closing costs (discount points and fees) and/or to reduce your loan balance. In situations where your loan balance is above the conforming amount, reducing the principal may allow you to get a lower rate. Enter zero if you want a no-point loan and/or to finance the closing fees. Back to Top
  • Cash-Out Refinance
    A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity. Back to Top
  • Ceiling
    The maximum interest rate that can accrue on a variable rate loan or adjustable rate mortgage (ARM). See lifetime rate cap. Back to Top
  • Certificate Of Eligibility
    A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) loan. Back to Top
  • Certificate Of Reasonable Value (CRV)
    A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA loan, based on an approved appraisal. Back to Top
  • Certificate Of Title
    A statement provided by an abstract company, title company, or attorney stating who holds title to real estate based on the public record. Back to Top
  • Chain Of Title
    The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent. Back to Top
  • Clear Title
    A title that is marketable and is free of liens or disputed legal questions as to ownership of the property. Back to Top
  • Closing
    The conclusion or consummation of a transaction. In real estate, closing includes the delivery of a deed, the signing of notes and security instruments, and the disbursement of funds necessary to the sale or loan transaction. Also referred to as settlement. Back to Top
  • Closing Cost Item
    A fee or amount that a home buyer must pay at closing for a particular service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 settlement statement. Back to Top
  • Closing Costs
    Various expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include items such as broker's commissions, discount points, origination fees, attorney's fees, taxes, title insurance premiums, escrow agent fees, and charges for obtaining appraisals, inspections and surveys. Closing costs will vary according to the area of the country. Lenders or real estate professionals often provide estimates of closing costs to prospective home buyers even before the HUD-1 settlement statement is delivered. Back to Top
  • Closing Statement
    An accounting of funds given to both buyer and seller before real estate is sold. See HUD-1 settlement statement. Back to Top
  • Cloud On Title
    An outstanding claim or lien, revealed by a title search, that adversely affects the owner's title to real estate. Usually, clouds on title cannot be removed except by a quit claim deed, release, or court action. Back to Top
  • Coinsurance
    A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss. Back to Top
  • Coinsurance Clause
    A provision in a hazard insurance policy stating the minimum amount of coverage that must be maintained - as a percentage of the total value of the property - in order for the insured to collect the full amount of a loss. Back to Top
  • Combined Loan To Value (CLTV)
    The ratio of the total amount borrowed on all mortgages against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage and a $10,000 2nd mortgage on a home with an appraised value of $100,000, the CLTV is 90% ($80,000+$10,000 = $90,000 / $100,000 = 90%). Back to Top
  • Commission
    The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan (such as 3%, 5%, or 6%). Back to Top
  • Commitment Letter
    A formal notification from a lender stating that the borrower's loan has been conditionally approved and specifying the terms under which lender agrees make the loan. Also known as a "loan commitment." Back to Top
  • Common Area Assessments
    Payments required of individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project. Back to Top
  • Common Areas
    Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc. Back to Top
  • Community Property
    In some Western and Southwestern states, the law specifies that property acquired during a marriage is presumed to be owned jointly by the husband and wife unless acquired as separate property of one spouse or the other. Back to Top
  • Community Seconds
    An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate at all). Part or all of the second mortgage debt may be forgiven depending on how long the buyer remains in the home. Back to Top
  • Comparables (comps)
    An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property. Back to Top
  • Compound Interest
    Interest paid on the principal balance and on the accrued and unpaid interest. Back to Top
  • Condemnation
    (1) Declaration that a building is unfit for use or is dangerous and must be destroyed; (2) taking of private property for a public use (such as a park, street or school) through an exercise of the right of eminent domain. Back to Top
  • Condominium
    A real estate project in which each unit owner has title to a unit in a multi-unit building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. Back to Top
  • Condominium Conversion
    Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

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  • Condominium Hotel (condotel)
    A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. Back to Top
  • Conforming Loan
    A home loan with a maximum loan amount of $252,700 that is eligible for purchase by FNMA and FHLMC. Back to Top
  • Construction loan
    A short-term, interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses. Back to Top
  • Consumer Reporting Agency (or bureau)
    An organization that prepares reports that lenders use to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from creditors such as mortgage lenders, credit card companies, department stores, etc. Back to Top
