| A Fannie Mae loan application form designed by Fannie Mae and Freddie Mac that is used by lenders
financial information from borrowers who apply for a mortgage loan secured by a one-to-four unit residential real estate. Also known as: Uniform Residential Loan Application (URLA).
It has been widely adopted by mortgage lenders as a standard
Also referring to it as the Freddie Mac Form 65. | 1003 |
| A 1031 exchange allows resident and non-resident United States to defer capital gains and recaptured depreciation taxes
When exchanging real or personal property held for productive use in a trade, business, or for investment for like-kind real or personal property held for productive use in a trade, business, or for investment.
The tax otherwise paid in a traditional sale is deferred indefinitely until the replacement property is sold or another 1031 exchange is initiated. | 1031 Exchange |
| An IRS Form used to retrieve past tax returns, W-2, and 1099 transcripts that are on file with the IRS.
It is used to validate income documentation for underwriting and quality control purposes. | 4506-T |
| A concise statement, usually prepared for a mortgagee or purchaser of real property, summarizing the history of a piece of loan, including all conveyances, interests, liens, and encumbrances that affect title to the property.
A good and merchantable abstract of title shows clear and marketable title, rather than showing only the history of the property | abstract of title |
| A loan-agreement provision that requires the debtor to pay off the balance sooner than the due date if some specified event occurs, such as failure to pay an installment or to maintain insurance. | Acceleration Clause |
| Interest that is earned but not yet paid.
For example: interest that accrues on real estate will be paid when the property is sold if the rental income does not cover the mortgage payments. | Accrued Interest |
| The original cost of an asset. | Acquisition Costs |
| A mortgage in which the lender can periodically adjust the mortgage interest rate in accordance with fluctuations in an external market index.
Also known as: Variable Rate Mortgage (VRM). | Adjustable Rate Mortgage (ARM) |
| Basis increased by capital improvements and decreased by depreciation deductions. | Adjusted Basis |
| On an Adjustable Rate Mortgage (ARM),
the time between changes in the interest rate and/or monthly payment. Typically one, three, or five years depending on the index. | Adjustment Interval |
| Time between the adjustment dates for an Adjustable Rate Mortgage (ARM). | Adjustment Period |
| An arrangement in which a person refers a business to a real estate service involving a federally related mortgage loan that has either an affiliate relationship with or a beneficial ownership interest.
An Affiliated Business Arrangement (ABA) is not a violation of Section 8 of the Real Estate Settlement Procedures Act (RESPA). | Affiliated Business Arrangement (ABA) |
| An agreement that obligates someone to sell and may include a corresponding obligation for someone else to buy. | Agreement of Sale |
| A method of documenting a loan file by using information such as pay stubs, W-2 forms, and bank stubs instead of waiting on verifications sent to third parties for confirmation of statements made on the application. | Alternative Documentation |
| The act or result of gradually extinguishing a debt, such as a mortgage, usually by contributing payments or principal each time a periodic interest payment is due. | Amortization |
| The length of time it will take to amortize the mortgage loan expressed in months. For example, a 30-year mortgage is a 360-month amortization term. | Amortization Term |
| The actual cost of borrowing money, expressed in the form of an annualized interest rate. | Annual Percentage Rate (APR) |
| A fixed sum of money payable periodically, usually monthly or annually.
These payments terminate upon the death of the designated beneficiary.
Also, a right, often acquired under a life-insurance contract, to receive fixed payments periodically for a specified duration. | Annuity |
| The determination of what constitutes a fair price for something or how its condition can be fairly stated at a point in time. | Appraisal |
| A fee charged by a licensed certified appraiser to determine the fair market value. | Appraisal Fee |
| An impartial person who estimates the value of something such as real estate. | Appraiser |
| An increase in an asset’s value (often because of inflation). | Appreciation |
| A dispute-resolution process in which the disputing parties choose one or more neutral third parties to make a final and binding decision resolving the dispute.
