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Definition |
Source |
More info |
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| AAA tenant |
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A rating given to a prime tenant with the highest credit rating. The term is often used to describe the credit rating of a retail store. For example, a developer who plans to build a shopping center will seek a "triple A" t enant to help secure financing.
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LISC |
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| Absorption rate |
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A rate that is a forecast of how quickly properties can be sold or leased in a given area. For example, if a developer can lease 20% of the units available to the market in a given area for a given time, the absorption ra te is 20 percent.
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LISC |
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| Abstract of title |
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A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cle ared before a buyer can purchase clear, marketable, and insurable title.
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LISC |
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| Abut |
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Connect or join. If two pieces of property touch each other, they abut each other.
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LISC |
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| Abutment |
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A load-bearing vertical member of a structure. A wall or a column are examples of abutments.
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LISC |
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| Acceleration Clause |
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A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
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Fannie Mae |
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| Acceptance |
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An offeree's consent to enter into a contract and be bound by the terms of the offer.
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Fannie Mae |
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| Accessibility |
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Accessibility: All new construction of covered multifamily buildings must include certain features of accessible and adaptable design. Units covered are all those in buildings with four or more units and one or more elevators, and all ground floor units in buildings without elevators.
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HUD |
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| Accessory building |
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A building or structure detached from but on the same property as a main building. Examples of accessory buildings are garages, storage buildings and guest houses.
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LISC |
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| Accident and health premium |
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A premium paid by a mortgagor for an insurance policy to ensure the continuance of mortgage payments if the borrower is disabled or ill.
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LISC |
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| Accommodation party |
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One who accommodates another by signing a note or a bill without receiving compensation (a note being a negotiable instrument such as a promissory note).
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LISC |
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| Accrued interest |
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Interest earned but not paid since the last due date.
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LISC |
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| Acoustical tile |
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Tile that absorbs sound. is often used in the ceilings of apartment units and offices.
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LISC |
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| Acre (AC) |
(AC) |
Land that measures 43,560 square feet. A lot 208.71' x 208.71' is 4,840 square yards, 4,047 square meters, 160 square rods, 0.4047 hectare or 43,560 square feet.
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LISC |
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| Act of God |
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An event that causes damage by nature such as a flood, earthquake or winds; an occurrence not caused by man.
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LISC |
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| Action to quiet title |
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A court action to establish ownership of real property. This court action usually removes any interest or claim to title of real estate. The action results in removing any cloud on the title. Normally a lender will not commit to a mortgage with a cloud on the title. If the complainant is successful in the court action, the title is made quiet, or is clean.
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LISC |
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| Ad valorem |
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A method of taxation using a fixed proportion of property value; for example, real estate taxes collected at the rate of a specific dollar amount of appraised value or assessment. People use the ad valorem method as a formula to decide how much tax to pay the government. A commonly used formula for computing taxes is as follows (assumptions: properties are assessed at 25% of valuation, appraisal is $100,000 and the tax rate is $7.50 per $100): $100,000 x 25% = $25,000 1Ú2 $100 = 250 ($100 units), 250 x $7.50 = $1,875 1Ú2 12 (12 months) = $156.25 per month
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LISC |
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| Adaptive reuse |
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Providing a new use for an older, but sound, structure. An example would be an abandoned warehouse converted into business or residential condominiums.
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LISC |
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| Add-on interest |
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Interest added to the amount of the loan on the front end, or beginning of the loan repayment period. The balance is then paid by installments. This form of interest is much more expensive than simple interest paid on the entire amount for the entire term of the loan.
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LISC |
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| Additional Principal Payment |
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A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
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Fannie Mae |
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| Adjoin |
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Connect or join. If two pieces of property touch each other, they adjoin or abut each other.
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LISC |
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| Adjustable Mortgage Loans (AML) |
(AML) |
See Adjustable Rate Mortgage
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LISC |
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| Adjustable Rate Mortgage |
(ARM) |
Adjustable-Rate Mortgages (ARMs) offer an interest rate that adjusts periodically to keep it in line with changing market rates.
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Fannie Mae |
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| Adjustable living expenses |
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Expenses you can change, such as costs of groceries, utilities, telephone.
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LISC |
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| Adjustable-Rate Mortgage (ARM) |
(ARM) |
A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. The rate is usually based on indexes tied to the nation's economy. You ma y also see ARMs referred to as AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages)
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LISC |
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| Adjustable-rate mortgage |
(ARM) |
A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.
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FHA |
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| Adjusted Basis |
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The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
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Fannie Mae |
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| Adjustment Date |
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The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
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Fannie Mae |
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| Adjustment Period |
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The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
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Fannie Mae |
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| Administrative Services Center |
(ASC) |
Administrative Services Center (ASC): HUD field offices providing administrative support in the areas of staffing, labor relations, computer, and a variety of day-to-day operational support needs such as space, supplies, equipment, furniture and mail to HUD employees in the field. (HUDWEB)
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HUD |
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| Administrator |
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A person appointed by a probate court to administer the estate of a person who died intestate.
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Fannie Mae |
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| Advance |
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To give someone a draw or payment by making them a loan.
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LISC |
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| Affidavits |
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As part of the closing process, you're likely to sign numerous affidavits. You may be required, for example, to sign an affidavit of occupancy. It states that you will use the property as a principal residence. Or, you and the seller may have to sign an affidavit stating all of the improvements to the property required in the sales contract were completed before closing.Your lender can provide additional information regarding any of these documents you will sign.
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Fannie Mae |
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| Affordability Analysis |
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A detailed analysis of your ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you might expect to pay.
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Fannie Mae |
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| Affordable Housing Program (AHP) |
(AHP) |
A program of the Federal Home Loan Bank system which allows the Regional Banks of the System to make subsidized funds available through member institutions for the production of affordable housing to serve f amilies below 80 % of their area median income (AMI).
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LISC |
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| Agrarian |
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Something that relates to land or to a distribution or division of land.
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LISC |
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| Agreement of sale |
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Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain speci fic terms and conditions spelled out in writing and signed by both parties.
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LISC |
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| Air rights |
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The right to use the space or air above the ground but not the ground itself. can be sold or leased. Ownership of land includes air rights above the property. Some use of air rights, such as traveling through airspace by airplane no longer require the approval of the property owner.
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LISC |
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| Alcove |
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A recessed room connected to a main or larger room.
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LISC |
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| Alienation |
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A transfer or conveyance of property. is voluntary when it is with the consent of the owner. Involuntary alienation is a transfer of property without the consent of the owner, as in a foreclosure, adverse possess ion and eminent domain.
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LISC |
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| Alienation clause |
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A clause closely associated in meaning with Due-On-Sale Clause and Acceleration Clause. An alienation clause in a mortgage can give the lender the option to call the loan (declare the entire balance due) when the proper ty owner transfers ownership, title or interest without the lender' s consent.
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LISC |
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| All Inclusive Trust Deed (AITD) |
(AITD) |
Also known as a Wraparound Mortgage. A junior lien on a property which encompasses the senior financing. Enables the borrower to increase the amount of borrowing without paying off the original loan or paying the higher interest rates associated with other types of secondary financing. The borrower makes one payment (usually to the seller) from which the senior financing is paid with the balance going to ward the holder of the Note. May be advantageous to the seller in that he can experience an additional return on money (the senior financing) which he never loaned.
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LISC |
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| Allodial system |
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Ownership of land with the owner having full and absolute dominion over the property. This system is the basis for our property rights in the United States. A contrasting system is the feudal system, which gives owners hip to a king or sovereign who gives rights to the citizenry to occupy the land for a period of time.
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LISC |
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| Allowance for vacancy and income loss |
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An allowance used on pro-forma or profit-and-loss projections for income properties. You subtract an allowance for vacancy from gross income to decide net effective income (income before expenses). An investor cannot use rental property that is 100% occupied. Depending on the market area, the vacancy allowance for income properties such as apartments is usually from 5% to 10% of the gross rental.
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LISC |
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| Alluvion |
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The gradual building up of soil deposited by water against a shore.
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LISC |
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| Alluvium |
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Soil deposited by accretion along the shore or bank of a river.
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LISC |
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| Amenity |
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A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
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Fannie Mae |
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| American Bankers Association (ABA) |
(ABA) |
A professional organization of banks based in Washington, D.C., that lobbies the federal government and monitors federal and state laws and regulations on issues pertinent to the banking industry.
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LISC |
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| American Institute Of Architects (AIA) |
(AIA) |
A professional organization of architects. All registered architects subscribe to AIA' s standards of ethical practice.
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LISC |
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| American Institute Of Certified Public Accountants (AIC |
(AICPA) |
CPA) A professional organization of certified public accountants. AICPA is responsible for developing "GAAP" accounting -- generally accepted accounting principles. AICPA awards th e CPA designation.
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LISC |
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| American Institute Of Real Estate Appraisers (AIREA) |
(AIREA) |
American Institute Of Real Estate Appraisers (AIREA) Formerly,.a member organization of the National Association of REALTORS (NAR). AIREA severed its affiliation with NAR in 1990 and merged with the Society of Real Estate Appraisers to f orm The Appraisal Institute. The Appraisal Institute officially began operation on January 1, 1991.
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LISC |
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| American Land Title Association (ALTA) |
(ALTA) |
An organization comprising title insurance companies, abstractors and attorneys specializing in real property law. ALTA has adopted many title insurance policy forms that standardize coverage nation ally for property owners and lenders. Many states require ALTA standardized title insurance policies.
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LISC |
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| Amortization |
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The gradual repayment of a mortgage loan by installments.
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Fannie Mae |
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| Amortization Schedule |
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A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.
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Fannie Mae |
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| Amortization Term |
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The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
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Fannie Mae |
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| Amortization schedule |
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A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the balance remaining.
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FHA |
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| Amortize |
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Fannie Mae |
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| Amount financed |
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The base loan amount without regard to closing costs, discount points or mortgage insurance premiums. This dollar amount is associated with a disclosure statement used in compliance with the Truth-in-Lending Act.
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LISC |
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| Ampere |
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Measure of electrical current equal to the current produced by the force of one volt through the resistance of one ohm.
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LISC |
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| Anaconda mortgage |
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A mortgage that uses the subject property as collateral for all debts from various loans owed to the lender. Courts may disagree with what an anaconda mortgage intends since they may require a direct relationship betwee n each loan and the collateral acquired by the loan proceeds.
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LISC |
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| Analysis of Impediments |
(AI) |
Analysis of Impediments (AI): A HUD requirement for each state to conduct an analysis to determine impediments to fair housing choice within the state. The Commonwealth must take appropriate actions to overcome the effects of any impediments identified through that analysis. Fair Housing Planning Guide, Volume I, Department of Housing and Urban Development, 1993
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HUD |
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| Anchor bolt |
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A bolt that attaches the sill of a house to the foundation wall.
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LISC |
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| Anchor tenant |
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A retail store in a shopping center used as a major draw to the center. The presence of an anchor tenant helps secure financing for the center and enhances the chance of success for other tenants as it draws the public to i ts store. The store is normally part of a major chain and is a name easily recognized by the public. Depending on the size of the shopping center, there can be several anchor tenants.
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LISC |
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| Ancillary income |
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Income that is secondary in nature and not the main reason for being in the business; income that an investor would not receive if they were not in a particular business.
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LISC |
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| Annex |
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To attach or add; to add to something else.