  • Contingency
    A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. Back to Top
  • Contract
    An oral or written agreement to do or not do something. Back to Top
  • Conventional Loan
    A home loan that is not insured or guaranteed by the federal government. Contrast with government loan. Can be for conforming or non-conforming loan amounts. Back to Top
  • Convertibility Clause
    A provision in some adjustable rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed rate loan at specified times during the life of the loan. Back to Top
  • Convertible ARM
    An adjustable rate mortgage (ARM) that can be converted to a fixed rate loan under specified conditions. Back to Top
  • Cooperative (co-op)
    A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. Back to Top
  • Corporate Relocation
    Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity. Back to Top
  • Co-Signer
    A person who signs a promissory note along with the borrower. A co-maker's signature helps to assure that the loan will be repaid. The borrower and the co-maker are jointly responsible
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  • Cost Of Funds Index (COFI)
    An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage (ARM). Back to Top
  • Covenant
    A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure of the property. Back to Top
  • Credit
    An agreement in which a borrower receives money or something of value in exchange for a promise to repay the lender on specified terms at a later time. Back to Top
  • Credit History
    An evaluation of an individual's capacity and history of debt repayment. A credit history helps a lender to determine whether a potential borrower is likely to repay a loan in a timely manner. Back to Top
  • Credit Life Insurance
    A type of insurance that pays off a loan if one of the borrowers dies while the policy is in force. Back to Top
  • Credit Limit
    The maximum amount that can be borrowed under the home equity line of credit. Back to Top
  • Creditor
    A person to whom money is owed. Back to Top
  • Credit Rating
    An expression of creditworthiness based upon present financial condition and past credit history. Back to Top
  • Credit Report
    A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual. Back to Top
  • Credit Repository (credit bureau)
    An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Back to Top
  • Credit Scoring
    Credit scores are numerical values that rank individuals according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, and other factors. According to Fannie Mae--one of the major investors in home loans, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan. Back to Top
  • Cumulative Interest
    Total interest accrued. Back to Top
  • Current PITI
    This is an abbreviation for a monthly payment that includes principal, interest, taxes and insurance. In mortgage lending it is common for the monthly mortgage payment to include not only the principal and interest payment on the loan, but an escrow amount for real estate taxes and hazard insurance as well. Back to Top
  • Curtailment
    A payment that reduces the principal balance of a loan. Back to Top
  • Debt
    An amount owed to another. See installment loan and revolving liability. Back to Top
  • Deed
    The legal document conveying title to a property. Back to Top
  • Deed-In-Lieu
    A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance." Back to Top
  • Deed Of Trust
    The document used in some states instead of a mortgage; title is vested in a trustee to secure repayment of the loan. Back to Top
  • Default
    Failure to make loan payments on a timely basis or to comply with other requirements of a mortgage. Back to Top
  • Delinquency
    Failure to make mortgage payments when due. Back to Top
  • Deposit
    A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit. Back to Top
  • Depreciation
    A decline in the value of property because of physical or economic changes such as wear and tear; the opposite of appreciation. Back to Top
  • Discount Points
    Amounts paid to the lender at origination to lower the rate on the face of the note. See point. Back to Top
  • Document Preparation
    This fee covers the expenses associated with this process of preparing some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement. Back to Top
  • Down Payment
    The part of the purchase price of a property that the buyer pays in cash and does not finance with a home loan. Back to Top
  • Draw Period
    The time period in which the borrower may access and use a line of credit. Back to Top
  • Due-On-Sale Provision
    A provision in a mortgage home loan that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan. Back to Top
  • Due-On-Transfer Provision
    This terminology is usually used for second mortgages. See due-on-sale provision. Back to Top
  • Earnest Money Deposit (Earnest Money)
    A deposit made by the potential home buyer to show that he or she is serious about buying the house. Back to Top
  • Easement
    A right of way giving to persons other than the owner to access to or over a property.

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  • Effective Age
    An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age. Back to Top
  • Eminent Domain
    The right of a government to take private property for public use upon payment of fair compensation to the owner. Eminent domain is the basis for condemnation proceedings. Back to Top
  • Employer-Assisted Housing
    A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.

