| A | "A" Loan | A loan that reflects the best possible interest rate, terms and conditions. Consumers need to demonstrate good credit to secure and "A" loan. |
| Abstract of Title | A historical summary provided by a title insurance company of all records affecting the title to a property. | |
| Acceleration Clause | A provision in a mortgage that give the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed. | |
| Acquired Property | A property owned as a result of a foreclosure, acceptance of a deed-in-lieu of foreclosure, or acquired as a result of a paid insurance claim; often referred to as Real Estate owned (REO) | |
| Adjustable Rate Mortgage (ARM) | A mortgage that permits the lender to periodically adjust the interest rate when the index changes. | |
| Amenities | Features of your home that fit your preferences and can increase the value of your property. some examples include the number of bedrooms, bathrooms, or vicinity to public transportation. | |
| Amortization | The gradual repayment of a mortgage by installments | |
| Amortization schedule | A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance. | |
| Amortize | A period of time over which a calculated mortgage payment will fully repay a set loan amount at a specified interest rate. | |
| Annual Percentage Rate (APR) | The total yearly cost of a mortgage stated as a percentage of the loan amount; includes the base interest rate, primary mortgage insurance, and loan origination fee (points). | |
| Appraisal | A professional estimate of a property's market value. | |
| Appreciation | An increase in the value of a house due to changes in market conditions or other causes such as home improvements. | |
| Assessed Value | The valuation placed upon property by a public tax assessor for purposes of taxation. | |
| Assessment | Charges levied against a property for tax purpoes or to pay for municipality or associatoin improvemens such as curbs, sewers, or grounds maintenance |
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| Assumable Mortgage | A mortgage that a buyer can take over with the purchase of a property | |
| Assumption | The transfer of the seller's existing mortgage to the buyer. | |
| Automated Underwriting | A computer-base (automated) underwriting system that helps mortgage lenders collect and analyze information needed to process mortgage loan applications. | |
| B | "B" or "C" Loan | A loan that reflects less than the best possible interest rate, terms and conditions. Consumers with impaired credit may be offered "B" or "C" loans. These loans always impose higher interest rates and fees and should be closely scrutinized. |
| Balance Transfer | An option offered by a credit card to move an outstanding balance from another credit card to it, typically at a lower interest rate. | |
| Balloon Mortgage | Mortgage with a final lump sum payment that is greater than the peceding paymens and pays the loan in full. | |
| Bankruptcy | The legal process undertaken by individuals in the situation of being unable to pay his or her debts. Although there are several types (chapters) of bankruptcy, consumers generally may explore Chapter 7 or Chapter 13 bankruptcy. | |
| top | Binder | A preliminary agreement, secured by the payment of earnest money, under which a buyer offers to purchase real estate. |
| By-weekly Mortgage | A loan Requiring payments of principal and interest at two-week intervals. This type of loan amortizes much faster than monthly payment loans. The payment for a biweekly mortgage is half what a monthly payment would be. | |
| Borrower | The person or entity that is using someone else's money or funds to purchase something. The term "borrower" can generally be used interchangeably with the term "debtor". | |
| Bridge Loan | A loan to "bridge" the gap between the terminiation of one mortage and the beginning of another, such as when a borrower purchases a new home before receiving cash proceeds from the sale of a prior home. Also known as a swing loan. | |
| Broker | An intermediary between the borrower and the lender. The broker may represent several lending sources and charges a fee or commission for services. | |
| Budget | An itemized summary of probable expenditures and income for a given period: a systematic plan for meeting expenses in a given period; the total sum of money allocated for a particular purpose or time period. | |
| Buy down | A sum of money paid to a lender at closing to reduce the borrower's out-of-pocket monthly mortgage payment. Most Buy Downs are temporary | |
| C | Cap | A limit on an adjustable rate mortgage (ARM) which determines how much the interest rate can increase. A cap is meant to protect the vorrower from large increaes and may be a payment cap, a cap on the amount of interest that can be charged or an annual cap. |
| Capacity | Another term for income. Lenders examine the ability of a potential borrower to demonstrate that his or her income is sufficient to repay a loan. | |
| Capital | The case reserves (savings), investments, or assets possessed by an individual. | |
| top | Cash Reserve | Another term for Capital. Case reserves may take the form of savings, money market funds, or other investment that may be converted to cash. Also, the equivalent of mortgage payments that a lender requires a borrower to have available after closing. |
