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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 Y Z
call option
A provision in the mortgage that gives the mortgagee the right to call the
mortgage due and payable at the end of a specified period for whatever reason.
cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the
interest rate or mortgage payments may increase or decrease.
capital expenditure
The cost of an improvement made to extend the useful life of a property or to
add to its value.
capital improvement
Any structure or component erected as a permanent improvement to real property
that adds to its value and useful life.
cash-out refinance
A refinance transaction in which the amount of money received from the new loan
exceeds the total of the money needed to repay the existing first mortgage,
closing costs, points, and the amount required to satisfy any outstanding
subordinate mortgage liens. In other words, a refinance transaction in which the
borrower receives additional cash that can be used for any purpose.
Certificate of Eligibility
A document issued by the federal government certifying a veteran's eligibility
for a Department of Veterans Affairs (VA) mortgage.
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 mortgage.
certificate of title
A statement provided by an abstract company, title company, or attorney stating
that the title to real estate is legally held by the current owner.
chain of title
The history of all of the documents that transfer title to a parcel of real
property, starting with the earliest existing document and ending with the most
recent.
change frequency
The frequency (in months) of payment and/or interest rate changes in an
adjustable-rate mortgage (ARM).
clear title
A title that is free of liens or legal questions as to ownership of the
property.
closing
A meeting at which a sale of a property is finalized by the buyer signing the
mortgage documents and paying closing costs. Also called "settlement."
closing cost item
A fee or amount that a home buyer must pay at closing for a single 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 statement.
closing costs
Expenses (over and above the price of the property) incurred by buyers and
sellers in transferring ownership of a property. Closing costs normally include
an origination fee, an attorney's fee, taxes, an amount placed in escrow, and
charges for obtaining title insurance and a survey. Closing costs percentage
will vary according to the area of the country.
closing statement
Also referred to as the HUD1. The final statement of costs incurred to close on
a loan or to purchase a home.
cloud on title
Any conditions revealed by a title search that adversely affect the title to
real estate. Usually clouds on title cannot be removed except by a quitclaim
deed, release, or court action.
collateral
An asset (such as a car or a home) that guarantees the repayment of a loan. The
borrower risks losing the asset if the loan is not repaid according to the terms
of the loan contract.
collection
The efforts used to bring a delinquent mortgage current and to file the
necessary notices to proceed with foreclosure when necessary.
co-maker
A person who signs a promissory note along with the borrower. A co-maker's
signature guarantees that the loan will be repaid, because the borrower and the
co-maker are equally responsible for the repayment. See endorser.
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.
commitment letter
A formal offer by a lender stating the terms under which it agrees to lend money
to a home buyer. Also known as a "loan commitment."
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.
Community Home Improvement Mortgage Loan
An alternative financing option that allows low- and moderate-income home buyers
to obtain 95 percent financing for the purchase and improvement of a home in
need of modest repairs. The repair work can account for as much as 30 percent of
the appraised value.
community property
In some western and southwestern states, a form of ownership under which
property acquired during a marriage is presumed to be owned jointly unless
acquired as separate property of either spouse.
comparable
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. Comparable Market
Analysis (CMA)--A comparison of the prices of similar houses in the same general
geographic area. A CMA is used to help determine the value of a property, either
for a seller or a buyer.
compound interest
Interest paid on the original principal balance and on the accrued and unpaid
interest.
condemnation
The determination that a building is not fit for use or is dangerous and must be
destroyed; the taking of private property for a public purpose through an
exercise of the right of eminent domain.
condominium
A real estate project in which each unit owner has title to a unit in a
building, an undivided interest in the common areas of the project, and
sometimes the exclusive use of certain limited common areas.
condominium conversion
Changing the ownership of an existing building (usually a rental project) to the
condominium form of ownership.
construction loan
A short-term, interim loan for financing the cost of construction. The lender
makes payments to the builder at periodic intervals as the work progresses.
consumer reporting agency (or bureau)
An organization that prepares reports that are used by lenders to determine a
potential borrower's credit history. The agency obtains data for these reports
from a credit repository as well as from other sources.
Contingencies
These are conditions--or "safety valves" written into
Real Estate offers and contracts to prevent a buyer from being forced to buy a
house that is unsatisfactory--either structurally or financially. Examples of
contingencies are "This contract is subject to the buyer obtaining a
satisfactory whole house inspection." or "Subject to the buyer being
able to obtain a mortgage."
contract
An oral or written agreement to do or not to do a certain thing.
conventional mortgage
A mortgage that is not insured or guaranteed by the federal government.
convertibility clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to
change the ARM to a fixed-rate mortgage at specified timeframes after loan
origination.
convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage
under specified conditions.
cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing
complex own shares in the cooperative corporation that owns the property, giving
each resident the right to occupy a specific apartment or unit.
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.
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.
covenant
A clause in a mortgage that obligates or restricts the borrower and that, if
violated, can result in foreclosure.
credit
An agreement in which a borrower receives something of value in exchange for a
promise to repay the lender at a later date.
creditor
A person to whom money is owed.
credit report
A report of an individual's credit history prepared by a credit bureau and used
by a lender in determining a loan applicant's creditworthiness.
credit reporting agency (or bureau)
An organization that prepares reports that are used by lenders to determine a
potential borrower's credit history. The agency obtains data for these reports
from a credit repository as well as from other sources.
credit repository
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.