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  • Encroachment
    An improvement that physically intrudes or trespasses on another's property. Back to Top
  • Encumbrance
    Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, deeds, or restrictions. Back to Top
  • Endorser
    A person who signs a check or promissory note over to another party. Contrast with co-signer. Back to Top
  • 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. Back to Top
  • Equity
    The value of your home after the outstanding balance of any loans are subtracted. If you make a 5 percent down payment, you have 5 percent of the price of your home in equity. As you make payments toward principal over time, the equity in your home grows. Back to Top
  • Escrow
    Can serve two purposes. 1)As a special third-party account set up by the lender in which a portion of your monthly payment funds are held to pay for taxes and insurance and other items. 2)Escrow is most commonly known as a third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement of a real estate purchase. Back to Top
  • Escrow (or Impound) Account
    The account in which a loan servicer holds the borrower's escrow payments prior to paying property expenses, such as property taxes or homeowners insurance. Back to Top
  • Escrow Analysis
    The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due. Back to Top
  • Escrow Collections
    Funds collected by the loan servicer and set aside in an escrow account to pay borrower expenses such as property taxes, mortgage insurance, and hazard homeowners insurance. Back to Top
  • Escrow Disbursements
    The use of escrow funds to pay real estate taxes, homeowners insurance, mortgage insurance, and other property expenses as they become due. Back to Top
  • Escrow Payment
    The portion of a borrower's monthly payment that is held by the loan servicer to pay for taxes, hazard homeowners insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states. Back to Top
  • Estate
    The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death. Back to Top
  • Eviction
    A legal proceeding by a landlord to recover possession of real property from the tenant. Back to Top
  • Examination Of Title
    The report on the title of a property from the public records or an abstract of the title. Back to Top
  • Exclusive Listing
    A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner's right to sell the property alone without the payment of a commission. Back to Top
  • Fair Credit Reporting Act
    A consumer protection law that regulates the disclosure and use of consumer credit information, establishes rules for credit reporting to consumer credit reporting agencies, and establishes procedures for a consumer to view his or her credit report and correct mistakes on it. Back to Top
  • Fair Market Value
    The price that a buyer, willing but not compelled to buy, and a seller, willing but not compelled to sell, would agree on. Back to Top
  • Fannie Mae (Federal National Mortgage Association FNMA)
    A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. It adds liquidity to the mortgage market by investing in home loans through the country. Back to Top
  • Federal Housing Administration (FHA)
    An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and loan underwriting but does not lend money or plan or construct housing. Back to Top
  • Fee Simple
    An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property. Back to Top
  • FHA Coinsured Home Loan
    A loan (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the borrower's default.

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  • FHA Home Loan
    A mortgage home loan that is insured by the Federal Housing Administration (FHA). Also known as a government loan. Back to Top
  • Filing Status
    Please enter here whether you file your income taxes as single, married, separated or head-of household. Back to Top
  • Firm Commitment
    A lender's agreement to make a loan to a specific borrower on a specific property. Back to Top
  • First Mortgage (Home Loan)
    A home loan that is the primary lien against a property. Back to Top
  • Fixed Installment
    The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest. Back to Top
  • Fixed Period ARM
    Provides a fixed rate for 3, 5, 7 or 10 years then adjusts annually based on a financial index for the remaining loan term. Back to Top
  • Fixed Rate Mortgage
    A mortgage with an interest rate that stays the same (fixed) over the life of the mortgage. Monthly payments for a fixed rate mortgage are very stable and will not change. Back to Top
  • Fixture
    Personal property that becomes real property when attached in a permanent manner to real estate (such as a lighting fixture or an in-ground spa). Back to Top
  • Flood Check
    A survey conducted to determine whether a property is in a flood zone. Back to Top
  • Flood Insurance
    Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas. Back to Top
  • Foreclosure
    The legal process by which a borrower's interest in mortgaged property is taken because of a default on the loan. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Back to Top
  • Forfeiture
    The loss of money, property, rights, or privileges due to a breach of legal obligation. Back to Top
  • 401(k)/403(b)
    An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not-for-profit organizations. Back to Top
  • 401(k)/403(b) Loan
    Some administrators of 401(k)/403(b) plans allow for loans against the monies accumulated in these plans - monies must be repaid to avoid serious penalty charges. Back to Top
  • Freddie Mac (Federal Home Loan Mortgage Corporation)
    A federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans. Back to Top
  • Good Faith Estimate
    A document provided when you apply for a loan. It provides estimates of all costs associated with obtaining and closing a mortgage loan. Back to Top
  • Government Loan
    A loan that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Contrast with conventional loan. Back to Top
  • Government National Mortgage Association (GNMA or Ginnie Mae)
    A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA assumed responsibility for the special assistance loan programs formerly administered by Fannie Mae. Back to Top
  • Grantee