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LISC |
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| Annual Debt Service (ADS) |
(ADS) |
The total amount of principal and interest to be paid each year to satisfy the obligations of a loan contract.
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LISC |
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| Annual Mortgagor Statement |
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A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
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Fannie Mae |
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| Annual Percentage Rate |
(APR) |
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).
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Fannie Mae |
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| Annual Percentage Rate (APR) |
(APR) |
A method for calculating an interest rate to the interest collected, discount points charged to either purchaser or seller or both, certain costs related to closing and mortgage insurance premiums.
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LISC |
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| Annual percentage rate |
(APR) |
The total yearly cost of a mortgage stated as a percentage of the loan amount; includes such items as the base interest rate, primary mortgage insurance, and loan origination fee (points).
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FHA |
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| Annual percentage rate or APR |
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The cost of a borrower's credit as a yearly rate. Defined by the federal Truth in Lending Act, it includes finance charges as well as the contractual interest rate.
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LISC |
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| Annuity |
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An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis.
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Fannie Mae |
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| Application |
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A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security.(See also "Loan Application")
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Fannie Mae |
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| Appointments |
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Decorative items such as furnishings and equipment in a building.
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LISC |
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| Apportionment |
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A division of expenses, liabilities, responsibilities or property among individuals.
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LISC |
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| Appraisal |
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A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.
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Fannie Mae |
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| Appraisal institute |
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An organization that officially began operation on January 1, 1991. The Appraisal Institute is the result of a merger of the former American Institute of Real Estate Appraisers (AIREA) and the Society of Real Estate A ppraisers. The surviving designations are the MAI (Member of the Appraisal Institute) and SRA (Senior Residential Appraiser).
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LISC |
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| Appraisal report |
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A written opinion of value. The report contains the estimate of value; date of valuation; certification and signature of the appraiser; the purpose, qualifying conditions and description of the subject property and its o wnership; a neighborhood description; the approaches to value; and the final determination of value. An appraiser shall report the present market value for existing properties and proposed developments. The appraiser may report a value as of the conclusion of construction and as of the projected date when stabilized occupancy is achieved.
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LISC |
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| Appraised Value |
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An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
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Fannie Mae |
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| Appraiser |
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A person qualified by education, training, and experience to estimate the value of real property and personal property.
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Fannie Mae |
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| Appreciation |
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An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
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Fannie Mae |
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| Appropriation |
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The private taking of property and dedicating it to public use. It is also the dedication of public land for a private use.
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LISC |
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| Appurtenance |
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An item attributable to the land, such as improvements or an easement. Something that comes from outside the property but is considered part of the property and transfers with the property upon sale or other transfer. A u tility easement is an example of an appurtenance.
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LISC |
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| Apron |
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An area such as the entrance to a driveway or the concrete portion around a swimming pool.
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LISC |
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| Arm's-length transaction |
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A transaction between individuals who do not have a conflict of interest or reason for collusion. The parties are as strangers to each other. The value of property should be questioned for fairness or accuracy if there is not an arm's-length transaction between the seller and buyer. An appraiser should not use comparable sales not closed by an arm's-length transaction in the market approach to value.
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LISC |
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| Army Corps of Engineers |
(COE) |
Army Corps of Engineers (COE): The Corps of Engineers is an agency of the U.S. Army that provides comprehensive engineering, management and technical support to the Department of Defense, other agencies, and to State and Local governments. Army Corps of Engineers Internet site: www.ace.army.mil
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HUD |
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| Arrears |
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At the end of a period. You pay interest on home mortgages in arrears. You pay rent in advance. For example, a mortgage payment due May 1 is for the interest for April; rent due May 1 is for the month of May. The term ca n pertain to delinquent mortgage payments. A mortgage loan that is three months delinquent can be said to be three months in arrears.
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LISC |
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| Artesian well |
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A deep well where water rises to the surface by natural pressure.
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LISC |
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| As is |
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Property sold in its present condition with no warranties made about the plumbing, heating, electrical system or infestation of termites is said to be sold "as is."
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LISC |
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| Assemblage |
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Combining pieces of property to make one large, attractive property. The added value is plottage. People often use option contracts with the practice of assemblage.
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LISC |
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| Assessed Value |
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The valuation placed on property by a public tax assessor for purposes of taxation.
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Fannie Mae |
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| Assessed valuation |
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The dollar amount or value on what real estate tax is levied. If a property worth $100,000 is assessed for tax purposes at 50% of value, the assessed valuation is $50,000. County or township tax assessors normally m ake appraisals for tax reasons. Many state laws require properties to be reappraised periodically. If the taxpayer disagrees with the appraisal, he or she can appeal to a board of appeal or board of equalization.
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LISC |
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| Assessed value |
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The valuation placed upon property by a public tax assessor for purposes of taxation.
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FHA |
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| Assessment |
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The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.
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Fannie Mae |
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| Assessment Rolls |
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The public record of taxable property.
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Fannie Mae |
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| Assessor |
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A public official who establishes the value of a property for taxation purposes.
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Fannie Mae |
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| Asset |
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Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
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Fannie Mae |
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| Assign |
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The act of transferring rights or property to another.
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LISC |
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| Assignee |
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One who receives rights or property. An assignee stands in the place of the assignor for rights, liabilities and interest in the property.
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LISC |
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| Assignment |
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The transfer of a mortgage from one person to another.
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Fannie Mae |
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| Assignment of Mortgage (A/M) |
(A/M) |
A transfer of a mortgage from one mortgagee to another. Sometimes, FHA will accept an assignment of a mortgage to help a qualified, distressed mortgagor.
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LISC |
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| Assignment of servicing |
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A process of assigning the servicing rights from one lender to another.
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LISC |
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| Assignor |
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One who assigns rights or property.
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LISC |
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| Assumability |
|
When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and usually charge a fee for the assumpt ion. Most mortgages now contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may insist that the entire balance is paid in full when the home is sold. Assumability may benefit the seller especially during periods of higher interest rates or after periods of property depreciation.
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LISC |
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| Assumable Mortgage |
|
A mortgage that can be taken over ("assumed") by the buyer when a home is sold. A provision in an assumable mortgage allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon the sale or transfer of the property.
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Fannie Mae |
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| Assumption |
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The transfer of the seller's existing mortgage to the buyer.(See also "Assumable Mortgage")
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Fannie Mae |
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| Assumption Clause |
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A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
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Fannie Mae |
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| Assumption Fee |
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The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
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Fannie Mae |
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| Assumption of mortgage |
|
An obligation undertaken by the purchaser of property to be personally liable for payment of an existing mortgage. In a full assumption, the purchaser is substituted for the original mortgagor in the mortgage instr ument and the original mortgagor is to be released from further liability in the assumption, the mortgagee's consent is usually required. The original mortgagor should always obtain a written release from further liability if he desires to be fully released under the assumption. Failure to obtain such a release renders the original mortgagor liable if the person assuming the mortgage fails to make the monthly payments. (Not to be confused with a subject-to purchase.)
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LISC |
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| Atrium |
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Usually a space in the center of a building with a translucent ceiling and sometimes decorated with such amenities as a water fountain and tropical plants.
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LISC |
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| Attachment |
|
The actual taking of property into the custody of a court to serve as collateral for a judgment sought in an impending suit. Law, not private consent, creates the lien. This form of legal action is not available for obligation s secured by collateral, as in the case of a mortgage.
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LISC |
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| Attestation |
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The act of witnessing a signature on an instrument.
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LISC |
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| Attic |
|
The portion of a house between the ceiling of the top floor and the underside of the roof. There must be access to an attic. By inspecting an attic you can check for signs of structural problems in the rafters and joists and ass ure that there is adequate ventilation.
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LISC |
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| Attorney-in-fact |
|
One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.
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Fannie Mae |
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| Attornment |
|
A tenant's formal recognition of a new landlord. A mortgagee, who becomes an owner by foreclosure, with the tenant recognizing the mortgagee as the new landlord, has a defense against claims for rent by the defaulting mortgago r. Attornment starts a new tenancy between the new owner and the tenant.
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LISC |
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| Attractive nuisance doctrine |
|
A legal doctrine holding that a property owner must protect children from injuring themselves by an attractive danger such as a swimming pool. As an example of adhering to this doctrine, a property owner shou ld build a fence around a swimming pool.
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LISC |
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| Automated Underwriting |
|
After you complete your loan application with a lender, it is sent to "underwriting" for review. In short, underwriting is the process used to analyze how you have managed credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for (i.e., your income and assets), and whether the price you are willing to pay for the home is supported by the price of the property.
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Fannie Mae |
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| Average life of a mortgage |
|
The average number of years one dollar of principal investment remains outstanding in a mortgage loan. The average life is used in deciding the true yield of a mortgage. A 30-year mortgage is said to have an average life of 12 years; a 10- to 15-year mortgage has an average life of 7 years. Investors base the yield of a mortgage on the average life as opposed to the original term.
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LISC |
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| Avulsion |
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The sudden removal of land by action of a body of water, such as a river.
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LISC |
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| BTU |
|
See British Thermal Unit.
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LISC |
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| Backfilling |
|
The act of putting back dirt removed for construction. You backfill by filling the gap between the foundation wall and the yard so that water will drain away from the building.
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LISC |
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| Backup contract |
|
A term often used with contracts to buy real estate. A backup contract is a contract that will replace a prior contract in the event of failure to perform or close by the parties of the prior contract. The seller shoul d get a release from the buyer on the first contract before canceling the contract and proceeding with the second, or backup, contract.
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LISC |
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| Balance Sheet |
|
A financial statement that shows assets, liabilities, and net worth as of a specific date.
|
Fannie Mae |
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| Balloon Mortgage |
|
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.
|
Fannie Mae |
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| Balloon Payment |
|
The final lump sum payment that is made at the maturity date of a balloon mortgage.
|
Fannie Mae |
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| Balloon note |
|
A Promissory Note which requires only partial or no amortization (principal reduction.) Balloon Notes result in an eventual Balloon Payment. A Balloon Note may be coupled with an Extendible Rider which allows for the extension of the loan term as long as certain conditions are met. (Such as on 5/25 and 7/23 loans.)
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LISC |
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| Baluster |
|
The support for the rail in a staircase; one of a series of upright posts.