Debt to Income Ratio
The ratio of a borrowers total of debt as a percentage of their
total gross income.
debt
An amount owed to another.
Deed
The document that, when recorded with your local government,
determines ownership of a property. Transferred from seller to buyer at closing.
deed-in-lieu
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid
foreclosure.
deed of trust
The document used in some states instead of a mortgage; title is conveyed to a
trustee.
default
Failure to make mortgage payments on a timely basis or to comply with other
requirements of a mortgage.
delinquency
Failure to make mortgage payments when mortgage payments are due.
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.
A.k.a. earnest money deposit.
depreciation
A decline in the value of property; the opposite of appreciation.
dower
The rights of a widow in the property of her husband at his death.
down payment
The part of the purchase price of a property that the buyer pays in cash and
does not finance with a mortgage.
due-on-sale provision
A provision in a mortgage that allows the lender to demand repayment in full if
the borrower sells the property that serves as security for the mortgage.
earnest money deposit
Money that is submitted with an offer to
purchase which indicates a buyer's seriousness and good faith. In virtually all
cases, earnest money will need to be submitted at the time of the offer and
remains in escrow until the time of closing, at which time it becomes part of
the down payment.
easement
A right of way giving persons other than the owner access to or over a property.
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.
effective gross income
Normal annual income including overtime that is regular or guaranteed. The
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.
eminent domain
The right of a government to take private property for public use upon payment
of its fair market value. Eminent domain is the basis for condemnation
proceedings.
encroachment
An improvement that intrudes illegally on another’s property.
encumbrance
Anything that affects or limits the fee simple title to a property, such as
mortgages, leases, easements, or restrictions.
endorser
A person who signs ownership interest over to another party. Contrast with
co-maker.
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.
Equity
The
difference between the value of a property and the total of any outstanding
mortgages or loans against it.
escrow
An item of value, money, or documents deposited with a third party to be
delivered upon the fulfillment of a condition. For example, the deposit by a
borrower with the lender of funds to pay taxes and insurance premiums when they
become due, or the deposit of funds or documents with an attorney or escrow
agent to be disbursed upon the closing of a sale of real estate.
escrow account
The account in which a mortgage servicer holds the borrower's escrow payments
prior to paying property expenses.
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.
escrow collections
Funds collected by the servicer and set aside in an escrow account to pay the
borrower's property taxes, mortgage insurance, and hazard insurance.
escrow disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage
insurance, and other property expenses as they become due.
escrow payment
The portion of a mortgagor's monthly payment that is held by the servicer to pay
for taxes, hazard insurance, mortgage insurance, lease payments, and other items
as they become due. Known as "impounds" or "reserves" in
some states.
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.
eviction
The lawful expulsion of an occupant from real property.
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.
executor
A person named in a will to administer an estate. The court will appoint an
administrator if no executor is named. "Executrix" is the feminine
form.
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit
reports by consumer/credit reporting agencies and establishes procedures for
correcting mistakes on one's credit record.
fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and
the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae
A congressionally chartered, shareholder-owned company that is the nation's
largest supplier of home mortgage funds.
Fannie 97®
A financing option for a fixed-rate mortgage that offers home buyers a 3 percent
down payment loan with a term between 15 and 30 years. The mortgage features a
loan-to-value (LTV) percentage of 97 percent, and is designed to expand
homeownership. A mortgage which is
a cross between a conventional mortgage and an FHA loan.
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 underwriting but does not
lend money or plan or construct housing.
fee simple
The greatest possible interest a person can have in real estate.
FHA mortgage
A mortgage that is insured by the Federal Housing Administration (FHA). Also
known as a government mortgage.
finder's fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a
prospective borrower.
first mortgage
A mortgage that is the primary lien against a property.
fixed installment
The monthly payment due on a mortgage loan. The fixed installment includes
payment of both principal and interest.
fixed-rate mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of
the loan.
fixture
Personal property that becomes real property when attached in a permanent manner
to real estate.
flood insurance
Insurance that compensates for physical property damage resulting from flooding.
It is required for properties located in federally designated flood areas.
Also typically covers land and mudslides.
foreclosure
The legal process by which a borrower in default under a mortgage is deprived of
his or her interest in the mortgaged property. This usually involves a forced
sale of the property at public auction with the proceeds of the sale being
applied to the mortgage debt.
forfeiture
The loss of money, property, rights, or privileges due to a breach of legal
obligation.
fully amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to
amortize the remaining balance, at the interest accrual rate, over the
amortization term.
good faith estimate
An estimate of charges which a borrower is likely to incur in connection with a
settlement.
government mortgage
A mortgage 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 mortgage.
Government National Mortgage Association
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 program formerly administered by
Fannie Mae. Popularly known as Ginnie Mae.
grantee
The person to whom an interest in real property is conveyed.
grantor
The person conveying an interest in real property.
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.
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.
growing-equity mortgage (GEM)
A fixed-rate mortgage that provides scheduled payment increases over an
established period of time, with the increased amount of the monthly payment
applied directly toward reducing the remaining balance of the mortgage.
guarantee mortgage
A mortgage that is guaranteed by a third party.
guaranteed loan
Also known as a government mortgage.
# A B C D E F G
H I J K L M N O P Q
R S T U V W X Y Z
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