    The person to whom an interest in real property is conveyed (e.g. the buyer). Back to Top
  • Grantor
    The person who conveys an interest in real property (e.g. the seller). Back to Top
  • Gross Monthly Income
    Normal annual income including overtime that is regular or guaranteed. The before taxes income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable. Back to Top
  • Ground Rent
    The amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate. Back to Top
  • Group Home
    A single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature. Back to Top
  • Homeowner's Insurance (Hazard Insurance)
    Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards. The policy typically combines personal liability insurance and property hazard insurance coverage for a dwelling and its contents. See also homeowner's insurance. Back to Top
  • Home Equity Line Of Credit (HELOC)
    A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property. Back to Top
  • Home Inspection
    A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal. Back to Top
  • Homeowners' Association
    A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements. See also master association. Back to Top
  • Homeowner's Insurance
    Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards. The policy typically combines personal liability insurance and property hazard insurance coverage for a dwelling and its contents. Back to Top
  • Homeowner's Warranty (HOW)
    A type of insurance that covers repairs to specified parts of a house for a specific period of time. It may be provided by the builder or property seller as a condition of the sale but homeowners can also purchase it. Back to Top
  • Housing Expense Ratio
    The percentage of gross monthly income that goes toward paying housing expenses. Back to Top
  • HUD Median Income
    Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD). Back to Top
  • HUD-1 Settlement Statement
    A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet." Back to Top
  • Income Property
    Real estate developed or improved to produce income. Back to Top
  • Index
    A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. Some lenders provide caps that limit how much the interest rate or loan payments may increase or decrease. Back to Top
  • In-File Credit Report
    An objective account, normally computer-generated, of credit and other financial information obtained from a credit reporting agencies. Back to Top
  • Inflation
    An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less. Back to Top
  • Initial Draw Amount
    The amount of the home equity line of credit that the borrower is requesting at closing (up to, but never exceeding, the credit line amount). Back to Top
  • Initial Interest Rate
    The starting interest rate for an adjustable-rate mortgage (ARM) loan or variable-rate home equity line of credit. At the end of the effective period for the initial rate, the interest rate adjusts periodically during the life of the loan based on changes in a specified financial index. Sometimes known as "start rate," "intro rate" or "teaser rate." Back to Top
  • Introductory Rate
    The starting rate for a home equity loan or line of credit, usually a discounted rate, for a short period of time. See initial interest rate. Back to Top
  • Installment Loan
    Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan. Back to Top
  • Insurable Title
    A property title that a title insurance company agrees to insure against defects and disputes. Back to Top
  • Insurance
    A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium. Back to Top
  • Insurance Binder
    A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date. Back to Top
  • Insured Mortgage
    A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount. Back to Top
  • Interest
    The amount the lender charges to lend you money. Back to Top
  • Interest Accrual Rate
    The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments. Back to Top
  • Interest Payment
    The portion of a monthly payment that goes to interest based on the amortization schedule. Back to Top
  • Interest Rate
    The percentage rate of return charged for use of a sum of money. This percentage rate is specified in the mortgage note. See note rate. Back to Top
  • Interest Rate Buydown Plan
    A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan. Back to Top
  • Investment Property
    A property that is not occupied by the owner and is generally rented to a tenant to produce income. Back to Top
  • Joint Tenancy
    A form of co-ownership that gives each tenant equal undivided interest and rights in the property, including the right of survivorship. Contrast with tenancy in common, tenancy by the entirety. Back to Top
  • Judgment
    A decree by a court of law that one person, a debtor, is indebted to another, a creditor, in a specified amount. The court may place a lien against the debtor's real property as collateral for payment of the judgment to the creditor. Back to Top
  • Judgment Lien
    A lien on the property of a debtor resulting from a judgment. Back to Top
  • Judicial Foreclosure
    A type of foreclosure proceeding used in some states that is handled as a civil lawsuit where the court confirms the sales price for the property and the distribution of the sale proceeds. Back to Top
  • Jumbo Loan
    Any loan amount in excess of $252,700. Also called a nonconforming loan. Back to Top
  • Late Charge
    The penalty a borrower must pay when a payment is made a stated number of days (usually 10-15) after the due date. Back to Top
  • Lease
    A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid. Back to Top
  • Leasehold Estate
    A tenant's interest in or right to hold possession of a property. Back to Top
  • Lender's Fees
    Fees paid to the lender to cover costs associated with processing, underwriting and closing of the loan. Back to Top
  • Lending Guidelines
    Every loan program has different guidelines. Guidelines are used to meet Federal, State and Local laws and enforce minimum requirements by the lender. Guidelines ensure that prospective borrowers won't purchase a home that they won't be able to afford. Back to Top
  • Liabilities
    A person's debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims. Back to Top