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LISC |
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| Bank Holding Company (BHC) |
(BHC) |
A corporation that owns interests in one or more banks.
|
LISC |
|
| Bankrupt |
|
A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
|
Fannie Mae |
|
| Bankruptcy |
|
A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
|
Fannie Mae |
|
| Base line |
|
A surveyor' s term used to show an east-west line.
|
LISC |
|
| Base rent |
|
The minimum monthly rent due to the landlord. Typically, it is a fixed amount.
|
LISC |
|
| Baseboard |
|
A board that runs along the base of the wall where it meets the floor.
|
LISC |
|
| Basement |
|
The space that is below the first floor. s are usually wholly or partly below the exterior grade. s should be checked for signs of water leakage. Dampness in comers is a sign of moisture problems, and water marks along the base of walls or any cabinets suggest that there is or has been some serious water leakage.
|
LISC |
|
| Basis |
|
The total amount paid for a property, including equity capital and the amount of debt incurred. For a LIHTC project, the initial value that is eligible for tax credits.
|
LISC |
|
| Basis points |
|
A term used in relationship to interest rates. One basis point is equal to 1/100 of 1 percent. are used to describe the yield of a debt instrument, including mortgages. The difference between 9% and 9.5% i s 50 basis points.
|
LISC |
|
| Batten |
|
A narrow board normally used to cover a joint or space between boards, often called a batten board.
|
LISC |
|
| Baty |
|
The strip of insulation placed between the studs of a wall or joists of a ceiling or floor.
|
LISC |
|
| Beam |
|
A load-bearing support that can be made of wood, iron, stone or other strong material.
|
LISC |
|
| Bearer bond |
|
A coupon bond payable to the individual who has possession of the bond.
|
LISC |
|
| Bedrock |
|
Solid rock for a foundation of a large building.
|
LISC |
|
| Bedroom community or suburb |
|
Residential area for commuters who work at a nearby large city or employment center.
|
LISC |
|
| Before-Tax Income |
|
Income before taxes are deducted.
|
Fannie Mae |
|
| Belly-up |
|
A project, business or venture that has failed is said to have gone belly-up.
|
LISC |
|
| Beneficiary |
|
The person designated to receive the income from a trust, estate, or a deed of trust.
|
Fannie Mae |
|
| Bequeath |
|
To transfer personal property through a will.
|
Fannie Mae |
|
| Betterment |
|
An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.
|
Fannie Mae |
|
| Bill of Sale |
|
A written document that transfers title to personal property.
|
Fannie Mae |
|
| Billing cycle |
|
The date a bill is sent out and the payment due. Some bills are sent out on the first of the month, some on the fifteenth, some on other dates.
|
LISC |
|
| Binder |
|
A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.
|
Fannie Mae |
|
| Biweekly Mortgages |
|
With a biweekly mortgage, the monthly payment is split in half, resulting in the same total monthly mortgage, but the resulting 26 and sometimes 27 biweekly payments a year translate into 13 monthly payments, or one extra monthly payment per year. Borrowers can qualify for a 30-year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates. At higher rates, the actual term declines. If you are looking to build up equity in your home faster without the higher mortgage payments that come with a shorter-term mortgage, you may want to consider the biweekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account.
|
Fannie Mae |
|
| Biweekly Payment Mortgage |
|
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.
|
Fannie Mae |
|
| Blacktop |
|
A paving surface usually made of asphalt.
|
LISC |
|
| Blanket Insurance Policy |
|
A single policy that covers more than one piece of property (or more than one person).
|
Fannie Mae |
|
| Blanket Mortgage |
|
The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.
|
Fannie Mae |
|
| Blended rate |
|
(1) A first-mortgage lender can use a blended rate in an advertisement to induce mortgagors to refinance and pay off their old low-interest-rate first mortgage. The first-mortgage lender could offer a 10% interest loan as co mpared to the going rate of 12% if the mortgagor will refinance the existing mortgage that is at 8 percent. (2) A second-mortgage lender or a wraparound lender will advertise not to pay off the old mortgage with the low rate and short term remaining, but instead, to place a second mortgage or wraparound loan behind the first and have a blended rate below market interest rates for first-mortgage loans.
|
LISC |
|
| Blighted area |
|
Usually an inner city area where property values are falling and buildings are deteriorating.
|
LISC |
|
| Blockbusting |
|
An illegal practice of promoting panic-selling in an all-white neighborhood because someone of a minority or ethnic background has moved into or is said to be moving into the neighborhood. The blockbuster will try to gain il legally from depressed prices either by buying or listing the properties at far below market values.
|
LISC |
|
| Blueprint |
|
An architect's or designer's detailed plan for a building. If you remodel your house, you will probably need a blueprint.
|
LISC |
|
| Board and batten |
|
Siding with batten boards nailed over cracks between wider boards.
|
LISC |
|
| Board foot |
|
A piece of wood that is one foot square by one inch thick; 144 cubic inches = l'x l'x 1".
|
LISC |
|
| Board of adjustment |
|
A government body that hears appeals concerning zoning matters. A Board of Adjustment can grant zoning variances.
|
LISC |
|
| Board of equalization |
|
A government body that hears appeals concerning real estate tax assessments. If a property owner thinks the assessment is too high, they can appeal to the Board of Equalization. This board can lower assessments, causing a lower real estate tax.
|
LISC |
|
| Board of realtors® |
|
The local association of REALTORS® who belong to the State and National Association of Realtors.®
|
LISC |
|
| Board of review |
|
See Board Of Equalization.
|
LISC |
|
| Boilerplating |
|
Standard language found in contracts, deeds or deeds of trust, and in covenants, conditions and restrictions (CC&Rs).
|
LISC |
|
| Bona fide |
|
In good faith, without fraud.
|
Fannie Mae |
|
| Bond |
|
An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.
|
Fannie Mae |
|
| Bond value |
|
The mortgage bond's cash flow (or underlying collateral) that upholds the value of the bond. The mortgage bond's value is restricted to the mortgage loan's unpaid balance.
|
LISC |
|
| Bond-type security |
|
An investment security, especially a mortgage-based one, that has the characteristics of a typical corporate bond, including a long-term, fixed rate of return and repayment of principal at maturity.
|
LISC |
|
| Book value |
|
An accounting term used to show the value of a business as a whole or particular asset, such as real estate. You show the value by accounting records that give the cost of the assets plus any improvement minus depreciation. It is the value of an asset. Depending on the reason for valuation, book value may be marked down for a distress sale, but it is normally never marked up to reflect an increase in value.
|
LISC |
|
| Boot |
|
Something of value given to even the exchange of like properties. For example, if parcel A is worth $100,000 and is exchanged for parcel B (worth $80,000) and $20,000 in cash, the boot is the $20,000 in cash.
|
LISC |
|
| Boring test |
|
Using samples obtained by boring deep holes in the ground to decide the strength of the subsoil for construction purposes.
|
LISC |
|
| Borough |
|
A section of a city, similar to an incorporated village, that has control over local matters. New York City has five boroughs.
|
LISC |
|
| Boti'om land |
|
Low land situated near a body of water.
|
LISC |
|
| Bottom line |
|
A phrase that means the net result, such as after-tax cash flow, or the final consequence.
|
LISC |
|
| Bracing |
|
Placing boards between floor or ceiling joists to prevent them from twisting.
|
LISC |
|
| Breach |
|
A violation of any legal obligation.
|
Fannie Mae |
|
| Breach of contract |
|
Failure to perform according to the terms of a contract. The party who has not breached the contract can rescind the agreement and sue for damages or for performance.
|
LISC |
|
| Breach of trust |
|
Abuse of the responsibilities or authority as set forth in a trust agreement.
|
LISC |
|
| Break-even cash ratio |
|
Equalization of the ratio of operating expense plus debt service to gross income (1:1.) Interpreted as the occupancy level that must be achieved to break even.
|
LISC |
|
| Break-even point |
|
A point when gross income will cover operating expenses and the debt service.
|
LISC |
|
| Breakpoint |
|
The Sales threshold over which percentage rent is due.
|
LISC |
|
| Bridge Loan |
|
A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."
|
Fannie Mae |
|
| Bridge financing or bridge loan |
|
Short-term mortgage financing between the end of one loan or financing instrument and the beginning of another.
|
LISC |
|
| British Thermal Unit (BTU) |
(BTU) |
A unit used to measure the efficiency or capacity of heating or cooling systems. A unit of heat required to raise one pound of water One degree Fahrenheit at sea level.
|
LISC |
|
| Broker |
|
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.
|
Fannie Mae |
|
| Brownfields |
|
Brownfields: Abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. Environmental Protection Agency web site at www.epa.gov/swerosps/bf/glossary.htm
|
HUD |
|
| Brownfields Economic Development Initiative |
(BEDI) |
Brownfields Economic Development Initiative (BEDI): BEDI grants enhance the security or improve the viability of a project financed with new Section 108 guaranteed loan authority. HUD intends BEDI and Section 108 funds to finance projects and activities that will provide near-term results and demonstrable economic benefits, such as job creation and increases in the local tax base. HUD web site at www.hud.gov/bedifact.html
|
HUD |
|
| Brownfields Redevelopment Initiative |
(BRI) |
Brownfields Redevelopment Initiative (BRI): An interagency initiative to address the financial and legal risks of cleaning up and redeveloping brownfields. To attract private financing, HUD brings together four existing types of assistance that communities can use to clean up and revitalize potentially contaminated sites: annual formula grants allocated through Community Development Block Grants; lower interest loan guarantee authority through the Section 108 Loan Guarantee program; accompanying competitive grants through the Brownfields Economic Development Initiative program; and additional competitive grants provided through the Lead-Based Paint Hazard Control program. HUD web site at www.hud.gov:80/progdesc/brownf.html
|
HUD |
|
| Budget |
|
A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.
|
Fannie Mae |
|
| Budget Category |
|
A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.
|
Fannie Mae |
|
| Buffer strip or zone |
|
Land between two areas of different use, such as commercial and residential.
|
LISC |
|
| Builder's risk insurance |
|
Insurance used to protect builders against fire and special risks while they have buildings under construction.
|
LISC |
|
| Building Code |
|
Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.
|
Fannie Mae |
|
| Building line or setback |
|
Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.
|
LISC |
|
| Building permit |
|
A written permit that must be purchased from the local government by anyone doing remodeling or rehabbing work on a property.
|
LISC |
|
| Buydown |
|
With a buydown, the seller or borrower pays an amount to the lender so that the lender can offer a lower rate and lower payments, during the earlier portion of the loan term. If the seller pays, he may increase the sales price to co ver the cost of the buydown. Buydowns can occur in all types of mortgages; fixed rate, interim fixed and adjustables.
|
LISC |
|
| Buydown Account |
|
An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.
|
Fannie Mae |
|
| Buydown Mortgage |
|
A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.
|
Fannie Mae |
|
| Buyer's agent |
|
A real estate agent who works for the buyer of a house, not the seller.
|
LISC |
|
| CD-Indexed (Certificate of Deposit) ARMs |
|
The Certificate of Deposit index represents the weekly average of secondary market interest rates on six-month negotiable CDs. The initial interest rate and payments adjust every six months after an initial six-month period. ARMs with this index typically come with a per-adjustment cap of 1 percent and a lifetime rate cap of 6 percent.
|
Fannie Mae |
|
| Cadastral map |
|
A map with legal boundaries and ownership of real property used for title recording.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Candle |
|
A measure of light intensity that is approximately equal; to the intensity of light for a 7/8" sperm candle burning at the rate of 120 grains per hour.
|
LISC |
|
| Candle power |
|
Luminous intensity of a light expressed in candles.
|
LISC |
|
| Cap |
|
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.
|
Fannie Mae |
|
| Capacity |
|
Lenders will want to know if you can repay the mortgage debt you incur -- this is known as your capacity. Lenders will base their evaluation on employment information, how long you've worked, and how much you are paid. Lenders will also review your expenses and any other debt obligations you have. This means they'll want to know how many dependents you have and whether you pay any alimony or child support, for example.
|
Fannie Mae |
|
| Cape cod |
|
A Colonial-style house, usually 1 _ stories in height. The house is small with a single centered front entrance. The entrance usually has one or windows on each side of the front door and is symmetrical. The chimney is often in center of the house, and the roof is a steep gable made of shingles.
|
LISC |
|
| Capital |
|
(1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.
|
Fannie Mae |
|
| Capital Expenditure |
|
The cost of an improvement made to extend the useful life of a property or to add to its value.