A third party may be chosen directly by mutual agreement, or indirectly by agreeing to have an arbitration organization select the third party. | Arbitration |
| Describes the features of the Adjustable Rate Mortgage (ARM) loan which must be presented to the consumer within 3 days of application. | Adjustable Rate Mortgage Disclosure |
| The consumer Handbook to Adjustable-Rate Mortgages must be presented within 3 days of application. | Adjustable Rate Mortgage Handbook (CHARM) |
| A soft gray mineral that was used as a building material in the past. It is no longer in use, but can still be found in some older homes.
When asbestos dust is inhaled it can cause serious diseases of the lungs. | Asbestos |
| The value of an asset as determined by an appraiser for tax purposes. | Assessed Value |
| Determination of the rate or amount of something, such as a tax or damages. | Assessment |
| An official who evaluates or makes assessments, especially for purposes of taxation. | Assessor |
| An owned item that has value. | Asset |
| The transfer of rights or property. | Assignment |
| An assignment in which a mortgage lender or borrower transfers the mortgage to a third party. | Assignment of Mortgage |
| The acquisition of real property coupled with the assumption of personal liability for debt secured by that property. | Assumption (of Mortgage or Trust Deed) |
| The fee paid to a lender when an assumption takes place. It is usually paid by the purchaser. | Assumption Fee |
| A statement of financial position as of the statement’s date, disclosing the value of assets, liabilities, and equity. | Balance Sheet |
| A mortgage requiring periodic payments for a specified time and a lump-sum payment of the outstanding balance at maturity. | Balloon Mortgage |
| A final loan payment that is usually much larger than the preceding regular payments. This payment discharges the principal balance of the loan. | Balloon Payment |
| Basis points are used in computing and calculating the interest rate in real estate transaction.
One basis point is equal to 1/100th of 1%, or 0.01%, and is used to denote the percentage change in a financial instrument. | Basis Point |
| A statutory procedure by which a usually insolvent debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation of the debtor’s assets for the benefit of creditors. | Bankruptcy |
| A mortgage that covers an aggregation of property, or that secures indebtedness previously existing in various forms.
For example: a mortgage covering two or more properties that are pledged to support a debt. | Blanket Mortgage |
| Made in good faith without fraud or deceit. | Bona fide |
| Someone who mortgages property. | Borrower (Mortgagor) |
| A short-term loan that is used to cover costs until more permanent financing is arranged or to cover a portion of costs that are expected to be covered by an imminent sale. | Bridge Loan |
| A law or regulation setting forth standards for the construction, maintenance, occupancy, use, or appearance of buildings and dwelling units. | Building Code |
| Money paid by the buyer of a house to reduce the mortgage-interest payments. | Buy-Down |
| The account in which funds are held so they can be applied as each payment comes due for an interest rate buy-down plan. | Buy-Down Account |
| A real estate broker who acts as the agent of a purchaser of property.
Statutes in many states permit prospective buyers to retain a licensed real estate agent.
In some states, a buyer’s broker is treated as the subagent of the broker with whom the owner lists property for sale and not the agent of the buyer. | Buyer’s Broker/Agent |
| A market in which supply significantly exceeds demand, resulting in lower prices. | Buyer’s Market |
| An option to buy something at a fixed rate price even if the market rises;
the right to require another to sell. | Call Option |
| The power to create a legal agreement under the same circumstances in which a normal person would.
It is with the satisfaction of a legal qualification, such as legal age or soundness of mind, that determines one’s ability to sue or be sued, enter a binding contract, etc.
A party wishing to raise the issue of capacity must do so by specific negative pleading. | Capacity |
| The movement of cash through a business as a measure of profitability or liquidity. | Cash Flow |
| A check drawn by a bank payable to another person.
This is evidence that the payee has authorization from the bank for the amount of money represented by the check. | Cashier’s Check |
| A banker’s certificate acknowledging the receipt of money and promising to repay the depositor. | Certificate of Deposit |
| A certificate issued by the Department of Veterans Affairs (VA)
certifying a veteran’s eligibility for a VA loan. | Certificate of Eligibility |
| A document indicating that a building complies with zoning and building ordinances and is ready to be occupied.