  • Liability Insurance
    Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. See also homeowners insurance. Back to Top
  • Lien
    A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money to purchase or refinance a home loan or and with obtain a home equity loan. Back to Top
  • Lifetime Rate Cap
    For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap. Back to Top
  • Line/Loan Amount
    The entire HELOC or Fixed Rate Second mortgage loan amount. Back to Top
  • Line Of Credit
    An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit. Back to Top
  • Liquid Asset
    A cash asset or an asset that is easily converted into cash. Back to Top
  • Loan Amount
    The amount of money you want to borrow to purchase or refinance a home. Also called the principal and is generally repaid over time with interest. Back to Top
  • Loan Commitment
    A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter. Back to Top
  • Loan Origination
    The process by which a mortgage lender makes a home loan and records a mortgage against the borrower's real property as security for repayment of the loan. Back to Top
  • Loan Program
    Typically a lender will have several types of loan programs available. They are described in accordance with the major features of the loan program. For example, a loan described as a "Fixed 30 Year" would mean that the interest rate and payment remain fixed over the thirty year life of the loan. A program described as "Fixed/ARM 5/1" means that the interest rate and payment remain fixed for the first five years, and then it is subject to adjustments every year thereafter. Back to Top
  • Loan-To-Value Ratio
    The ratio of the total amount borrowed on a mortgage against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%). Back to Top
  • Lock-In
    A written agreement in which the lender guarantees a specified loan program interest rate and points if a mortgage goes to closing within a set period of time. Back to Top
  • Lock-In Period
    The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in. Back to Top
  • Margin
    For an adjustable-rate mortgage (ARM) or home equity line of credit, the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change. The margin is static and will not change during the life of the loan. Back to Top
  • Master Association
    A homeowners' association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a "second-level" association that handles matters affecting the entire development, while the "first-level" associations handle matters affecting their particular portions of the project. Back to Top
  • Maturity
    The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable. At the maturity of a 30-year loan the principal balance will be paid in full. Back to Top
  • Maximum Financing
    The maximum amount a lender will lend on a specific loan program. Back to Top
  • Maximum Rate
    The maximum interest rate that can accrue on a variable rate loan Back to Top
  • Merged Credit Report
    A credit report that contains information from more than one credit reporting agency. When the report is created, the information is compared for inconsistencies and duplicate entries. Any duplicates are combined to provide a summary of a your credit. Back to Top
  • Minimum Payment
    The minimum amount that must be paid monthly on an account. On the HELOC product, the minimum payment is interest only during the draw period. On the Fixed Rate Second products, the minimum payment is principal and interest. Back to Top
  • Modification
    The act of changing any of the terms of the mortgage. Back to Top
  • Money Market Account
    A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account. Back to Top
  • Money Market Fund
    A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury bills. Back to Top
  • Monthly Debt
    A borrower's monthly expenses including credit cards, installment loans, student loan payments, alimony and child support and housing payment expense. Back to Top
  • Monthly Mortgage Insurance (MI) Payment
    Portion of monthly payment that covers the cost of Private Mortgage Insurance. Back to Top
  • Monthly Principal & Interest (P&I) Payment
    Portion of monthly payment that covers the principal and interest due on the loan. Back to Top
  • Monthly Taxes & Insurance (T&I) Payment
    Portion of monthly payment that funds the escrow or impound account for taxes and insurance. Back to Top
  • Monthly Payment (P&I)
    This is the monthly mortgage payment on a home loan, this includes principal and interest, but excludes any amounts that are applied to taxes and insurance. Back to Top
  • Mortgage
    A legal document that pledges a property to the lender as security for payment of a debt. Back to Top
  • Mortgage Banker
    A company that originates, sells and services mortgages exclusively for resale in the secondary mortgage market. Back to Top
  • Mortgage Broker
    An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. Back to Top
  • Mortgagee
    The lender in a mortgage agreement. Back to Top
  • Mortgage Insurance
    A contract that insures the lender against loss caused by a borrower's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan. See private mortgage insurance (PMI). Back to Top
  • Mortgage Insurance Premium (MIP)
    The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company. Back to Top
  • Mortgage Life Insurance
    A type of term life insurance sometimes bought by borrowers. The amount of coverage decreases as the loan's principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. See credit life insurance. Back to Top
  • Mortgagor
    The borrower in a mortgage agreement. Back to Top
  • Multi-Dwelling Units
    Properties that provide separate housing units for more than one family, although they secure only a single mortgage. Typically a 2-4 unit property. Back to Top
  • Negative Amortization
    An increase in the outstanding balance of a mortgage that occurs when the monthly payment is not large enough to cover the interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization. Back to Top
  • Net Cash Flow
    The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments. Back to Top
  • No Closing Cost Loan
    A loan in which the fees the borrower(s) are not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs. Back to Top