| Certificate of Reasonable Value | A Veterans' Administration appraisal that establishes the maximum VA mortgage loan amount for a specified property. | |
| Certificate of Title | Document rendering an opinion on the status of a property's title based upon public records. | |
| Charge-Offs | Loans or debts that have gone unpaid by the creditor. Simply put, in the case of a charge-off, the creditor "gives up" on collecting payment and reports this "charge-off" to the credit bureau for inclusion on an individual's credit report. Most lenders, however, regard "charge-offs" as debts that are still owed. | |
| Clear Title | Title to a property without liens or questions of ownership. | |
| Closed-end Mortgage | A mortgage principal amount that is fixed and cannot be increased during the life of the loan. | |
| Closing | A meeting or settlement of the finalized sale on a property where documents are signed, and monies exchanged. | |
| Closing Costs | Expenses or settlement costs, above the sales price, incurred by both buyer and seller during the transfer of a property. |
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| Cloud | A claim to the title of a property that, if valid, would prevent a purchaser from obtaining a clear title. | |
| Collateral | The value of property owned or possessed by the borrower. Relative to home mortgages, collateral is the value of the home the borrower wishes to purchase. If the debtor fails to pay the loan, the creditor may force the debtor to sell the collateral to satisfy the debt, or may foreclose and repossess the property to satisfy the debt. | |
| Collection Accounts | A loan or debt that has been referred by a creditor to an agency whose primary business is to collect outstanding debt obligations. These types of accounts will normally appear on the debtor's credit report. | |
| Commitment Fee | A fee charged when an agreement is reached between a lender and a borrower for a loan at a specific rate and points and the lender guarantees to lock in that rate. | |
| top | Commitment Letter | A letter send by the lender to a borrower and describing the terms of the loan. |
| Co-mortgager | One who is individualyl and jointly obligated to repay a mortgage loan and shares ownership of the property with one or more borrowers. | |
| Community Home Buyer's Program | An alternative financing option that allows households of modest means to qualify for mortgages using nontraditional histories, 33 percent housing-t-income and 38 percents debt-to-income rations, and the waiver of the usual two payment case reserve at closing. | |
| Community Home Improvement Mortgage Loan | An alternative financing option that allows low and moderate income homebuyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. | |
| Community Land Trust Mortgage Loan | An alternative financing option that enables low and moderate income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust, and to lease the land on which the property stands. | |
| Compensating Factors | A term used by lenders in relation to examining a borrower's credit strengths and weaknesses. If a buyer is exceptionally strong in one area, such as cash reserves, he/she may be weaker in another area, such as less than perfect credit due to late payments. In this case, the cash reserves may compensate for the derogatory credit. | |
| top | Condominium | A form of property ownership in which the homeowner holds title to an individual dwelling unit plus an interest in common areas of a multi-unit project. |
| Conforming Loan | A loan that conforms to Federal National Mortgage Association (FMNA) or Federal HOme Loan Mortage Corporation (FHLMC) guidelines. | |
| Consumer Handbook on Adjustable Rate Mortgages (C.H.A.R.M.) | A disclosure required by the federal government to be given to any borrower applying for an adjustable rate mortgage (ARM) | |
| Contingency | A condition that must be met before a contract is legally binding. | |
| Contract | An agreement between two or more parties for legal consideration. | |
| Conventional Mortgage | Any mortgage that is not insured or guaranteed by the Federal Government. | |
| Convertible Mortgage | An adjustable rate mortgage than can be converted to a fixed-rate mortgage under specified conditions. | |
| Conveyance | The transfer of title on real property from one party to another. | |
| Cooperative | A form of ownership where shares of stock for a unit is owned in a corporation rather than a unit itself. | |
| Co-Signer | An individual who signs a loan or credit application with another person and promises to pay if the primary borrower does not pay. | |
| top | Covenant | A clause in a mortgage that obligates or restricts the borrower and which, if violated, can result in foreclosure. |
| Credit | Using tomorrow's money to pay for something you get today. Credit is a promise to repay a debt for goods and services. Credit may be extended via several means, including credit cards, personal loans, car loans, and home mortgages. | |
| Credit Bureau | Companies that gather information on consumers who use credit and sell that information in the form of a credit report to credit grantors. | |