A certificate of occupancy is often required before title can be transferred and the building occupied | Certificate of Occupancy |
| An appraisal issued by the Department of Veterans Affairs (VA)
showing the property’s fair market value | Certificate of Reasonable Value (CRV) |
| A document indicating the ownership of real or personal property.
This document also identifies any liens or other encumbrances. | Certificate of Title |
| Certificate given to veterans or reservists who have served 90 days of continuous active duty (including training time),
which enables veterans to obtain lower down payments on certain Fair Housing Act (FHA) loans. | Certificate of Veteran Status |
| The ownership history of a piece of land, from its first owner to the present one.
For the holder to have a good title, every prior negotiation must have been proper.
If the necessary indorsement is missing or forged, the chain of title is broken and no later transferee can become a holder. | Chain of Title |
| A modification of the original construction plans ordered by the property owner or general contractor. | Change Orders |
| A title free from any encumbrances, burdens, or other limitations.
I.e. a good and marketable title. | Clear Title |
| Affirmed that all citizens are equally protected by the law.
Enacted April 9, 1866. | Civil Rights Act (1866) |
| Change in the frequency of payment or interest rate
of Adjustable Rate Mortgage (ARM). | Change Frequency |
| The final transaction between the buyer and seller whereby the conveyance of documents is concluded and the money and property transferred. | Closing/Settlement |
| An agent who represents the buyer in the negotiation and closing of real property transactions by handling financial calculations and transfer of documents. | Closing Agent |
| The expenses that must be paid, usually in a lump sum at closing, apart from the purchase price and interest.
These may include taxes, title insurance, and attorney’s fees. | Closing Costs |
| The date scheduled for the conclusion of the real estate transaction | Closing Date |
| A written breakdown of the costs involved in the real estate transaction, usually prepared by a lender or an escrow agent. | Closing Statement |
| A defect or potential defect in the owner’s title to a piece of land arising from some claim or encumbrance, such as a lien, an easement, or a court order | Cloud on Title |
| Any borrower in addition to the first borrower whose name appears on the application.
The co-borrower’s income, assets, liabilities, and credit history are considered in determining creditworthiness | Co-Borrower |
| Property that is pledged as security against a debt; the property subject to a security interest or agricultural lien. | Collateral |
| Ratio of the total mortgage liens against the property to the lesser of either the appraised value or the sales price. | Combined Loan-to-Value (CLTV) |
| The fee paid to an agent for a transaction usually as a percentage of the money received from the transaction. | Commission |
| A binding offer by a lender to make a loan under certain terms or conditions to a borrower.
Includes the amount of the mortgage, the interest rate, and repayment terms. | Commitment |
| The realty that all tenants may use, though the landlord retains control over and responsibility for it.
An area owned and used in common by the residents of a condominium, subdivision, or planned-unit development. | Common Areas |
| Intended to encourage depository institutions to help meet the credit needs of the communities in which they operate,
including low to moderate income neighborhoods, consistent with safe and sound banking operations. | Community Reinvestment Act (1977) |
| An abbreviation for “comparable properties” used in the appraisal process. Comparables are properties similar to 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 | Comparables |
| The voluntary yielding to a demand for the sake of a settlement. In a real estate transaction, something given up or agreed to in sale negotiations.
For example, the sellers may agree to help pay for closing costs. | Concession |
| A stipulation or prerequisite in a sales contract.
If a court construes a contractual term to be a condition, then its breach will entitle the party to whom it is made to be discharged from all liabilities under the contract. | Condition |
| A single real estate unit in a multi-unit development in which a person has both separate ownership of a unit and a common interest, along with the development’s other owners, in the common areas. | Condominium |
| A mortgage loan under the maximum amount of loans that Fannie Mae and Freddie Mac are legally allowed to buy. | Conforming Loan |
| A mortgage used to finance a construction project. | Construction Mortgage |
| An independent federal agency that regulates consumer financial products and services.
The Bureau protects consumers by restricting unfair and deceptive business practices, by promoting financial education, taking consumer complaints, and enforcing federal consumer-financial-protection laws.