  • Net Worth
    The value of all of a person's assets, including cash, minus all liabilities. Back to Top
  • Non-Conforming Loan
    Any loan amount in excess of $252,700. Also called a nonconforming loan. Back to Top
  • Non-Liquid Asset
    An asset that cannot easily be converted into cash. Back to Top
  • "No Out Of Pocket Cost" Loan
    A loan in which the fees the borrower(s) are not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs. Back to Top
  • Notary
    An official authorized by law to attest and certify certain documents by his or her hand and official seal. Back to Top
  • Note
    A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time. Back to Top
  • Note Rate
    The interest rate stated on a mortgage note. Back to Top
  • Notice Of Default
    A formal written notice to a borrower that a default has occurred and that legal action may be taken. Back to Top
  • Original Principal Balance
    The total amount of principal owed on a mortgage before any payments are made. Back to Top
  • Origination Fee
    A fee paid to a lender for processing a loan application, making a home loan, and recording a mortgage against the borrower's real property as security for repayment of the loan. The origination fee is stated in the form of points. One point is 1% of the mortgage amount (e.g., 1,000 on a $100,000 loan). Back to Top
  • Owner Financing
    A property purchase transaction in which the property seller provides all or part of the financing and takes back a security instrument. Back to Top
  • Partial Payment
    A payment that is not sufficient to cover the scheduled monthly principal and interest payment on a mortgage loan. Back to Top
  • Payment (P&I)
    Your monthly mortgage payment, including principal and interest, but excluding Tax and insurance payments. Back to Top
  • Payment Change Date
    The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the adjustment date and the borrower is notified 30 days prior as to the new rate. Back to Top
  • Payoff
    To pay the outstanding balance of a loan in full. Back to Top
  • Periodic Payment Cap
    A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. Back to Top
  • Periodic Rate Cap
    A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. Back to Top
  • Personal Property
    Any property that is not real property or is not permanently fixed to land. Cash, furniture, and cars are all examples of personal property. Back to Top
  • Piggyback
    A combination of two loans. Example: A loan is made for 90% of the home price. 80% of the purchase price is supplied by a 1st mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st. Back to Top
  • PITI
    An abbreviation for the parts of a typical monthly mortgage payment. PITI stands for principal-Interest-Taxes-Insurance. See principal, interest, taxes, and insurance. Back to Top
  • PITI Reserves
    A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months. Back to Top
  • PMI
    Stands for Private Mortgage Insurance. PMI is an insurance policy the borrower buys to protect the lender from non-payment of the loan. PMI policies are usually required if you make a down payment that is below 20% of the sales price of the home. Back to Top
  • Points
    Points are prepaid interest on your mortgage. A one-time fee charged by the lender at the time of closing for originating a loan. Each point is 1% of the loan amount - that is, 2 points on a $100,000 mortgage would be $2,000. Back to Top
  • Power Of Attorney
    A legal document authorizing one person to act on another's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time. Back to Top
  • Pre-Approval
    A lender's conditional agreement to lend a specific amount on specific terms to a homebuyer. (subject to satisfactory appraisal and no change in financial condition). You can shop with assurance, because you'll know up-front how large a loan you could qualify for.

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  • Preforeclosure Sale
    A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property, typically for less than the amount that is owed to the lender. Back to Top
  • Pre-Paid Items (Prepaids)
    Items required by lender to be paid at closing prior to the period they cover such as prorated property taxes, homeowners insurance and pre-paid interest. Back to Top
  • Pre-Paid Interest
    Mortgage interest that is paid in advance of when it is due. Back to Top
  • Prepayment
    Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized. Back to Top
  • Prepayment Penalty
    A fee that may be charged to a borrower who pays off a loan before it is due. Generally, a prepayment penalty is added to a loan in exchange for a discounted rate. Back to Top
  • Pre-Qualification
    A preliminary analysis of a borrower's ability to afford the purchase of a home. An affordability analysis takes into consideration factors such as income, liabilities, and available funds, along with the type of home loan, the likely taxes and insurance for the home, and the estimated closing costs. Back to Top
  • Primary Residence
    The place someone lives most of the time. Back to Top
  • Prime Rate
    The interest rate that banks charge on short-term loans to its most creditworthy customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates. Back to Top
  • Principal
    The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage. Back to Top
  • Principal Balance
    The outstanding balance on a mortgage. The principal balance does not include interest or any other charges. See remaining balance. Back to Top
  • Principal, Interest, Taxes, and Insurance (PITI)
    Four potential components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that may be paid into an escrow account each month for property taxes and mortgage and hazard insurance. Back to Top
  • Principal Payment
    Portion of your monthly payment that reduces the remaining balance of a home loan. Back to Top
  • Private Mortgage Insurance (PMI)
    Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 %. Back to Top
  • Processing
    The preparation and documentation of a mortgage loan application for underwriting. Back to Top
  • Promissory Note
    A written promise to repay a specified amount over a specified period of time. Back to Top
  • Property Value