|
Fannie Mae |
|
| Capital Improvement |
|
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
|
Fannie Mae |
|
| Capital asset |
|
As defined by the IRS, an asset that can receive favorable treatment upon sale. Assets excluded would be inventory, property held for resale property used in a trade or business.
|
LISC |
|
| Capital gain |
|
The taxable profit from the sale of a capital asset. The gain is the difference from the basis for the capital asset and the value received less adjustments the cost of the sale, e.g., sales commissions, discount points, and closing costs.
|
LISC |
|
| Capital gains tax |
|
A tax owed for selling something at a price that is more than the price the owner bought it for.
|
LISC |
|
| Capital loss |
|
What a homeowner has if he sells his home for less money than he paid for it.
|
LISC |
|
| Capitalization |
|
Process of estimating value by discounting stabilized net operating income by an appropriate rate.
|
LISC |
|
| Capitalization rate |
|
Commonly called the cap rate, the capitalization rate can be used as a division factor to decide the capital value. The net income from an investment divided by the cap rate will equal the capital value, or value. The cap rate is a combination of a return or recapture of the investment and a return on the investment.
|
LISC |
|
| Carryback financing |
|
When the seller helps to finances the sale of property.
|
LISC |
|
| Cash basis |
|
The method of reporting income and expenditures as they are received. A way of deciding the net profit or loss of a business based solely on income received minus expenses paid.
|
LISC |
|
| Cash flow |
|
Income from an investment after deducting expenses and debt service from gross income and before depreciation and income taxes. Net income minus debt service equals cash flow.
|
LISC |
|
| Cash flow model |
|
The framework used to determine the cash flow from operations and the cash proceeds from sale.
|
LISC |
|
| Cash reserve |
|
A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two monthly mortgage payments.
|
FHA |
|
| Cash-on-cash return |
|
Rate of return based on cash returned to the investor on his or her cash investment. The cash-on-cash return is the relationship of the cash returned to the cash invested.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Certificate Of Occupancy (CO) |
(CO) |
An official document by a governing authority stating that a structure complies with the building code and may be occupied legally.
|
LISC |
|
| Certificate of Deposit |
|
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period. (see also "Adjustable-Rate Mortgage")
|
Fannie Mae |
|
| Certificate of Deposit Index |
|
An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit (see also "Adjustable-Rate Mortgage")
|
Fannie Mae |
|
| Certificate of Eligibility |
|
A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Certificate of occupancy |
|
Official document issued by a local government body stating that a structure meets local zoning and building codes and is ready for use.
|
LISC |
|
| Cession deed |
|
A deed used to transfer rights to a government authority. Developers may use a Cession Deed to transfer control of streets in a subdivision.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Change Frequency |
|
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
|
Fannie Mae |
|
| Change Orders |
|
After construction begins, you may discover that you need to make unplanned and necessary changes to the work. The contingency reserve covers unforeseen repairs or deficiencies found during renovation. Unnecessary additions or changes are treated differently. These change orders are considered discretionary and must first be approved by your lender. You must deposit additional funds to pay for the work in the escrow account before work on the changes begins. These change orders -- as well as any that result from unforeseen repairs -- must be added as amendments to your construction contract.
|
Fannie Mae |
|
| Change order |
|
A form used by a builder to specify changes from the approved original plans or blueprints used to construct a building.
|
LISC |
|
| Chattel |
|
Another name for personal property.
|
Fannie Mae |
|
| Chattel mortgage |
|
A lien on personal property that is not permanently attached; something other than real estate.
|
LISC |
|
| Clear Title |
|
A title that is free of liens or legal questions as to ownership of the property.
|
Fannie Mae |
|
| 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."(see also "Settlement")
|
Fannie Mae |
|
| Closing Agent |
|
As a potential home buyer, you will need a closing (or "settlement") agent to coordinate the various closing activities. These can include but are not limited to preparing and recording the closing documents and disbursing funds. The types of services provided by a closing agent depend on the person you hire, but typically the closing is conducted by title companies, escrow companies or attorneys. It is usually held at the lender's or real estate sales professional's office.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| 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; lenders or realtors® often provide estimates of closing costs to prospective homebuyers.
|
Fannie Mae |
|
| Closing Date |
|
After your lender has approved your mortgage and you accept the commitment letter, the next step is to set a closing date. Many times, your real estate sales professional coordinates the setting of this date with you, the seller, the closing agent, and your lender. You may be able to move up the time frame for your closing by working with a lender who uses Desktop Underwriter® -- our advanced automated underwriting system -- because it can cut the time it takes to process your mortgage. Remember, you need to ensure that the closing occurs before your lender's commitment letter -- and the rate lock-in, if there is one -- expire. You can now finalize your moving plans.
|
Fannie Mae |
|
| Closing Statement |
|
(see also "HUD-1 Settlement Statement")
|
Fannie Mae |
|
| Closing costs |
|
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called "settlement costs."
|
FHA |
|
| Closing day |
|
The day on which the formalities of a real estate sale are concluded and at which time title passes from seller to buyer. The final closing merely confirms the original agreement reached in the agreement of sale.
|
LISC |
|
| Cloud (On Title) |
|
An outstanding claim or encumbrance which adversely affects the marketability of title.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| 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 also "Endorser")
|
Fannie Mae |
|
| Co-signer |
|
A person who signs loan documents, such as a mortgage note with another person. The co-signer is responsible for making payments, if the borrower does not.
|
LISC |
|
| Codes |
|
Standards for constructing buildings that are established by city, state or municipal governments. In most areas these codes are modeled after national codes establish many minimum requirements for construction buildings. Points covered by the codes are design, quality of construction, use and occupancy of the building on the site, safety and health.
|
LISC |
|
| Coinsurance |
|
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
|
Fannie Mae |
|
| Coinsurance Clause |
|
A provision in a hazard insurance policy that states the amount of coverage that must be maintained -- as a percentage of the total value of the property -- for the insured to collect the full amount of a loss.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Collateral or security |
|
Property that backs up a loan. If the borrower does not pay back the loan as agreed, the lender can take the collateral. A house is collateral for a mortgage loan. A house gives security to a mortgage loan.
|
LISC |
|
| Collection |
|
The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
|
Fannie Mae |
|
| Collection agencies |
|
Private businesses, hired by creditors, that try to get borrowers to make payments that are overdue.
|
LISC |
|
| Collusion |
|
Two or more parties agree to perform an illegal act.
|
LISC |
|
| Commercial Banks |
|
Commercial banks, like thrifts, originate and service mortgage loans. In some cases, commercial banks may have mortgage banking subsidiaries that perform this function. Banks may choose to hold a loan in their own portfolio or sell the loan to an investor.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| 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."(see also "Loan Committment")
|
Fannie Mae |
|
| Common Area Assessments |
|
Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.
|
Fannie Mae |
|
| Common Area Maintenance |
|
Charges paid by the tenant for the upkeep of areas designated for the use (CAM) and benefit of all tenants.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Common Law |
|
An unwritten body of law based on general custom in England and used to an extent in the United States.
|
Fannie Mae |
|
| Common areas and elements |
|
Arease of property used or available for use by multiple parties. Common Arease in office building often include stairways, hallways, restrooms, courtyards, etc.
|
LISC |
|
| Community Development Block Grant Program |
(CDBG) |
Community Development Block Grant Program (CDBG): Authorized by the Housing and Community Development Act of 1974 replacing several community development categorical grant programs. CDBG provides eligible metropolitan cities and urban counties (called "entitlement communities") with annual direct grants that they can use to revitalize neighborhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low- and moderate-income persons.
|
HUD |
|
| Community Development Block Grant Program (CDBG) |
(CDBG) |
Provides eligible metropolitan cities, urban counties (called "entitlement communities"), and state governments for rural areas with annual direct grants that they can use to revitalize neigh borhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low- and moderate-income persons.
|
LISC |
|
| Community Land Trust Mortgage Option |
|
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.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Community home buyer's program |
|
An alternative financing option that allows households of modest means to qualify for mortgages using nontraditional credit histories, 33 percent housing-to-income and 38 percent debt to-income ratios, and the waiver of the usual two payment cash reserve at closing.
|
LISC |
|
| 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.
|
LISC |
|
| 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.
|
LISC |
|
| Comparable properties |
|
See Direct Sales Comparison.
|
LISC |
|
| Comparables |
|
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.
|
Fannie Mae |
|
| Completion bonds |
|
Bonds provided by contractors to lenders to guarantee completion of construction in accordance plans and specifications.
|
LISC |
|
| Compoinent depreciation |
|
An accounting method used to depreciate components or individual parts of a structure or improvement.
|
LISC |
|
| Compound Interest |
|
Interest paid on the original principal balance and on the accrued and unpaid interest.
|
Fannie Mae |
|
| Compounding |
|
A type of calculation in which interest earned is reinvested and earns additional interest.
|
LISC |
|
| Comprehensive Homeless Assistance Plan |
(CHAP) |
Comprehensive Homeless Assistance Plan (CHAP): Plans, required by law, which are submitted by states and local governments to the Secretary for approval before HUD assistance for the homeless can be made available.
|
HUD |
|
| Comprehensive Improvement Assistance Program |
(CIAP) |
Comprehensive Improvement Assistance Program (CIAP): Program to provide funds to Public Housing Agencies to modernize public housing units.
|
HUD |
|
| 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.
|
Fannie Mae |
|
| Condition of the Home |
|
Potential homeowners should know of major problems in a home before they make an offer. As a potential buyer, you should carefully examine all elements of the home. Ask questions to the seller and the real estate sales professional about any concerns you may have. Both the seller and the real estate agent can be held liable if they do not disclose any defects they know about in the home.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Condominium Conversion |
|
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
|
Fannie Mae |
|
| Condominium Hotel |
|
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
|
Fannie Mae |
|
| Construction Contract |
|
The terms and conditions of any major renovation job should be part of a formal, legally binding contract between you and your contractor -- this is called the construction contract. The lender you choose will likely want to review this contract before you sign it.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Consumer credit counseling services |
|
Nonprofit local agencies that provide credit counseling services to people for free or a small fee.
|
LISC |
|
| Consumer credit counselor |
|
A counselor who helps people develop and stick to a plan for getting out of debt.
|
LISC |
|
| Contiguous |
|
Properties that touch each other.
|
LISC |
|
| Contingencies for Repairs |
|
In your purchase offer, you may consider stating that the seller must make sure the electrical systems, heating and cooling, plumbing, and mechanical systems are functioning properly at the closing. You may also state that your purchase is contingent upon the satisfactory completion of a professional home inspection, which will check these systems and other elements more completely. These are both ways to ensure that surprises don't arise when your moving day arrives. If you do not include this clause in your contract, you are essentially accepting the house "as is."
|
Fannie Mae |
|
| Contingency |
|
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
|
Fannie Mae |
|
| Contingency Reserve |
|
Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account. This contingency reserve is only used when unforeseen repairs or deficiencies are found during renovation.
|
Fannie Mae |
|
| Contingency for Clear Title |
|
Your purchase contract should include a contingency that the purchase is subject to your receiving clear title to the property. This process includes a title search and title insurance.
|
Fannie Mae |
|
| Contingency for Financing |
|
When you make a formal offer on a house, your contract should include a financing contingency. It specifies if you don't get the money you need to purchase the house at the terms you want, the offer is void and you will be refunded your deposit.