It was established by the Dodd-Frank Act in 2010 and began operating in 2011. | Consumer Financial Protection Bureau (CFPB) |
| An independent firm that collects, compiles and reports the credit activities of individuals which is made available, for a fee, to lenders or credit issuing entities investigating the creditworthiness of those applying for credit.
Consumers may also access reports from each of the three major reporting agencies for free as required by law | Consumer Reporting Agency (Credit Bureau) |
| A clause within the sales contract stating that a certain condition must be met before a contract is legally binding, and the sale can close.
Real estate contracts often have a specific date by which the contingency must be met.
E.g. The buyer will often include an inspection contingency, requiring the home to be inspected for physical damages or problems before the sales contract is binding.
The buyer will have the right to rescind if the contingency is not met. | Contingency Clause |
| A mortgage, not backed by government insurance, which the borrower transfers a lien or title to the lending bank or other financial institution.
These mortgages, which feature a fixed periodic payment and interest throughout the mortgage term, are typically used for home financing. | Conventional Mortgage |
| A provision in an Adjustable Rate Mortgage (ARM) which allows the loan to be converted from an ARM to a fixed-rate mortgage at specified times during the term.
Usually allowed at the end of the first adjustment period. Also known as a Convertible ARM. | Conversion Clause/Option |
| The voluntary transfer of property | Conveyance |
| A project in which a corporation holds the title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title. | Cooperative (Co-op) Project |
| An offeree’s new offer that varies the terms of the original offer and that ordinarily rejects and terminates the original offer.
A late or defective acceptance is considered a counteroffer. | Counteroffer |
| A formal agreement or promise to perform, or not perform, a particular act. | Covenants |
| One’s ability to borrow money. | Credit |
| Information in the files of a credit bureau regarding an individual’s debts and repayments (or non-repayments). | Credit History |
| Life insurance on a borrower, usually in a consumer installment loan,
in which the amount due is paid if the borrower dies. | Credit Life Insurance |
| A credit bureau’s report on a person’s financial status, usually including
the approximate amounts and locations of a person’s bank accounts, charge accounts, loans, other debts, bill-paying habits, defaults, bankruptcies, foreclosures, marital status, occupation, income, and lawsuits. | Credit Report |
| Statistically derived numeric expression of a person’s creditworthiness that is used by lenders to assess the likelihood that the individual will repay their debts. | Credit Score |
| One who gives credit for money or goods. | Creditor |
| Financially sound enough that a lender will extend credit in the belief that default is unlikely | Creditworthy |
| Liability on a claim. | Debt |
| The percentage of gross monthly income that goes toward paying
for monthly housing expenses, alimony, child support, car payments, and other installment debts, and payments on revolving or openended accounts such as credit cards. | Debt-to-Income Ratio |
| A legal document that is signed and delivered regarding the ownership of property. | Deed |
| Deed in which the mortgagor conveys all interest in the property to the mortgagee to satisfy a loan that is in default to avoid foreclosure proceedings.
A written settlement agreement will always accompany deed-in-lieu.
The lender waives the right to collect any deficiency based on a promissory note | Deed-in-Lieu of Foreclosure |
| A deed conveying the title of real property to a trustee as security until the grantor repays a loan.
This type of deed resembles a mortgage. It is an alternative to a mortgage preferred by lenders because it is faster and cheaper to foreclose. | Deed of Trust |
| The omission or failure to perform a legal or contractual duty,
especially the failure to pay a debt when due. | Default |
| A debt that is overdue in payment. | Delinquency |
| The cabinet-level department of the federal government responsible for operating programs that benefit veterans of military service and their families.
It is headed by the Secretary of Veterans Affairs. | Department of Veterans Affairs (VA) |
| A reduction in the value or price of something,
specifically, a decline in an asset’s value because of use, wear, obsolescence, or age. | Depreciation |
| A fee equal to 1 percent of the loan amount that is prepaid interest on the mortgage loan.
The more points, the lower the interest rate.
Borrowers can typically pay from 0-4 points. It is also tax-deductible. | Discount Point |
| A 2010 federal statute that promotes the financial stability of the United States by
improving accountability and transparency in the financial system.