    LTV or Loan to Value Ratio refers to the relationship between the unpaid principal balance of the mortgage and the property's appraised value (or sales price if it is lower). Back to Top
  • Public Auction
    A meeting in an announced public location to sell property to repay a mortgage that is in default. Back to Top
  • PUD (Planned Unit Development)
    A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners. Back to Top
  • Purchase Agreement
    A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. Back to Top
  • Purchase Money Transaction
    A loan used in part as payment for a purchase. A loan that is used to buy a home is called a purchase money mortgage. Back to Top
  • Purchase Price
    The total amount paid for a home. Back to Top
  • Qualifying Ratios
    Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio. Back to Top
  • Quit Claim Deed
    A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made. Back to Top
  • Rate
    This is the annual interest rate applied to the outstanding balance of the loans. Back to Top
  • Rate Reduction Option
    A fixed-rate mortgage that includes a provision that gives the borrower an option to reduce the interest rate (without refinancing) at a later date. It is similar to a prearranged refinancing agreement, except that it does not require re-qualifying. Back to Top
  • Rate Lock
    A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time. Back to Top
  • Real Estate Agent
    A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction. Back to Top
  • Real Estate Settlement Procedures Act (RESPA)
    A consumer protection law that, among other things, requires advance disclosure of settlement costs to home buyers and sellers, prohibits certain types of referral and other fees, sets rules for escrow accounts, and requires notice to borrowers when servicing of a home loan is transferred. Back to Top
  • Real Property
    Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Back to Top
  • REALTOR®
    A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS®. Back to Top
  • Recording
    Filing a document in the public records, thereby giving constructive notice to the world of the existence of the document and its contents. Back to Top
  • Reduced Documentation
    A method used to determine income when qualifying a borrower(s) for a loan. Borrower(s) provide their income, however no verification documentation is typically required. Back to Top
  • Rescission
    The act of cancellation or annulment of a transaction or contract by the operation of a law. Borrowers usually have the option to cancel certain credit transactions, including a refinance or home equity transaction, within three business days after consummation (when the consumer becomes contractually obligated by, for example, signing the loan documents). Back to Top
  • Recorder
    The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk." Back to Top
  • Recording
    The noting in a book of public record of the terms of a legal document affecting title to real property, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage. Back to Top
  • Refinance Transaction
    The process of paying off one loan with the proceeds from a new loan, typically using the same property as security for the new loan. Back to Top
  • Rehabilitation Mortgage
    A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property. Back to Top
  • Remaining Balance
    The amount of principal that has not yet been repaid. Back to Top
  • Remaining Term
    The original amortization term minus the number of payments that have been applied. Back to Top
  • Repayment Plan
    An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are often called "relief provisions." Back to Top
  • Revolving Liability
    A credit arrangement, such as a credit card or HELOC, that allows a customer to borrow against a predetermined line of credit when purchasing goods and services. The borrower makes payments on the amount that is actually borrowed plus any interest due. Back to Top
  • Request For Notice of Default
    A recorded document that obligates the holder of the first mortgage lien to notify subordinate lien holders in the event of default by the borrower. Back to Top
  • Right Of First Refusal
    A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others. Back to Top
  • Right Of Ingress or Egress
    The right to enter or leave designated premises. Back to Top
  • Right Of Survivorship
    In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant. Back to Top
  • Rural Housing Service (RHS)
    An agency within the Department of Agriculture. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury. Back to Top
  • Sale-Lease Back
    A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller. Back to Top
  • Second Home
    A property occupied part-time by a person in addition to his or her primary residence. Back to Top
  • Second Mortgage
    A mortgage that has a lien position subordinate to the first mortgage. Back to Top
  • Secondary Mortgage Market
    An informal market where lenders and investors buy and sell existing mortgages. Government-sponsored entities and private investors buy mortgages from lenders who use the proceeds to make additional loans. Back to Top
  • Secured Loan
    A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt. Back to Top
  • Security
    The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt. Back to Top
  • Security Interest
    An interest a lender takes in the borrower's property to assure repayment of a debt. If the borrower defaults, the lender can sell the collateral to satisfy the debt. Back to Top
  • Seller Take-Back
    An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing. Back to Top
  • Servicer
    An organization that collects principal and interest payments from borrowers and manages borrowers' tax and insurance escrow accounts. A mortgage banker is often paid a fee to service mortgages that have been purchased by an investor in the secondary mortgage market. Back to Top
  • Servicing
    The collection of principal and interest payments from borrowers and management of borrowers' tax and insurance escrow accounts. Back to Top
  • Single Family Residence
    A residential structure designed to include one dwelling. Back to Top
  • Special Deposit Account
    An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed. Back to Top