| Credit Derogatives | Negative credit reflected on a credit report such as slow pays, open collection accounts, liens, judgments, etc. | |
| Credit Grantor | The person, financial institution or entity that is providing a loan or credit. | |
| Credit History | A record of credit use. It is comprised of a list of individual consumer debts and an indication whether these debts were paid back in a timely fashion or "as agreed". Credit institutors have developed a complex recording system of documenting your credit history. This is called a credit report (See "credit report".) | |
| top | Credit Repair Companies | Private, for-profit businesses that claim to offer consumers with credit and debt repayment difficulties assistance in "fixing" their credit problems and/or "fixing" an impaired credit report. That are also non-profit companies which offer to do the same thing. Most of their services are free. |
| Credit Report | An individual's or organizations' credit history prepared by a credit bureau and used by a lender to determine a loan applicant's credit worthiness. | |
| Credit Reporting Agencies | A company that collects and retains credit information on all persons using credit. This information is sold to creditors upon the request or application of individual consumers for the extension of credit. | |
| Credit Risk | The level of risk or likelihood of an individual borrower's future or potential default. | |
| Credit Score | A numerical value determined by a statistical model based upon past credit behaviors that predicts the likelihood of future loan default. | |
| top | Creditor | The person or entity that is providing credit or a loan to a borrower at specific terns and conditions. The term "creditor" can generally be used interchangeably with the term "Lender" (Seen "Lender".) |
| Creditworthiness | The state or condition of an individual's overall credit. Individuals who have established credit and maintained a positive credit history are considered to be creditworthy, i.e., an acceptable risk for the extension of additional credit based upon their ability and willingness to repay past and current debt obligations. | |
| Curtailments | The borrower's privilege to make payments on a loan's principal before they are due. Paying off a mortgage before it is due may incur a penaly if so specified in the mortgage's prepayment clause. | |
| D | Debt | A sum of money due by an expressed agreement. |
| Debt Consolidation | This is a prime bussword used by predatory lenders. They offer to pay off all your debts and finance themunder one low monthly payment. The only problem with thie "low monthly payment," is that you'll be paying it for a long time, and may still get socked by a large balloon payment at the end. | |
| Debt-to-Income Ratio | Percentage of total debt payments to gross income. | |
| Deed | The legal document conveying title to a property. | |
| Deed of Trust | A document used instead of a mortgage in some states. | |
| top | Default | Failure to make loan payments when they are due. |
| Delinquency | A loan in which a payment is overdue but not yet in default. | |
| Department of Veterans Affairs (VOA loan) | A federal agency that guarantees no downpayment loans to veterans who have served and active military who are serving in the U.S. military. | |
| Deposit | Cash paid to the seller when a formal sales contract is signed. | |
| Depreciation | A decline in the value of property: the opposite of "appreciation". | |
| Discount Point | An amount equal to one percent of the principal amount of a mortgage loan. A one time charge assessed by the lender that must be paid in cash at closing. | |
| Down Payment | The part of the purchase price that a buyer pays in cash and is not included in the mortgage. | |
| Due-on-sale | A clause in a mortgage or deed of trust allowing a lender to require immediate payment of the balance of the loan if the property is sold (subject to the terms of the security instrument). | |
| Duplex | Dwelling divided into two units. | |
| Earnest Money Deposit | See "deposit" | |
| E | Easement | A right of way giving persons other than the owner access to or over a property. |
| Equal Credit Opportunity Act (ECOA) | Federal law that prohibits lenders from denying mortgages on the basis of race, color, religion, national origin, age, sex, marital status. | |
| top | Equity | A homeowner's financial interest in a property. Equity is the difference between the fair market value of a property and the amount till owed on the mortgage. |
| Escape Clause | A provision allowing one party or more to cancel all or part of the contract if certain events fail to happen, such as the ability of the buyer to obtain financing within a specified period. | |
| Escrow | Money deposited with a third party that is returned upon fulfillment of a condition or contract. | |
| Escrow Account | An account established with a third party (See "escrow") | |
| F | Fair Credit Reporting Act | A consumer protection law that regulates the disclosure of consumer credit reports. |
| Fair Market Value | The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area. | |
| Fannie Mae | Federal National Mortgage Association | |