The statute affects nearly every federal agency with jurisdiction over finance or consumer protection, and nearly every segment of the financial-services industry | Dodd-Frank Wall Street Reform & Consumer Protection Act |
| A portion of the purchase price paid in cash (or its equivalent) at the time the sale agreement is executed. | Down Payment |
| A mortgage provision that gives a lender the option to accelerate the debt if the borrower transfers any part of the mortgaged real estate without the lender’s consent. | Due-on-Sale Clause |
| A deposit paid (often in escrow) by a prospective buyer to show a good-faith intention to complete the transaction, and ordinarily forfeited if the buyer defaults.
It is generally a percentage of the purchase price and it rarely exceeds 10 percent. | Earnest Money Deposit |
| An interest in land owned by another person, consisting of the right to use or control the land, or an area above or below it, for a specific limited purpose.
E.g., an ingress and egress easement for the right to access the land through the land of another.
The land benefitting from an easement is called the dominant estate, while the land burdened by an easement is called the servient estate.
Unlike a lease or license, an easement may last forever, but it does not give the holder the right to possess, take from, improve upon, or sell the land. | Easement |
| The primary recognized easements are:
1. A right-of-way
2. A right of entry for any purpose relating to the dominant estate
3. A right to support of land and buildings
4. A right of light and air
5. A right to water
6. A right to do some act that would otherwise amount to a nuisance
7. A right to place or keep something on the servient estate | Easement (2) |
| Obsolescence that results from external economic factors,
such as decreased demand or changed governmental regulations. | Economic Obsolescence |
| The actual annual rate,
which incorporates compounding when calculating interest, rather than the stated rate or coupon rate. | Effective Interest Rate |
| The inherent power of a governmental entity to take privately owned property and convert it to public use,
subject to reasonable compensation for the taking. | Eminent Domain |
| A program in which an employer assists its employees in purchasing homes
by helping with the down payment, closing costs, or monthly payments. | Employer-Assisted Housing |
| An interference with or intrusion onto another’s property. | Encroachment |
| A claim or liability that is attached to property and that may lessen its value, such as a lien or mortgage.
An encumbrance cannot defeat the transfer of possession, but it remains after the property or right is transferred. | Encumbrance |
| An absolute right to a benefit granted immediately upon legal requirement. | Entitlement |
| A federal statute that prohibits creditors from discriminating against credit applicants based on
race, color, religion, national origin, age, sex, or marital status with respect to any aspect of a credit transaction. | Equal Credit Opportunity Act (ECOA/Regulation B) |
| A transaction that has the intent but not the form of a mortgage,
and that a court of equity will treat as a mortgage. | Equitable Mortgage |
| The amount by which an interest in property exceeds secured claims or liens.
The difference between the value of the property and all encumbrances on it. | Equity |
| A legal document or property delivered by a promisor to a third party to be held by that third party for a given amount of time or until the occurrence of a condition at which time the third party is to hand over the document or property to the promisee. | Escrow |
| A bank account, generally held in the name of the depositor and an escrow agent
that is returnable to the depositor or paid to a third person on the fulfillment of specified conditions. | Escrow Account |
| The third-party depositary of an escrow.
An escrow holder is not a common-law agent because the holder does not act subject to the control of the parties to the escrow agreement. | Escrow Agent |
| The instruction given to the third-party depositary of an escrow | Escrow Agreement |
| The contract among buyer, seller, and escrow holder,
setting forth the rights and responsibilities of each. | Escrow Contract |
| The act or process of legally dispossessing a person of land or rental property | Eviction |
| The right to sell a principal’s products or to act as the seller’s real estate agent to the exclusion of all others, including the owner.
The listing agreement upon which the broker gets commission even if seller is
the one who sells the house during the agreement period or for a certain period thereafter | Exclusive Right-to-Sell Listing |
| A listing giving one agent the right to be the only person, other than the owner,
to sell the property during a specified period.
A listing agreement upon which the broker does not get a commission if the
seller sells the property themselves. | Exclusive Agency Listing |
| A person named by a testator to carry out the provisions of the testator’s will. | Executor |
| A 2003 amendment to the federal Fair Credit Reporting Act
providing free annual credit reports to consumers and establishing measures intended to help prevent identity theft.