  • Stand Alone
    A Home Equity loan originated without obtaining a Countrywide first mortgage at the same time. Back to Top
  • Start Date
    The date you want to use as the start date for the amortization, usually the date you closed on your loan or today's date. Back to Top
  • Start Month
    The date you will begin adding an extra dollar amount to your regular monthly payments. Enter the payment number from 1 to 360 (e.g., if you will start paying extra principal at the start of year 5 of a 30 year loan, enter "49". Back to Top
  • Subdivision
    A housing development that is created by dividing a tract of land into individual lots for sale or lease. Back to Top
  • Sub-Escrow
    Are fees charged by the escrow company for allowing the borrower to be able to sign all the loan documents in the Escrow office instead of having to go to the lenders office. Back to Top
  • Subordinate Financing
    Any mortgage or other lien that has a priority that is lower than that of the first mortgage. The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid. Back to Top
  • Subprime
    Subprime Lending is also called B&C lending. It refers to a category of loan programs that offer more lenient underwriting provisions and expanded credit guidelines. These provisions allow more flexibility in approving loans for borrowers who have less-than-perfect credit. Subprime loans are available at various interest rates and terms. They also offer capabilities for debt consolidation allowing borrowers to get a mortgage with enough extra cash to consolidate loans. Back to Top
  • Subsidized Second Mortgage
    An alternative financing option known as the Community Seconds� mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part or all of the second mortgage debt may be forgiven depending on how long the buyer remains in the home. Back to Top
  • Survey
    A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features. Back to Top
  • Sweat Equity
    Contribution to the construction or rehabilitation of a property in the form of labor or services performed personally by the owner. Back to Top
  • Tax Bracket
    Please select the tax bracket you fall under. If you are unsure what tax bracket you are in, you may want to speak with an accountant find out. Back to Top
  • Tax Savings
    This is the amount of money you save in income taxes. You save this money because in most cases the interest you pay on your home loan is tax deductible! Back to Top
  • Tax Service
    A fee collected to set up a third-party to monitor the borrower's property tax payments to ensure that the payments are made on time, and to prevent tax liens from occurring. Back to Top
  • Tenancy By The Entirety
    A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. One spouse dies the property goes to the other spouse. Contrast with tenancy in common and joint tenancy. Back to Top
  • Tenancy In Common
    A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenancy. Back to Top
  • Term
    The term of a home loan is the number of years the home loan is amortized for. Home loans are generally amortized over 15, 20 or 30 years. Back to Top
  • Termite Report
    A report that results from an inspection by a professional to determine if the property has termites. Back to Top
  • Third Party Fees
    Fees collected by lender for services provided by other companies, such as an appraiser. Back to Top
  • Third Party Origination
    A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the home loan. Back to Top
  • Title
    A legal document evidencing a person's right to or ownership of a property. Back to Top
  • Title Company
    A company that specializes in examining and insuring titles to real estate. Back to Top
  • Title Insurance
    Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property. Back to Top
  • Title Insurance Endorsements
    This is an endorsement of insurance against losses that may result from claims of previously unknown ownership in insured property. Back to Top
  • Total Expense Ratio
    Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts. Used to help qualify a potential borrower for a home loan. Back to Top
  • Transaction Fee
    A fee charged each time the borrower draws on the credit line. Back to Top
  • Transfer of Ownership
    Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. Back to Top
  • Transfer Tax
    State or local tax payable when title to a property passes from one owner to another. Back to Top
  • Treasury Index
    An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. See adjustable-rate mortgage (ARM). Back to Top
  • Truth-in-Lending
    A federal law that requires lenders to fully disclose, in writing, the terms and conditions of credit, such as a mortgage, including the annual percentage rate (APR) and other charges. Back to Top
  • Two To Four-Family Property
    A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed. See multi-unit housing. Back to Top
  • Trustee
    A fiduciary who holds or controls property for the benefit of another. Back to Top
  • Underwriting
    The analysis of risk, the determination of the appropriate loan amount, and the setting of loan terms and conditions, based on the borrower's creditworthiness and the value of the real property that will secure the loan. Back to Top
  • Unsecured Loan
    A loan that is not backed by collateral. Back to Top
  • VA Mortgage
    A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage. Back to Top
  • Variable Rate
    An interest rate that changes periodically in relation to an index. Payments may increase or decrease per the terms of the loan agreement or note. Back to Top
  • Vested
    Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn. Back to Top
  • Veterans Affairs, Department of (VA)
    An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans. Back to Top
  • Warehouse
    A closing-cost fee representing the lender's cost of holding a borrower's loan temporarily prior to being sold on the secondary mortgage market. Back to Top
  • Year Acquired
    The date you acquired your existing mortgage, used to determine your remaining balance. Back to Top
  • Year-End Statement
    A report sent to the borrower each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year. Back to Top

© 2009 Ed Neuhaus 512.922.7559 Contact Me