|
Fannie Mae |
|
| Contingency for Personal Property |
|
Your purchase contract should specify appliances, fixtures, and other personal property that must remain in the home. You can avoid any surprises by listing in your contract everything that is to be left behind when the seller moves out.
|
Fannie Mae |
|
| Continuum of Care |
|
Continuum of Care: A program to help homeless Americans get housing, job training, child care, and other services.
|
HUD |
|
| Contract |
|
An oral or written agreement to do or not to do a certain thing.
|
Fannie Mae |
|
| Contract Authority |
|
Contract Authority: One of the basic forms of Budget Authority. Statutory authority under which contracts or other Obligations may be entered into prior to an appropriation for the payment of such obligations. The later enacted Appropriation provides cash to liquidate such obligations. (JFMIP Core; A-34, Part 11, Section 21.1 (Budget Authority), p. 11-3) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Contract of purchase or contract of sale |
|
See Agreement of Sale.
|
LISC |
|
| Contractor |
|
A general contractor is a person who oversees a construction project and handles aspects such as scheduling workers and ordering supplies.
|
Fannie Mae |
|
| Conventional Mortgage |
|
A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.
|
Fannie Mae |
|
| Conversion clause |
|
A provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term. Usually conversion is allowed at the end of the first adjustment period. At the time of the conversion, the new fixed rate is generally set at one of the rates then prevailing for fixed rate mortgages. The conversion feature may be available at extra cost.
|
LISC |
|
| Conversion provision |
|
A feature of an adjustable-rate mortgage loan that allows the borrow-er to change to a fixed-rate loan, with an interest rate and monthly payment that stay the same.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Convertible ARM |
|
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
|
Fannie Mae |
|
| Cooperative |
|
A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
|
FHA |
|
| 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.
|
Fannie Mae |
|
| Cooperative Corporation |
|
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.
|
Fannie Mae |
|
| Cooperative Mortgages |
|
Mortgages related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units.
|
Fannie Mae |
|
| Cooperative Project |
|
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.
|
Fannie Mae |
|
| Cooperative housing |
|
An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Cost approach |
|
A way to determine the market value of a property by evaluating the costs of creating a property exactly like the subject.
|
LISC |
|
| Cost of Funds Index |
(COFI) |
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage (ARM).
|
Fannie Mae |
|
| Cotenancy |
|
A form of co-ownership of property. Examples include: tenancy in common, tenancy-by-the-entirety, joint tenancy.
|
LISC |
|
| Counter-offer |
|
If a seller does not like a buyer's offer, the seller can reject the offer or make a counter-offer.
|
LISC |
|
| Covenant |
|
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
|
Fannie Mae |
|
| Credit |
|
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
|
Fannie Mae |
|
| Credit Bureau |
|
The three main credit reporting agencies, or credit bureaus, are Equifax, Experian, and Trans Union. You can order a copy of your credit report (a nominal fee may apply) via telephone at: * Equifax: 1 * Trans Union: 0 * Experian: 4
|
Fannie Mae |
|
| Credit History |
|
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.
|
Fannie Mae |
|
| Credit Life Insurance |
|
A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.
|
Fannie Mae |
|
| Credit Profile |
|
There are several ways to ensure you have a good credit report and credit score. One of the most effective is to manage your existing credit in a positive way. Ask your lender for suggestions about ways to control the amount of money you owe. Or, you can choose a credit counselor from the list provided on this site. Some lenders may view consumers as a greater risk if they have used most or all of their available credit. Consumers who are considered "overextended" may be viewed this way even if they have made all their debt payments on time. Missing a payment on a bill should be avoided, as should late payments on any of your credit obligations. Experiencing a mortgage foreclosure, filing for bankruptcy, or having your vehicle repossessed can also affect your credit score and credit report, limiting your ability to get new credit at a reasonable rate.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Credit Report Fee |
|
The credit report fee covers the lender's cost for ordering your credit report from a credit bureau. This report will verify some of the information you provided on your loan application as well as additional information from the credit agency's files and from public records. When a credit report is received, your lender will check it against your application and look for any discrepancies. You may be asked to explain information in your credit report.
|
Fannie Mae |
|
| 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. The three main credit reporting agencies, or credit bureaus, are Equifax, Experian, and Trans Union. You can order a copy of your credit report (a nominal fee may apply) via telephone at:* Equifax: 1 * Trans Union: 0 * Experian: 4
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Credit Score |
|
Your credit score is based on all the information in your credit report. This information is converted into a number ^a credit score ^that the lender uses to determine whether you are likely to repay your loan in a timely manner. The scores used in mortgage lending are typically in the 300 to 900 range. A general guide is that the higher your score the better. But you should keep in mind that your credit score is just one of several factors that will be used to evaluate your mortgage loan application.
|
Fannie Mae |
|
| Credit Unions |
|
A credit union is a financial institution that is owned and run by its members. It is a nonprofit, cooperative institution that offers members a place to save and borrow. A credit union often works by having its members pool their funds so additional loans can be made to other members.
|
Fannie Mae |
|
| Credit rating |
|
A credit bureau's ranking of the way a person has repaid her debts. A lender uses a loan applicant's credit rating to decide whether or not to make the loan.
|
LISC |
|
| 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.
|
FHA |
|
| Credit union |
|
A financial institution that is a cooperative, or co-op. It offers savings and checking accounts and other financial services for members.
|
LISC |
|
| Creditor |
|
A person to whom money is owed.
|
Fannie Mae |
|
| Creditworthy |
|
A person with good credit, whom a lender judges will repay a loan, is credit worthy.
|
LISC |
|
| Cross-default clause |
|
A provision in a junior mortgage making the mortgagor in default on all mortgages if a default occurs on just one mortgage. The cross-default clause allows a lender to foreclose if the borrower is in default on just one mortgage.
|
LISC |
|
| Daily interest |
|
The amount of interest the borrower pays the lender calculated on a daily basis. It equals the annual interest rate divided by 360 or 365 and multiplied by the amount of the loan. Also called per diem interest.
|
LISC |
|
| De facto |
|
Latin for in fact.
|
LISC |
|
| Debenture |
|
A broad term for any unsecured, long-term debt instrument. Corporations use debenture bonds to raise capital. Municipal bonds are debenture bonds.
|
LISC |
|
| Debt |
|
An amount owed to another. See installment loan and revolving liability.
|
Fannie Mae |
|
| Debt Coverage Ratio (DCR) |
(DCR) |
Ratio of net operating income(NOI) to annual debt service (ADS). DCR = NOI / ADS.
|
LISC |
|
| Debt management plan |
|
A bill payment plan for a borrower in a credit emergency. The plan is agreed to by the borrower and creditors.
|
LISC |
|
| Debt service |
|
Mortgage Payment.
|
LISC |
|
| Debt service coverage |
|
Amount of money left over after other expenses such as taxes, insurance, maintenance and utilities, including an assumption of a reasonable vacancy factor, which can be utilized to service mortgage debt. Lenders usuall y require that the resulting earnings be a certain percentage above the proposed mortgage payments. (Applicable to Apartments and Commercial Properties.)
|
LISC |
|
| Debt-to-income ratio |
|
Percentages lenders use to decide whether a loan applicant can afford to make payments on a certain mortgage loan. Lenders may allow first-time home-buyers to use 33% of monthly income for housing costs, and a total of 38% for housing costs and all other debt.
|
LISC |
|
| Declaration of trust |
|
An instrument that identifies property held by a master for another individual.
|
LISC |
|
| Decree |
|
An order or judgment of a court.
|
LISC |
|
| Deduct |
|
To subtract an amount from income that is being taxed. Homeowners can deduct interest they pay on their mortgage loans; points they pay at settlement; home improve-ments; and related items.
|
LISC |
|
| Deed |
|
The legal document conveying title to a property. The deed is the document that transfers ownership from the seller to you. Only the seller signs the deed at closing, and you'll receive a copy of it. The closing agent will record the deed with you listed as the new property owner. Your name and the names of any other buyers appear on the deed, and it will be sent to you after it is recorded.
|
Fannie Mae |
|
| Deed of Trust |
|
The document used in some states instead of a mortgage; title is conveyed to a trustee. In some states, a "deed of trust" is used instead of a mortgage. When homeowners sign a deed of trust, they receive title to the property but convey title to a neutral third party -- called a trustee -- until the loan balance is paid in full.
|
Fannie Mae |
|
| Deed restrictions |
|
Restrictions or limitations to the use of property as noted in a deed.
|
LISC |
|
| Deed-in-lieu |
|
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."
|
Fannie Mae |
|
| Default |
|
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
|
Fannie Mae |
|
| Defective title |
|
Title that is not clear.
|
LISC |
|
| Defendant |
|
Party who is defending or denying in a legal action.
|
LISC |
|
| Deferred interest |
|
Interest due but unpaid. Mortgages that permit negative amortization (GPMs, and ARMs without a rate cap) will allow deferred interest.
|
LISC |
|
| Deferred maintenance |
|
Depreciation caused by failure to maintain properly; sometimes called curable physical depreciation.
|
LISC |
|
| Deficiency |
|
In the event of a foreclosure, there is a deficiency when the highest bid in a foreclosure sale is less than the outstanding balance plus foreclosure-related costs.
|
LISC |
|
| Delinquency |
|
Failure to make mortgage payments when mortgage payments are due.
|
Fannie Mae |
|
| Demand note |
|
A debt instrument that allows the lender to call the balance due at any time without prior notice.
|
LISC |
|
| Demographics |
|
Statistical information regarding population growth and trends.
|
LISC |
|
| Density |
|
A measure of the number of dwelling units per component size of land, such as an acre.
|
LISC |
|
| Department of Veterans Affairs |
(VA) |
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs. The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans. If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office.
|
Fannie Mae |
|
| Deposit |
|
A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.
|
Fannie Mae |
|
| Depreciation |
|
A decline in the value of property; the opposite of appreciation.
|
Fannie Mae |
|
| Detached Single-Family Home |
|
The most traditional type of single-family home is one that is "detached." This type of home stands separate from any other housing structure and serves as a place of residence for the occupants.
|
Fannie Mae |
|
| Direct Leveraging Loan Program |
|
The Direct Leveraging Loan Program makes it easier and more economical for rural residents to own a home through lower interest rates and no down payment.Under this program, the lender offers up to 50 percent of the mortgage amount as a conventional 30-year, fixed-rate first mortgage and the Rural Housing Service (RHS) offers the balance as a second mortgage at an interest rate that is generally below market. The RHS is part of the U.S. Department of Agriculture.
|
Fannie Mae |
|
| Direct deposit |
|
A method of having an organization that issues you checks-such as your employer-send the checks straight into your bank account.
|
LISC |
|
| Direct sales comparison |
|
Property value estimation using the sales prices of similar properties (comparables) and making value adjustments according to such things as square footage, room count, lot size, condition and amenities in order to obtain a realistic fair market value of the property being appraised.
|
LISC |
|
| Disbursements |
|
Disbursements: Payments made using cash, checks, or electronic transfers. Disbursements include advances to others as well as payments for goods and services received and other types of payments made. (JFMIP Core, Pg. 48; Common Term) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Discount Points |
|
Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. A point equals 1 percent of the loan amount. So, if you and your lender agree to a mortgage of $100,000, one point would equal $1,000. Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point. If the current interest rate on a 30-year mortgage is 7.75 percent, paying one point would lower the interest rate to 7.625. Ask your lender if you have the option of paying 1, 2, or 3 discount points -- or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time.