One of the Act’s better-known and more heavily litigated provisions prohibits merchants from printing the expiration date or more than the last five digits of the card number on a point-of-sale credit card or debit card receipts | Fair and Accurate Credit Transactions Act (FACT Act) 2003 |
| A 1970 federal statute that regulates disclosure and use of consumer-credit information
and ensures the right of consumers to have access to and to correct their credit reports.
Many states have enacted similar statutes. | Fair Credit Reporting Act (FCRA/Regulation V) |
| A 1968 federal statute that prohibits discrimination based on
race, sex, religion, family status, or national origin in the sale or rental of a dwelling, especially in the refusal to sell or rent. | Fair Housing Act (FHA) |
| The price that a seller is willing to accept and a buyer is willing to pay
on the open market and in an arm’s-length transaction, the point at which supply and demand intersect. | Fair Market Value |
| The current loan limits are:
$510,400 for a single family unit home,
$653,550 for a two-unit home,
$789,950 for a three-unit home and
$981,700 for a four-unit home.
These numbers are 150 percent higher in high cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands. | Fannie Mae/Freddie Mac Loan Limit |
| A privately owned and managed corporation chartered by the U.S. government that provides a secondary mortgage market for the purchase and sale of mortgages guaranteed by the Veterans Administration and those insured
under the Federal Housing Administration. | Federal National Mortgage Association (Fannie Mae/FNMA) |
| A corporation that purchases both conventional and federally insured first mortgages
from members of the Federal Reserve System and other approved banks. | Federal Home Loan Mortgage Corporation (Freddie Mac/FHLMC) |
| An agency in the U.S. Department of Housing and Urban Development
responsible for facilitating mortgage lending by insuring mortgage loans on
houses meeting the agency’s standards.
Created in1934. | Federal Housing Administration (FHA) |
| The central bank that sets credit and monetary policy by fixing the reserves to be maintained by depository institutions, determining the discount rate charged by Federal Reserve Banks, and regulating the amount of credit that may be extended on any security.
The Federal Reserve System was established by
the Federal Reserve Act of 1913.
It incorporates 12 central banks supervised by a Board of Governors
whose members are appointed by the President and confirmed by the Senate | Federal Reserve System (FRS) |
| An interest in land that, being the broadest property interest allowed by law, endures until the current holder dies without heirs. | Fee Simple |
| A mortgage that is insured fully or partially by the Federal Housing Administration (FHA). | FHA Mortgage |
| Current Federal Housing Administration (FHA) upfront mortgage insurance premiums are 1.75 percent of the loan size.
If an FHA-backed mortgage is used for a purchase mortgage and your loan size is $300,000,
then your upfront Mortgage Insurance Premium (MIP) will be $5,250. | FHA Mortgage Insurance |
| A promise from a lender to make a mortgage loan. | Firm Commitment |
| A mortgage that is senior to all other mortgages on the same property. | First Mortgage |
| An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property.
This includes a spouse. If either meets the test, they are considered first-time homebuyers.
A single parent who has only owned with a former spouse while married. | First-Time Home Buyer |
| The monthly payment due on a mortgage loan which includes both principal and interest. | Fixed Installment |
| An adjustable rate mortgage with an initial fixed interest rate period.
After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin.
The amount by which the interest rate can adjust after the fixed period is usually subject to an interest rate cap | Fixed Period Adjustable Rate Mortgage |
| A mortgage with an interest rate that remains the same over the life of the mortgage regardless of market conditions. | Fixed-Rate Mortgage (FRM) |
| Fee issued to the client which covers the cost of the assessment and is included in closing costs and fees. | Flood Certification Fee |
| Insurance that indemnifies against a loss caused by a flood.
This type of insurance is often sold privately but subsidized by the federal government. | Flood Insurance |
| The lowest limit, such as the lowest interest rate allowed by law or the smallest permissible payment under a contract. | Floor |
| The act of refraining from enforcing a right, obligation, or debt.
Permitting one to retain a loan of money after it has become due and payable is forbearing it.