| FHA | Acronym for the Federal Housing Administration that provides mortgage insurance and sets construction and underwriting standards. FHA does not lend money. | |
| FHA Mortgage | A mortgage insured by the Federal Housing Administration (FHA) | |
| Fee | Any charge added to a loan. | |
| Finance Charge | The amount charged for the use of credit services. | |
| top | Financial Literacy | A term commonly used to indicate one's basic understanding of the primary principles of credit, money management and financial well-being. |
| First Mortgage | The mortgage that has first claim in the event of default. | |
| Fixed Expenses | Cost or payments that generally do not vary from month to month. An example of a fixed expense is a car loan. | |
| Fixed-Rate Mortgage | A mortgage in which the interest rate does not change. | |
| Flipping | To repeatedly refinance a loan in a short period of time to get additional fees from the borrower. | |
| Flood Insurance | Insurance required on properties located in a designated flood area. | |
| For Sale By Owner | Homeowners who sell their homes without the assistance of a real estate agent. | |
| Forbearance | A lenders' agreement to postpone foreclosure in order to give a borrower time to catch up on overdue payments. | |
| Foreclosure | The legal procedure permitting a creditor to take possession of and sell property that is mortgaged as security for a defaulted loan. | |
| top | Freddie Mac | Federal Home Loan Mortgage Corporation. |
| G | Gift | This includes amounts from a relative or a grant from the borrower's employer, a municpality, non-profit religious organization, or a non-profit community organization that does not have to be repaid. |
| Goal | The objective toward which an endeavor is directed. | |
| Ginnie Mae | Nichame for Government National Mortgage Association (GNHA) | |
| Good Credit | The term used to mean that one's credit has been handled responsibly and that payments have been made on time. | |
| Good Faith Estimate | An itemized breakdown of estimated closing or settlement costs. | |
| Grace Period | The amount of time before which additional interest, late fees and/or penalties are imposed for receipt of a loan payment beyond its due date. | |
| Graduated Payment Mortgage | A mortgage that starts with low monthly payments that increase at a predetermined rate. | |
| Gross Monthly Income | The total amount a borrower earns each month before income taxes or other expenses are deducted. | |
| H | Hazard Insurance | A casualty policy covering real estate property against "multiple perils". |
| top | Home Equity Loan | A loan product that is secured against a home (real estate). |
| Home Inspection | A thorough review of the physical aspects and condition of a home by a professional home inspector. This inspection should be completed prior to closing so that any repairs or changes can be completed before the home is sold. | |
| Homeowners Insurance | A form of incuerance that protects the insurd property against loss from theft, liability, and most common disasters. | |
| Homeowner's Warranty | Insurance that covers repairs to specific parts of a house for a specific period of time. | |
| Housing Affordability Index | Indicates what proportion of homebuyers can afford to buy an average-priced home is specified areas. The most well known housing affordability index is published by the national Association of Realtors. | |
| HUD | Acronym for the U.S. Department of Housing and Urban Development which administers many housing programs. | |
| Hybrid Lender | Lenders who specialize in non-conformong loans. | |
| Impaired Credit | Also known as "Derogatory Credit". | |
| I | Index | A measurement used by lenders to determine any changes to the interest rate charged on an adjustable rate mortgage. |
| Inquiry | The process used by creditors to request a copy of your credit report. Inquiries occur every time a consumer fills out a credit application and/or request the extension of credit. Too many inquiries appearing on a credit report are considered damaging to the report. | |
| Installment Account | A type of credit whereby a consumer signs a contract to repay a fixed amount in equal payments over a specific period of time. | |
| top | Interest | The fee charged for borrowing money. |
| Interest Rate | A percentage of an amount of money usually expressed as an annual percentage which is paid for the use of money for a specified period of time. | |
| Interest Rate Cap | A provision of an ARM limiting how much interest rates may increase per adjustment period. See also "Lifetime cap". | |
| Joint Accounts | Credit accounts that are held or owned by two or more persons. In the case of a joint account, all parties are held equally responsible and liable for payment under the terms and conditions of the loan contract. | |
| Joint Tenancy | A form of co-ownership giving each tenant equal interest and equal rights in the property, including the right of survivorship. | |
| Judgments | Formal orders, generally court orders, which are displayed on a credit report if a debt or loan obligation is unpaid. | |
| L | Late Charge | The penalty a borrower must pay when a payment is made after the due date. |