|
Fannie Mae |
|
| Discounting |
|
The process of reducing the value of money received in the future to reflect the opportunity cost of waiting to receive the money.
|
LISC |
|
| Discretionary spending |
|
Spending you choose to do, that you do not have to do to live.
|
LISC |
|
| Dower |
|
The rights of a widow in the property of her husband at his death.
|
Fannie Mae |
|
| Down Payment |
|
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.Saving for a down payment is usually one of the most difficult parts of preparing to buy a home. If you believe you have the needed funds, you are in a better position to seek pre-qualification from a lender to get the mortgage that is right for you.Most homeowners rely on a mortgage from a financial institution, and most mortgage products require buyers to include a portion of their own funds towards the purchase of the home. This is called the down payment. Lenders feel more secure when buyers include a down payment, indicating they are less likely to walk away from their investment if their finances take a downturn.Historically, buyers usually made a down payment that totaled 20 percent of the home's purchase price. Under this scenario, a down payment for a $100,000 home is $20,000. But today, new mortgage products allow buyers to put down as little as 3 percent to 5 percent, provided private mortgage insurance is obtained. The down payment for a $100,000 home with 5 percent down payment is just $5,000.Sources for down payments may come from buyers' savings accounts, checking accounts, stocks and bonds, life insurance policies, and gifts.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Due-on-sale clause |
|
A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage.
|
FHA |
|
| Due-on-transfer Provision |
|
This terminology is usually used for second mortgages. See due-on-sale provision.
|
Fannie Mae |
|
| EOY |
|
End of Year.
|
LISC |
|
| Earnest Money Deposit |
|
A deposit made by the potential home buyer to show that he or she is serious about buying the house. The earnest money deposit is a "good-faith" payment you submit with your offer on a home to show the seller you are serious about proceeding. The earnest money is deposited in an escrow account and will be applied to your closing costs. Sometimes, your lender will want you to bring a receipt for the earnest money deposit along with your sales contract to the initial loan application meeting.
|
Fannie Mae |
|
| Earnest money |
|
A deposit made by the potential home buyer to show that he or she is serious about buying the house.
|
FHA |
|
| Earnest money (Good Faith Deposit) |
|
The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earne st money is applied against the down payment. If the sale does not go through, the earnest money may be forfeited or lost unless the offer to purchase expressly provides that it is refundable. Most purchase contracts require that certain contingencies (such as the availability of financing and acceptance of property condition) be removed prior to the deposit being forfeited
|
LISC |
|
| Easement |
|
A right of way giving persons other than the owner access to or over a property.
|
Fannie Mae |
|
| Easement appurtenant |
|
An easement that burdens one parcel of land (the servient estate) for the benefit of another parcel ( the dominant estate).
|
LISC |
|
| Easement by necessity |
|
An easement that is created by operation of law when a grantor conveys a portion of a larger parcel of land and in doing so landlocks either the portion that is transferred or the part that is retained.
|
LISC |
|
| Easement rights |
|
A right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example.
|
LISC |
|
| Economic Development Administration |
(EDA) |
Economic Development Administration (EDA): Organization within the U.S. Department of Commerce responsible for a number of grant and loan programs designed to help alleviate conditions in economically depressed areas of the country.
|
HUD |
|
| Economic life |
|
Length of time that improvements (buildings) will produce a competitive return or will be properly habitable. Land usually has an infinite economic life.
|
LISC |
|
| Economic obsolence |
|
oss in property value caused by conditions external to the property.
|
LISC |
|
| Economic rent |
|
The rent that a property could generate if it were available today; market rent.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Egress |
|
A means of exit from a parcel of land.
|
LISC |
|
| Emergency Shelter Grant |
(ESG) |
Emergency Shelter Grant (ESG): A Federal grant program designed to help improve the quality of existing emergency shelters for the homeless, to make available additional shelters, to meet the costs of operating shelters, to provide essential social services to homeless individuals, and to help prevent homelessness. HUDWEB, Continuum of Care and Veterans Programs Glossary
|
HUD |
|
| 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.
|
Fannie Mae |
|
| Employer-Assisted Housing |
|
A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.
|
Fannie Mae |
|
| Empowerment Zones and Enterprise Communities |
(EZ/E) |
Empowerment Zones and Enterprise Communities (EZ/EC): Designated low-income areas targeted to receive tax incentives, performance grants, and loans in order to create jobs, expand business opportunities, and support people looking for work. Initially authorized by Title XIII of the Omnibus Budget Reconciliation Act of 1993 (the Statute), additional EZ/ECs were authorized by the Taxpayer Relief Act of 1997. HUD web site at www.hud.gov:80/progdesc/ezec.html
|
HUD |
|
| Encroachment |
|
An improvement that intrudes illegally on another's property.
|
Fannie Mae |
|
| Encumbrance |
|
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
|
Fannie Mae |
|
| Endorser |
|
A person who signs ownership interest over to another party. Contrast with co-maker.
|
Fannie Mae |
|
| Environmental Assessment |
(EA) |
Environmental Assessment (EA): A preliminary, written, environmental analysis required by EPA to determine whether a federal activity such as building airports or highways would significantly affect the environment; an EA may require preparation of more detailed Environmental Impact Statement. EPA Web site for Environmental/Biological-Related Technical Terms, www.epa.gov/grtlakes/seahome/grants/src/glosbis.htm
|
HUD |
|
| Environmental Impact Statement |
(EIS) |
Environmental Impact Statement (EIS): A document prepared by or for EPA which identifies and analyzes, in detail, environmental impacts of a proposed action. As a tool for decision-making, the EIS describes positive and negative effects and lists alternatives for an undertaking, such as development of a wilderness area..EPA Web site for Environmental/Biological-Related Technical Terms, www.epa.gov/grtlakes/seahome/grants/src/glosbis.htm
|
HUD |
|
| 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.
|
Fannie Mae |
|
| Equal Employment Opportunity |
(EEO) |
Equal Employment Opportunity (EEO): Term which refers to a variety of activities to ensure non-discrimination in hiring, promoting, and managing employees.
|
HUD |
|
| Equal Housing Opportunity Plan |
(EHOP) |
Equal Housing Opportunity Plan (EHOP): Plan developed by Public Housing Agencies for use in Section 8 and Moderate Rehabilitation programs.
|
HUD |
|
| Equal credit opportunity act |
|
A federal law that says creditors cannot discriminate against borrowers because of race, color, religion, national origin, sex, marital status, age, and receipt of public assistance.
|
LISC |
|
| Equity |
|
A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage. A lender determines how much equity you have in your home by taking the appraised value of the home and subtracting any mortgage debt. For example, if your house is valued at $150,000 and your mortgage balance is $80,000, you have $70,000 equity in the house.
|
Fannie Mae |
|
| Equity financing |
|
Use of buyer's or owner's funds to finance property.
|
LISC |
|
| Equity loan |
|
A loan based on the borrower's equity in his or her home.
|
LISC |
|
| Equity participation mortgage |
|
A mortgage whereby the lender obtains an equity in the pledged property in addition to the interest.
|
LISC |
|
| Erosion |
|
The loss of land by wearing action of water or wind.
|
LISC |
|
| Errors in Credit Report |
|
Your credit report may contain inaccuracies. The best way to ensure there are no errors in your credit report is to request copies and review the information. Since each of the main credit bureaus keeps its own records, you may want to request copies from all three: Trans Union, Equifax, and Experian. If you have been turned down for credit because of the information in your credit report, you are entitled to receive a free copy of your report within 60 days of the denial. If you haven't been denied credit, you can still request a copy of your credit report, usually for a nominal fee. If you find errors in your report, follow the directions in the credit report and contact the agencies to have the errors corrected. They will investigate the targeted items and remove incorrect information. You don't have to delay applying for a mortgage while errors in your report are being corrected. Explain the discrepancies in the report to your lender and state that the credit agency is correcting them.
|
Fannie Mae |
|
| Escalator clause |
|
A contract clause that provides for an upward or downward adjustment in interest, rent, or other factors to cover specified contingencies.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Escrow Account |
|
The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses. An escrow account is money that is deposited with a third party -- outside the buyer and the seller -- to be used to pay various fees. A borrower typically provides funds that will pay taxes, mortgage insurance, lease payments, hazard insurance premiums, and other payments when they are due.An escrow payment by the holder of a mortgage is also known as "impounds" or "reserves" in some states. When escrow funds are used to pay taxes, hazard insurance, and other fees, it is called an escrow disbursement. Periodically, an escrow analysis will be performed to determine if current monthly deposits provide sufficient funds to pay bills when they are due.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Escrow Disbursements |
|
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Escrow agent (escrowee) |
|
A person or corporation employed by parties to a real estate transaction to receive documents and money and deliver them in accordance with their instructions.
|
LISC |
|
| Escrow agreement (escrow instructions) |
|
A contract between the parties to a real estate transaction to effect a settlement of the transaction in escrow.
|
LISC |
|
| Establishing a Credit Record |
|
It is possible to establish a credit history even if you do not have a traditional credit record that shows credit card payments or payments on a student or car loan. You can build a nontraditional credit history, for example, by documenting your monthly payments to previous and current landlords; to utility companies for your gas, water and telephone services; and to insurance companies for medical, life, and automobile coverage. Your lender can provide further details on how you can effectively establish a credit record.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Estate sale |
|
A sale held to sell the property of someone who has died. Sometimes houses are sold at estate sales.
|
LISC |
|
| Estopped certificate |
|
Document in which the borrower verifies the remaining balance and interest rate of a loan.
|
LISC |
|
| Estoppel |
|
A doctrine of law that prevents a person from asserting rights inconsistent with his prior words or conduct.
|
LISC |
|
| Eviction |
|
The lawful expulsion of an occupant from real property.
|
Fannie Mae |
|
| Examination of Title |
|
The report on the title of a property from the public records or an abstract of the title.
|
Fannie Mae |
|
| Exchange |
|
When ownership of like-kind properties are transferred between two or more owners; can result in postponement of part or all of the tax for one or more of the parties to the exchange.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Exclusive agency listing |
|
A listing agreement between a seller and a broker in which either has a right to sell the property; if sold by the broker a commission will be due
|
LISC |
|
| Exclusive right to sell |
|
A listing agreement between a seller and a broker whereby the broker receives a commission, regardless of who sells the property.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| FHA (Federal Housing Administration) |
(FHA) |
A division of the U.S. Department of Housing and Urban Development that insures mortgage loans.
|
LISC |
|
| FHA Coinsured Mortgage |
|
A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default.
|
Fannie Mae |
|
| FHA Fund |
|
FHA Fund: This fund is comprised of four separate funds to finance specific FHA mortgage insurance programs: Mutual Mortgage Insurance Fund (MMI), Cooperative Management Housing Insurance Fund (CMHI), General Insurance Fund (GI), and Special Risk Insurance Fund (SRI).
|
HUD |
|
| FHA Loans |
|
With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower. FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a conventional mortgage through a lender.
|
Fannie Mae |
|
| FHA Mortgage |
|
A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage. With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower.FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a mortgage through a lender.
|
Fannie Mae |
|
| FHA loan |
|
A mortgage that is insured by the Federal Housing Administration.