Forbearance, within the meaning of usury laws, is the giving of further time for the return of payment of money after the date upon which it became due. | Forbearance |
| A legal proceeding to terminate a mortgagor’s interest in property,
instituted by the lender (the mortgagee) either to gain title or to force a sale to satisfy the unpaid debt secured by the property. | Foreclosure |
| A destruction or deprivation of some estate or right because of the failure to perform some contractual obligation or condition.
When a condition is not likely to occur until the obligee has relied on the
expected exchange by, for example, performing or preparing to perform, nonoccurrence of the condition results in the obligee’s loss of its reliance interest when the obligee loses the right to that exchange.
This loss of reliance interest is often described as forfeiture. | Forfeiture |
| A mortgage in which the mortgagor pays the interest as well as a portion of the principal in the periodic payment.
At maturity, the periodic payments will have completely repaid the loan.
Also known as a selfliquidating mortgage. | Fully Amortized Mortgage |
| Someone who contracts for the completion of an estate project, including purchasing all materials, hiring and paying subcontractors, and coordinating all the work. | General Contractor |
| A seller promises that there are no defects in the title that arose or were created while the seller owned the property or while anyone prior to the seller owned the property. | General Warranty Deed |
| A letter to the lender from the donor stating a gift of money has been made to the buyer to purchase a specific property.
The relationship of the donor and donee is stated, as well as the amount of the
gift. | Gift Letter |
| Gives you an estimate of the costs of the mortgage loan.
A form that lists basic information about the terms of a mortgage for which the applicant has applied.
If the applicant applied for a mortgage before
October 3, 2015,
or if the applicant is applying for a reverse mortgage, they will receive a Good Faith Estimate (GFE). | Good Faith Estimate |
| Mortgage insured by a government entity, such as
Federal Housing Administration (FHA),
Veteren’s Administration (VA) or
Rural Housing Service (RHS). | Government Mortgage |
| A federally owned corporation in the U.S. Department of Housing and Urban Development responsible for guaranteeing mortgage-backed securities composed of FHA insured or VA guaranteed mortgage loans.
The Association purchases, on the secondary market, residential mortgages originated by local lenders; it then issues federally insured securities backed by these mortgages. | Government National Mortgage Association (Ginnie Mae/GNMA) |
| A mortgage whose initial payments are lower than its later payments.
The payments are intended to gradually increase, as the borrower’s income increases over time. | Graduated Payment Mortgage (GPM) |
| An extra period of time allowed for taking some required action (such as making payment) without incurring the usual penalty for being late.
Article 9 of the Uniform Commercial Code (UCC) provides
for a 20-day grace period after the collateral is received.
During that time a purchase-money security
interest must be perfected to have priority over any conflicting security interests. | Grace Period |
| A federal statute that repealed both parts of the Glass-Stegall Act prohibiting combinations among banking, securities, and insurance companies, as well as related conflict-of-interest provisions for such companies’ officers, directors, and employees.
The Act also regulates the collection, disclosure, use, and protection of consumers’ nonpublic personal information. | Gramm-Leach-Bliley Act (GLB) 1999 |
| The total amount of a person’s income before taxes. | Gross Monthly Income |
| Rent paid by a tenant under a long-term lease for the use of undeveloped land, usually for the construction of a commercial building. | Ground Rent |
| A mortgage that is fully amortized over a significantly shorter term than the traditional 30-year mortgage, with increasing payments each year. | Growing-Equity Mortgage (GEM) |
| Assumption of the liability of another’s debts in the event of default. | Guarantee |
| A mortgage that is guaranteed by a third party | Guarantee Mortgage |
| A promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another who is liable in the first instance. | Guaranty |
| Insurance that protects property owners against damage caused by fires, severe storms, earthquakes, or other natural events.
If the specific event is covered within the policy, the property owner will receive compensation to cover the cost of any damage incurred. | Hazard Insurance |
| A line of bank credit given to a homeowner, using the homeowner’s equity in the home as collateral. | Home Equity Loan |
| A non-invasive visual examination of a residential dwelling, performed for a fee, which is designed to identify observed material defects within specific components of said dwelling | Home Inspection |
| This regulation provides the public loan data that can be used to assist in determining whether financial institutions are serving the housing needs of their communities, public officials in distributing publicsector investments to attract private investment to areas where it is needed, and in identifying possible
discriminatory lending patterns.