| top | Late Payments | Loan or credit payments which do not reach the lender or creditor on or before the payment due date. The indication of late payments on a credit report are very damaging to an individual's credit report. |
| Least-Purchase Mortgage Loan | An alternative financing option that allows low and moderate income homebuyers to lease a home from a non-profit organization with an option to buy, and with each month's rent payment consisting of PITI payments (See "PITI") on the first mortgage, plus an extra amount that is earmarked for a savings account in which money for a down payment accumulates. | |
| Lender | The person or entity that is providing credit or a loan to a borrower at specific terms and conditions. The term "lender" can generally be used interchangeably with the term "creditor". | |
| Lien | A legal claim to a property that must be paid when the property is sold. | |
| Lifetime Cap | A provision of an ARM that limits the total increase in interest rates over the life of the loan. | |
| top | Line of Credit | A preauthorized amount of credit offered to an individual, business or institution. A line of credit is commonly secured against an asses such as a home (real estate). |
| Loan | The letting of money by a lender to a borrower to be repaid with or without interest. | |
| Loan Commitment | See "Commitment Letter". | |
| Loan Origination Fee | See "Origination fee". | |
| Loan Servicing | The collection of mortgage payments from borrowers and related responsibilities of a loan servicer. | |
| Loan-to-value (LTV) | The amount of a loan compared to the value of a property expressed as a percentage. | |
| Lock-In | A written agreement guaranteeing the homebuyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing. | |
| LTV | See "Loan-to-Value". | |
| M | Margin | The Lender's cost and profit for doing business which is added to the index rate to determine the interest rate on an adjustable rate mortgage for the upcoming period. |
| Margin | The amount a lender adds to the index of an adjustable rage mortgage to establish an adjusted interest rate. For example, a morgain of 1.50 added to a 7 percent index establishes an adjusted interest rate of 8.50 percent. | |
| Market Value | The price of a property can realistically sell for, based upon comparable selling prices of oher property in the same area. | |
| Modification | A change in the terms of the mortgage note, such as a reduction in the interest rate or change in maturity date. | |
| Mortgage | A legal document which a borrower gives to the lender on property as security for payment of a debt. | |
| top | Mortgage Banker | An entity active in the field of mortgage banking. |
| Mortgage Broker | A firm that processes loans for a number of lenders. | |
| Mortgage Insurance | Insurance that protects lenders against loss if a borrower defaults. | |
| Mortgage Insurance Premium | The fee paid by a borrower to the FHA or a private insurer for mortgage insurance. | |
| Mortgage Qualifying Ration | Lenders use qualifying ratios to calculate the maximum amount of funds that an individual may traditionally be able to afford. A typical mortgage qualifying ration is 28/36. | |
| Mortgage Terms | The length of time that a mortage is scheduled to exist. | |
| Mortgagee | The lender in a mortgage agreement. | |
| Mortgagor | The borrower in a mortgage agreement. | |
| N | Needs | Things in life which are required for basic survival. Examples of needs include, shelter, food and clothing. |
| Negative amortization | Payment terms under which the borrower's monthly payments to no cover the interest due; as a result, the loan balance increases. | |
| top | Net Income | The amount of money paid to an employee after taxes and other deductions have been subtracted. Net income is commonly referred to as take home pay. |
| Non-assumption Clause | IN a mortgage contract, a statement that prohibits a new buyer from assuming a mortgage loan without the approval of the lender. | |
| Non-conforming Loan | A loan that does not conform to Federal National Mortgage Association or Federal Home Loan Mortgae Corporation guidelines. | |
| Note | A written promise by one party to pay a specified sum of money to a second party under the conditions agree upon mutually. Also called a "promissory note". | |
| Note Rate | The interest rate on a mortgage loan. | |
| Notice of Default | A formal written notice to a borrower that a default has occurred and that legal action may be taken. | |
| O | Open 30-Day Account | A type of credit in which a consumer promises to repay the full balance owed each month, such as travel and entertainment charge cards. |
| Open-end Mortgage | A mortgage allowing the borrower to receive advances of principal from the lender during the life of the loan. | |
| Origination Fee | A fee paid to the lender for processing the loan application, stated as a percentage of the mortgage amount. | |
| Owner Financing | A purchase in which the seller provides all or part of the financing. | |
| Padded Closing Costs | Charging more than the actual cost of the fee. | |
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Payment Cap | A provision of some ARMs limiting how much a borrower's payment may increase regardless of how much the interest rate increases; may result in negative amortization. |