|
LISC |
|
| FHLMC (Federal Home Loan Mortgage Corporation) |
(FHLMC) |
Referred to as "Freddie Mac" and supervised by the Federal Home Loan Bank Board. FHLMC creates a secondary market for conventional mortgage loans.
|
LISC |
|
| FNMA (Federal National Mortgage Association) |
(FNMA) |
Referred to "Fannie Mae", FNMA is a privately owned, government sponsored agency that buys and sells FHA-insured, VA-guaranteed and conventional mortgage loans.
|
LISC |
|
| Fair Credit Reporting Act |
(FCRA) |
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.
|
Fannie Mae |
|
| Fair Housing Act |
|
Legislation first enacted in 1968 and expanded by amendments in 1974 and 1988, which provides the Secretary with investigation and enforcement responsibilities for fair housing practices. Prohibits discrimination in housing and lending based on race, color, religion, sex, national origin, handicap, or familial status.Federal Deposit Insurance Corporatio^
|
HUD |
|
| Fair Housing Assistance Program |
(FHAP) |
Fair Housing Assistance Program (FHAP): A Program to assist state and local agencies and community housing resources boards in processing Fair Housing Act complaints.
|
HUD |
|
| Fair Housing Initiatives Program |
(FHIP) |
Fair Housing Initiatives Program (FHIP): A Program to assist states, local agencies, fair housing groups, and community housing resource boards in bringing public and private efforts together to combat housing discrimination.
|
HUD |
|
| Fair Market Rents |
(FMR) |
Fair Market Rents (FMR): Rent Schedules published in the Federal Register which establish maximum eligible rent levels allowed under the Section 8 program by geographic area.
|
HUD |
|
| 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 |
|
| Fair credit billing act |
|
A federal law that gives a borrower the right to question credit card bills from companies other than banks. The law lays out a process for a borrower to follow if a credit-card bill is wrong, or appears to be wrong.
|
LISC |
|
| Fair debt collection practices act |
|
A federal law that protects consumers from abuse or threats from collection agencies trying to get overdue payments.
|
LISC |
|
| Fannie Mae |
|
A federally chartered, stockholder owned corporation which supports the secondary market for both conventional mortgages and mortgages insured by the FHA and guaranteed by VA.
|
Fannie Mae |
|
| Feasibility analysis |
|
Study of the cash flow, profitability potential and overall desirability of a project.
|
LISC |
|
| Federal Deposit Insurance Corporation |
(FDIC) |
|
|
|
| Federal Home Loan Bank Board |
(FHLBB) |
Federal Home Loan Bank Board (FHLBB): Supervises Federal Home Loan Banks, which supply member banks with credit to enhance their service as savings depositories and as lenders of mortgage funds.
|
HUD |
|
| Federal Home Loan Bank System |
|
Through its 12 District Banks, the FHLB makes advances to over 7,000 member financial institutions, which in turn lend the funds for home mortgages and community development. Also see AHP.
|
LISC |
|
| Federal Home Loan Mortgage Corporation |
(Freddi) |
Federal Home Loan Mortgage Corporation (Freddie Mac): A federally chartered stockholder owned corporation which supports the secondary market for conventional mortgages.
|
HUD |
|
| Federal Home Loan Mortgage Corporation (Freddie Ma |
|
A federally chartered stockholder owned corporation which supports the secondary market for conventional mortgages.
|
HUD |
|
| 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.
|
Fannie Mae |
|
| Federal Housing Finance Board (FHFB) |
(FHFB) |
The FHFB regulates the Federal Home Loan Bank System.
|
LISC |
|
| Federal Information Processing Standards |
(FIPS) |
Federal Information Processing Standards (FIPS): Standards and guidelines issued by National Institute of Standards and Technology (NIST) for use government-wide. NIST develops FIPS when there are compelling Federal government requirements such as for security and interoperability and there are no acceptable industry standards or solutions. (NIST Web site, 11/09/98)
|
HUD |
|
| Federal National Mortgage Association |
(Fannie) |
Federal National Mortgage Association (Fannie Mae): A federally chartered, stockholder owned corporation which supports the secondary market for both conventional mortgages and mortgages insured by the FHA and guaranteed by VA.
|
HUD |
|
| Federal National Mortgage Association (Fannie Mae) |
(FNMA) |
|
|
|
| Federal Reserve System |
|
The System's duties fall into four general areas: conducting the nation's monetary policy; supervising and regulating banking institutions; maintaining the stability of the financial system; and providing certain f inancial services to the U.S. government, the public, financial institutions, and foreign official institutions.
|
LISC |
|
| Fee Simple |
|
The greatest possible interest a person can have in real estate. Fee simple ownership provides the owner with unrestricted powers to dispose of the owned property as the owner sees fit. Of all types of ownership a person can have in real estate, fee simple provides the greatest amount of personal control.
|
Fannie Mae |
|
| Fee Simple Estate |
|
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.
|
Fannie Mae |
|
| Fee simple absolute |
|
Entire bundle of rights to use and control real property.
|
LISC |
|
| Final Walk-Through Inspection |
|
Your sales contract should include a clause that allows you to examine the property you want to purchase within the 24 hours before closing.This walk-through, during which you will be accompanied by the real estate sales professional, is your chance to ensure that the seller has vacated the house and left behind whatever property was agreed upon.Make sure to check that all lights, appliances, and plumbing fixtures are in working order.You will also want to make sure that all conditions of the sales contract have been met. If they aren't, or you observe major problems, you have the right to delay the closing until the problems are corrected.One other option is to make sure money to correct the problems is placed in an escrow account at closing to cover the cost of repairs.
|
Fannie Mae |
|
| Finance |
|
To supply money for a purchase. A lender can finance home ownership with a mortgage loan.
|
LISC |
|
| Financial Index |
|
An index is a number to which the interest rate on an adjustable rate mortgage (ARM) is tied. It is generally a published number expressed as a percentage, such as the average interest rate or yield on U.S. Treasury bills. A margin is added to the index to determine the interest rate that will be charged on ARMs. This interest rate is subject to any caps associated with the mortgage. The interest rate changes on an ARM are tied to some type of financial index. Some of the most common type of indexed ARMs are: *Treasury-Indexed ARMs; *CD-Indexed ARMs (Certificate of Deposit); *Cost of Funds-Indexed ARMs (COFI); *LIBOR-Based ARMs When comparing ARMs, look at how the index to which it is tied has performed recently. Your lender can provide information on how to track the index and a history of the index they use.
|
Fannie Mae |
|
| Financial leverage |
|
The use of borrowed funds to acquire an investment.
|
LISC |
|
| Financial risk |
|
The possible change in an investment's ability to return principal and income.
|
LISC |
|
| Financing |
|
Financing: Those functions necessary to provide the financial resources to fund government operations and federal assistance including the functions of taxation, fee and revenue generation, public debt, deposit funds, and intra governmental collections. (JFMIP Framework) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Finder's Fee |
|
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
|
Fannie Mae |
|
| Firm Commitment |
|
A lender's agreement to make a loan to a specific borrower on a specific property.
|
Fannie Mae |
|
| First Mortgage |
|
A mortgage that is the primary lien against a property. A "first mortgage" is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments.
|
Fannie Mae |
|
| First and Second Mortgages |
|
A first mortgage is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments.
|
Fannie Mae |
|
| Fiscal Year |
|
Fiscal Year: Any yearly accounting period, regardless of its relationship to a calendar year. (GAO) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Fixed Installment |
|
The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.
|
Fannie Mae |
|
| Fixed Lease |
|
A lease in which the lessee pays a fixed amount for the durration of the lease. May also be referred to as a Gross Lease.
|
LISC |
|
| Fixed Rate Mortgage |
(FRM) |
A mortgage in which the interest rate does not change during the entire term of the loan. Fixed-rate mortgages, the most popular type of mortgage, offer the peace of mind that your interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your key concern. If you decide that you like the stable, predictable payments of a fixed-rate loan, you have the option of choosing from a variety of repayment terms: 15, 20, and 30 years are the most common. Typically, the longer the term of the mortgage, the more interest you pay over the life of your loan. However, stretching out your repayment term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage. Lenders offer a wide array of fixed-rate mortgages: * Balloon Mortgages * Biweekly Mortgages
|
Fannie Mae |
|
| Fixed expenses |
|
Costs that do not change with a building's occupancy rate. They include property taxes, insurance, and some forms of building maintenance.
|
LISC |
|
| Fixed expenses or fixed payments |
|
Expenses or payments that usually stay the same from month to month, such as rent, a car loan, a student loan, insurance, child support.
|
LISC |
|
| Fixed-Period Adjustable-Rate Mortgages |
|
This type of adjustable-rate mortgage (ARM) maintains the same initial interest rate for the first three, five, seven, or 10 years of your loan, depending on the term you choose. Your interest rate then adjusts annually, and can move up or down as market conditions change. Be sure to ask your lender about the interest rate caps for both the annual adjustments and for the life of the loan.Advantages: (1)Your initial interest rate will be lower than a fixed-rate mortgage, so you may be able to afford more home.(2)You are protected against interest rate increases for the first three, five, seven, or 10 years of the loan, depending on which type of fixed-period ARM you choose.(3)You may have the option to convert your ARM to a fixed-rate mortgage at the first, second, or third interest rate adjustment dates.(4)You have time to improve your financial position (i.e., salary increases) or accumulate additional assets before the interest rate adjusts at the end of the fixed period.
|
Fannie Mae |
|
| Fixed-rate mortgage |
|
A mortgage in which the interest rate does not change during the entire term of the loan.
|
LISC |
|
| Fixture |
|
Personal property that becomes real property when attached in a permanent manner to real estate.
|
Fannie Mae |
|
| Flood Insurance |
|
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
|
Fannie Mae |
|
| Forbearance |
|
The lender's postponement of foreclosure to give the borrower time to catch up on overdue payments.
|
LISC |
|
| Foreclose |
|
The process of the lender taking a property when the borrower has defaulted on the loan. The lender then sells the property to recoup its loss on the unpaid loan.
|
LISC |
|
| 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. If you repeatedly do not make your mortgage payments on time, your lender could sell your home and evict you from it in a legal procedure called foreclosure. A foreclosure on your property can result in the loss of your home and your good credit rating. Foreclosure is most often a last resort effort that lenders will take if you repeatedly don't make your mortgage payments. Before going to foreclosure, lenders will work with you if you are facing financial hardships to come up with repayment plans that will let you get back on track and remain in your home.
|
Fannie Mae |
|
| Forfeiture |
|
The loss of money, property, rights, or privileges due to a breach of legal obligation.
|
Fannie Mae |
|
| Front foot |
|
A measure of property by which the distance is measured along the street, highway, stream, or other body of water.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Fully amortized mortgage |
|
A method of loan amortization in which equal periodic payments completely loan repay the loan.
|
LISC |
|
| Functional obsolescence |
|
Decline in value of property caused by changes in technology or by defects in design, layout, or size of building; loss of a building's ability to perform its function.
|
LISC |
|
| Future value |
|
The amount to which money grows over a designated period of time at a specified rate of interest.
|
LISC |
|
| General Contractor |
|
A general contractor is someone whom you may work closely with during your home improvement project. The general contractor is the person who oversees the construction project and handles various aspects such as scheduling workers and ordering supplies. If you are borrowing mortgage funds to renovate a home, your lender may need to review whether your contractor meets all federal, state, and local registration, licensing and certification standards.