The regulation applies to certain financial institutions, including banks,
savings associations, credit unions, and other mortgage lending institutions. | Home Mortgage Disclosure Act of 1975 (HMDA/Regulation C) |
| Insurance that covers both damage to the insured’s residence and liability claims made against the insured, especially those arising from the insured’s negligence. | Homeowner’s Insurance |
| A warranty and insurance program that, among other coverage, insures a new home for ten years against major structural defects.
The program was developed by the Home Owners Warranty Corporation, a
subsidiary of the National Association of Home Builders.
Builders often provide this type of coverage, and may states provide similar warranty protection by statute. | Homeowner’s Warranty (HOW) |
| HOEPA was enacted in 1994 as an amendment to the Truth-In-Lending Act (TILA)
to address abusive practices in refinances and closed end home equity loans with high interest rates or high fees. | Home Ownership and Equity Protection Act (HOEPA) 1994 |
| The cabinet-level department of the federal government responsible for overseeing programs that are concerned with housing needs and fair-housing opportunities, and with improving and developing the country’s communities.
Established in 1965, headed by the Secretary of Housing and Urban
Development. | Housing and Urban Development (HUD) |
| A law or regulation setting standards for the construction, maintenance, occupancy, use, or appearance of buildings and dwelling units. | Housing Code |
| A ratio comparing housing expenses to before-tax income that is used by lenders to qualify borrowers for a mortgage.
The housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance, and association fees.
The limit for housing is generally 28 percent of the expense-to-income ratio. | Housing Expenses-to-Income Ratio |
| Standard form which is used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate. | HUD-1 Settlement Statement |
| It performs like a fixed and adjustable rate loan. It has a fixed rate for an initial period before turning into an Adjustable Rate Mortgage (ARM).
These initial periods are offered in 3, 5, 7, and 10 year terms. | Hybrid Loan |
| The portion of a monthly mortgage payment that is earmarked to pay property taxes and property insurance premiums. | Impound |
| Property that produces income, such as rental property | Income Property |
| A number, usually expressed in the form of a percentage or ratio, that indicates or measures a series of observations, especially those involving a market or the economy | Index |
| An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin.
The indexed rate is used to calculate the interest rate on an
Adjustable Rate Mortgage (ARM). | Indexed Rate |
| A savings or brokerage account to which a person may contribute up to a specified amount of earned income each year.
The contributions, along with any interest earned in the account, are not taxed until the money is withdrawn after a participant reaches the age of 59.5 (or before then, if a 10 percent penalty is paid). | Individual Retirement Account (IRA) |
| A general increase in prices coinciding with a fall in the real value of money. | Inflation |
| The interest rate that applies on the first day of the loan’s term. | Initial Interest Rate |
| A request for a copy of your credit report by a lender or other business, often when you fill out a credit application and/or request more credit. | Inquiry |
| Insolvency is a term
for when an individual or organization can no longer meet its financial obligations with its lender(s) as debts become due. | Insolvency |
| A periodic partial payment of a debt. | Installment |
| A loan that is repaid by the borrower in regular installments.
Installment debt is generally repaid in equal monthly payments that include interest and a portion of principal. | Installment Debt |
| Interest is the charge for the privilege of borrowing money,
typically expressed as an Annual Percentage Rate (APR). | Interest |
| The rate of interest that is added to the principal of a financial instrument between cash payments of that interest. | Interest Accrual Rate |
| Arrangement that allows the seller to deposit money to an account,
from which the money is released each month to reduce the mortgagor’s monthly payments during the early years of the mortgage. | Interest Rate Buy Down Plan |
| The maximum interest rate that a financial institution can charge a borrower
for an Adjustable Rate Mortgage (ARM) or loan according to the contractual terms of the mortgage loan. | Interest Rate Ceiling (Cap) |