| top | Payment Due Date | Every time that money is borrowed, contract language specifies when payments are due. |
| PIN | Personal Identification Number. For security purposed, credit cards and bank cards require the rightful owner to select and memorize a PIN. | |
| PITI | An acronym for Principal, Interest, Taxes and Insurance, the components of a monthly mortgage payment. | |
| Points | See "Discount points". | |
| Preapproval | Where you actually apply for a loan before you have found the house you want to buy. Then lender guaranteed you a fixed loan amount as long as you buy withing a certain time period. | |
| Predatory Lending | Abusive lending practices including those that strip equity from a homeowner. | |
| Prepayment | Paying on pincipal, or paying abouve gthe minimum payment required by the lender. The minimum payment is usually all interest. Anything added to that payment will go to paying off the principal. The more you prepay, the shorter the term of your loan will be. Sometimes there are prepayment penalties. | |
| Prepayment Penalty | Charges imposed by some lenders as a penalty for paying a loan off earlier than its original pay off date. Prepayment penalties are common among some of the sub-prime and/or predatory lending loan products. | |
| Prepayment Penalty Mortgage (PPM) | A type of mortgage that requires that you pay a prepayment penalty or a fee if you repay your entire loan (or a substantial portion of it) within a certain time period. | |
| top | Prequalification | Tentative establishment of a borrower's qualification for a mortgage loan amount of a specific range, based on the borrower's assets, debts, and income. |
| Prime Rate | The interest rate commercial banks charge their most creditworthy customers. | |
| Principal | The amount borrowed or the remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage. | |
| Prioritize | To arrange or deal with an order of importance | |
| Private Mortgage Insurance (PMI) | Insurance provided by nongovernmental insurers that protects lenders against loss if a borrower defaults. | |
| Property Tax | The amount which the state and/or locality assesses as a tax on a piece of property. | |
| Public Record Information | Information on events that are a matter of public record (court-house records) related to your creditworthiness, such as bankruptcy, foreclosures, or tax liens. The presence of public record information appearing on a credit report is viewed negatively by the credit industry. | |
| Purchase and Sale Agreement | A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. | |
| Qualification | As determined by a lender, the ability of the borrower to repay a mortgage loan based on the borrower's credit history, employment history, assets, debts and income. | |
| Q | Qualifying Income Ratios | A comparison of a proposed monthly housing expense to gross monthly income; and a comparison of total monthly debt, including proposed housing expense, to gross monthly income. |
| Rate Cap | See "cap" | |
| top | Rate Lock | See "Lock-in". |
| R | Real Estate Agent | A licensed person who acts on behalf of an owner to sell a property. In some states, a licensed person who acts on behalf of the buyer, and is paid a commission by the seller. |
| Real Estate Settlement Procedure Act (RESPA) | Requires lenders to give borrowers advance notice of closing costs. | |
| Refinancing | Paying off one loan from the proceeds of another loan on the same property. | |
| Rent With Option To Buy | See "Lease Purchase Mortgage Loan". | |
| Reverse Annuity Mortgage | A type of mortgage loan in which the lender makes periodic payments to the borrower. The borrower's equity in the home is used as secutiy for the loan. | |
| Revolving Account | A type of credit account in which a consumer has the option to pay the debt in full each month or to make a minimum monthly payment based upon the outstanding balance. | |
| Right of First Refusal | Purchasing a property under conditions and terms made by another buyer and accepted by the seller. | |
| Right of Rescission | When a borrower's principal dwelling is going to secure a loan, the borrower has three business days following signing of the loan documents to rescind or cancel the transaction. | |
| Rural Economic and Community Development (RECD) | Provides housing loans in rural communities, formerly known as Farmers Home Administration (FmHA). | |
| S | Savings | Money that is set aside into an interest-bearing or investment account. Savings is oftentimes viewed as the difference between net income and expenses. |
| top | Second Mortgage | A mortgage that has rights that are subordinate to the rights of the first mortgage holder. |
| Secondary Mortgage Market | The buying and selling of existing mortgages | |
| Secured Debt | This type of debt is the result of money loaned on collateral, which might come inthe form of your home or other valuable possessions. If you neglect to pay off according to the terms agreed, the lender can acquire that collateral from you. | |
| Secured Credit Card | A credit card backed by collateral (usually cash). | |
| Secured Loans | A loan backed by collateral and secured against something tangible, such as a home (real estate). | |
| Seller Take-Back | An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage. | |
| Settlement | See "Closing". | |
| Settlement Sheet | The computation of costs payable at closing which determines the seller's net proceeds and the buyer's net payment. | |
| Servicing | The responsibility of collecting monthly mortgage payments and properly cre4dity them to the principal, taxes and insurance, as well as keeping the borrower informed of any changes in the status of the loan. | |
| Subprime | An industry term used to describe credit and loan products that have less stringent lending and underwriting (loan approval) terms and conditions. However, as a compensating factor for the higher risk, subprime products charge consumers higher interest rates and fees. | |
| top | Subsidized Second Mortgage | An alternative financing option for low and moderate income households that also includes a down payment and a first mortgage, with funds for the second mortgage provided by city, county or state housing agencies, foundation , or nonprofit corporations. Payment on the second mortgage is often deferred, carries no or low interest rates, and part of the debt may be forgiven for each year the family remains in the home. |
| Survey | A drawing showing the legal boundaries of a property. | |
| Tax Deed | A written document conveying title to property repossessed by the government due to default on tax payments. | |
| Tax Savings | The amount of money that the homeowner is not required to pay the government in taxers because he or she owns a home. | |
| Taxes | As a part of PITI, the amount of the monthly mortgage payment which does not include the principal, interest, and insurance. | |
| T | Tenancy By Entirety | A type of joint ownership in a property available only to a husband and wife. |
| Tenancy In Common | A type of joint ownership of property without right of survivorship. | |
| Tenants in Severalty | Ownership of property by one legal entity or a sole party. | |
| Tenancy at Will | A license to use or occupy a property at the will of the owner. | |
| Terms | The period of time and the interest rate agreed between the creditor and the debtor to repay a loan. | |
| Three-Day RIght of Recision | The three-day period that a borrower has to change his/her mind and cancel a refinance transactinon the home that he/she occupies. | |
| Three/two (3/2) Option | An alternative financing plan that enables households whose earnings are not more than 115 percent of the median income in their regional area to make a 3 percent down payment with their own funds, couples with a 2 percent gift from a relative or a 2 percent grant or unsecured loan from a nonprofit or state or local government program. | |
| Title | A legal document establishing the right of ownership. | |
| Title Company | A company that specializes in insuring title to property. | |
| Title Insurance | Insurance to protect the lender (lender's policy) or the buyer (owner's policy) against loss arising form disputes over ownership of property. | |
| Title Search | A check of the title records to ensure that the seller is the legal owner of the property and that there are not liens or other claims outstanding. | |
| Transfer Tax | State or local tax payable when title passes from one owner to another. | |
| Trust Deed | See "Deed of Trust". | |
| Truth-In-Lending | A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges. | |
| U | Underwriting | A risk analysis conducted by a lender to decide whether or not to approve a loan. |
| Uniform Settlement Statement | A standard document prescribed by the Real Estate Settlement PRocedures Act containing information for closing which must be supplied to both buyer and seller. | |
| Unsecured Debt | Loans that are not backed by collateral. | |
| Usuary | Interest charged in excess of the legal rate established by law. | |
| Utility Costs | Periodic housing costs from water, electricity, natural gas, garbage, etc. | |
| VA Loan | A loan that is guaranteed by the Veterans Administration. | |
| V | Variable Expense | Costs or payments that may vary from month to month. An example of a variable expense is a grocery bill. |
| Variable Rate | Interest rate that changes periodically in relation to an index. | |
| Verification of Deposit (VOD) | A form sent to each depository listed on the loan application to verify funds of the borrower. | |
| top | Verification of Employment (VOE) | A form sent to the borrower's employer to verify the borrower's employment and employment history. |
| Veterans Administration | The federal agency resonsible fo the VA loan guarantee program as well as other services for eligible veterans. | |
| Walk-Through | An inspection of a property by the prospective buyer prior to closing on a mortgage. | |
| W | Wants | Things in life that are not essential for survival, but are desired for comfort, convenience or status. |
| Warranty Deed | A document protecting a homebuyer against any and all claims to the property. | |
| Y | Yield | The effective rate of return on an investment based on fees, an interest rate, and the price paid for the mortgage. |