|
Fannie Mae |
|
| General Services Administration |
(GSA) |
General Services Administration (GSA): The largest civilian Federal agency buyer of general supplies and services. It provides operational supplies and services to the civilian Federal agencies through its Federal Supply Service. Most of these supplies are furnished by independent contractors. The GSA Small Business Centers provide advice to small businesses about GSA's contracting opportunities. GSA Internet Site at www.gsa.gov
|
HUD |
|
| General partnership |
|
Form of co-ownership wherein all partners have a voice in the management of a business and unlimited liability for its debts.
|
LISC |
|
| General warranty deed |
|
A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.
|
LISC |
|
| Good Faith Estimate |
|
The good-faith estimate is a report from your lender that outlines the costs you will incur to get your mortgage. It is based on the lender's typical loan origination costs for the area where your home is located. The estimate usually changes between application and closing, so you'll want to review your settlement form before the closing meeting. The settlement form will list the actual amount of money you'll need to bring to closing. You'll need to pay your closing costs in the form of a certified or cashier's check because personal checks usually are not accepted.
|
Fannie Mae |
|
| Good faith deposit |
|
See Earnest Money.
|
LISC |
|
| Gound Lease |
|
A lease of the land only. Usually the land is leased for a relatively long period of time to a tenant that constructs a building on the property. Gross Area The entire floor area of a building.
|
LISC |
|
| 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 mortage.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Grade |
|
The level of the ground at the structure foundation.
|
LISC |
|
| Graduated lease |
|
A lease providing for a variable rate of rent depending upon some future event.
|
LISC |
|
| Graduated payment |
|
A mortgage loan with monthly payments that start at a lower amount and then increase slowly over the next several years. The monthly payments then stay the same at the higher amount.
|
LISC |
|
| Grantee |
|
The person to whom an interest in real property is conveyed.
|
Fannie Mae |
|
| Grantor |
|
The person conveying an interest in real property.
|
Fannie Mae |
|
| Gross Lease |
|
A lease in which the lessee pays a fixed rental amount for the durration of the lease and the lessor pays the expenses associated with owning the property such as taxes and insurance.
|
LISC |
|
| Gross income |
|
The total amount of money that a person receives, before taxes and other deductions. This income may include funds from a job or jobs; interest or dividends; alimo-ny; disability payments; or public assistance.
|
LISC |
|
| Gross operating income |
|
The total amount of cash generated by the operations of a property. Hedging Protecting oneself against negative outcomes.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| Ground lease |
|
An agreement for rental of land only.
|
LISC |
|
| 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.
|
Fannie Mae |
|
| 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.
|
Fannie Mae |
|
| Guarantee Mortgage |
|
A mortgage that is guaranteed by a third party.
|
Fannie Mae |
|
| Guaranteed Loan |
|
see Government mortgage.
|
Fannie Mae |
|
| HOME |
|
HOME: Provides funds to local governments and states for new construction, rehabilitation, acquisition of standard housing, assistance to homebuyers, and tenant-based rental assistance.
|
HUD |
|
| HOPE I |
|
HOPE I: No longer funded. Provided financial assistance for public housing authorities in the form of planning and implementation grants to be used in conjunction with the development of affordable homeownership programs for public housing residents involving the sale of public housing units.
|
HUD |
|
| HOPE II |
|
HOPE II: Provided financial assistance for the creation of homeownership opportunities for low to moderate income families in government-insured or -owned of FHA multifamily properties
|
HUD |
|
| HOPE III |
|
HOPE III: Provided financial assistance for the creation of home ownership opportunities for low to moderate income, first-time homebuyers utilizing single family properties.
|
HUD |
|
| HOPE VI |
|
HOPE VI: HOPE VI, or the Urban Revitalization Program, enables demolition of obsolete public housing, revitalization of public housing sites and distribution of supportive services to the public housing residents affected by these actions.
|
HUD |
|
| HUD |
|
U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within insures home mortgage loans made by lenders and sets minimum standards for such homes.
|
LISC |
|
| HUD median income |
|
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).
|
Fannie Mae |
|
| HUD-1 statement |
|
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet." The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The (blank) form is published by the U.S. Department of Housing and Urban Development (HUD).
|
Fannie Mae |
|
| HVAC |
|
Heating, Ventilation, and Air Conditioning.
|
LISC |
|
| Hazard Insurance |
|
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.
|
Fannie Mae |
|
| Highest and best use |
|
The use of a property that will yield the greatest return on the property.
|
LISC |
|
| Home Equity Conversion Mortgage |
(HECM) |
A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Sometimes called a reverse mortgage. A Home Equity Conversion Mortgage (HECM) is a type of home loan that lets homeowners aged 62 or over with little or no remaining balance on their mortgage convert their equity into cash. The equity can be paid to the homeowner in a lump sum, in a stream of payments, draws from a line of credit, or a combination of monthly payments and line of credit. Whatever payment plan you select, you do not have to repay any part of this reverse mortgage until you sell the home or vacate it for another reason. At that time, you pay the loan balance, plus any accrued interest. Any proceeds above that amount go to you or to your estate. Developed by the Federal Housing Administration (FHA), the HECM mortgage provides a cash growth feature not found with some other reverse mortgages.
|
Fannie Mae |
|
| Home Equity Line of Credit |
|
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.
|
Fannie Mae |
|
| Home Equity Loan |
|
|
|
|
| Home Inspection |
|
A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal. The home inspection reviews the structural and mechanical condition of the property. This is not an evaluation of the market value of the home or a determination of whether the home complies with applicable building and safety codes. The inspection does not include a recommendation on whether you should or should not buy the house.The inspector bases the findings on observable structural elements of the home. Potential home buyers are urged to be present during the inspection. This will allow you to ask questions and be in a better position to learn more about any problems that arise.
|
Fannie Mae |
|
| Home Mortgage Disclosure Act |
(HMDA) |
Home Mortgage Disclosure Act (HMDA): The Home Mortgage Disclosure Act of 1975, as amended in 1989, requires most financial institutions and mortgage lenders that make mortgage loans, home improvement loans, or home refinance loans to collect and disclose information about their lending practices. Office Of The Assistant Secretary For Housing-Federal Housing Commissioner Mortgagee Letter 94-22, May 4, 1994
|
HUD |
|
| Home inspector |
|
A licensed professional who looks at all parts of a house and evaluates its condition.
|
LISC |
|
| Homebuyer Protection Plan |
|
Homebuyer Protection Plan: A HUD package of home appraisal reforms that will increase the level of consumer confidence in the homebuying process and benefit 800,000 families who get Federal Housing Administration mortgages each year. HUD web site at www.hud.gov/pressrel/pr98-206.html
|
HUD |
|
| Homeowner's Insurance |
|
Homeowners insurance (also called "hazard insurance") should be equal to at least the replacement cost of the property you want to purchase. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss. Most home buyers purchase a homeowner's insurance policy that includes personal liability insurance in case someone is injured on their property; personal property coverage for loss and damage to personal property due to theft or other events; and dwelling coverage to protect the house against fire, theft, weather damage, and other hazards. If the home you want to buy is located near water, you may be able to get flood insurance as part of your homeowner's protection. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.Seek out and compare rates from several insurance companies before making your final decision.Lenders often want the first year's premium to be paid at or before closing. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in an escrow account. The lender then pays your insurance bill out of escrow when it receives premium notices from your insurance company.
|
Fannie Mae |
|
| Homeowner's Insurance for Reverse Mortgages |
|
Homeowner's insurance (also called hazard insurance) is required and should be equal to at least the replacement cost of the home you want to purchase. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss.Most home buyers purchase a homeowner's insurance policy that includes personal liability insurance (though this personal liability insurance is not required) in case someone is injured on their property; personal property coverage for loss and damage to property due to theft or other events; and dwelling coverage to protect the house against fire, theft, weather damage, and other hazards.If the home is near water, you may be able to get flood insurance as part of your homeowner's protection. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.Seek out and compare rates from several insurance companies before making your final decision.
|
Fannie Mae |
|
| Homeowner's Warranty |
(HOW) |
A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.
|
Fannie Mae |
|
| Homeowner's insurance |
|
An insurance policy that combines personal liability coverage and hazard insurance coverage for a dwelling and its contents.
|
FHA |
|
| Homeowner's warranty |
|
A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.
|
FHA |
|
| Homeowners Association |
|
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
|
Fannie Mae |
|
| Homestead |
|
Primary residence as declared by the head of a household and filed with the county clerk in order to exempt the homestead from claims of creditors.
|
LISC |
|
| Housing Expense Ratio |
|
The percentage of gross monthly income that goes toward paying housing expenses.
|
Fannie Mae |
|
| Housing for the Elderly and Handicapped |
|
Housing for the Elderly and Handicapped: Program authorized by Section 202 of the National Housing Act. This program provides direct Federal loans to nonprofit sponsors for construction and mortgage financing of housing for elderly and handicapped.
|
HUD |
|
| Impound account |
|
See Escrow.
|
LISC |
|
| Improvement |
|
Anything done to a house that increases its value, such as adding a sun porch or modernizing the kitchen.
|
LISC |
|
| In-File Credit Report |
|
An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.
|
Fannie Mae |
|
| Income Property |
|
Real estate developed or improved to produce income.
|
Fannie Mae |
|
| Income approach |
|
A valuation method that capitalizes or converts the current benefits of the property into an estimated value.
|
LISC |
|
| Income capitalization |
|
A way to determine the market value of an income-producing property by approach converting its future income stream into a single capital value.
|
LISC |
|
| Index |
|
A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. This interest rate is subject to any caps that are associated with the mortgage.
|
Fannie Mae |
|
| Index Lease |
|
A lease in which the rental amount adjusts according to changes in a price index, commonly the consumer price index.
|
LISC |
|
| Individual Retirement Account |
(IRA) |
A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds.
|
Fannie Mae |
|
| Industrial revenue bond |
|
Bonds issued to raise funds for developing commercial buildings for lease or industrial parks.
|
LISC |
|
| Inflation |
|
An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.
|
Fannie Mae |
|
| Informational Resources Management |
(IRM) |
Informational Resources Management (IRM): Term used to refer to current Federal efforts to improve the integration and management of automated and other data.
|
HUD |
|
| Ingress |
|
A means of entry to a property.
|
LISC |
|
| Initial Interest Rate |
|
The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as "start rate" or "teaser."
|
Fannie Mae |
|
| Inspection |
|
When a house is remodeled or rehabbed it must be inspected by an inspector from the local government to be sure all work is done properly.
|
LISC |
|
| Installment |
|
The regular periodic payment that a borrower agrees to make to a lender. The regular periodic payment that a borrower agrees to make to a lender. The installment is more often referred to as your monthly mortgage payment. Installments, or monthly payments, can be made either monthly or biweekly, depending on your mortgage type. Your approved lender may also offer additional payment plans tailored to fit your needs.
|
Fannie Mae |
|
| Installment Loan |
|
Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.
|
Fannie Mae |
|
| Installment debt |
|
Debts or accounts that are paid off in monthly payments, or install-ments, such as credit-card accounts.
|
LISC |
|
| Installment sale contract (land contract, installment |
|
contract, and contract for deed) A contract in which a seller of real estate promises to deliver a deed to the buyer at some time in the future after the buyer has, in an agreed upon num ber of payments of principal and interest, paid the purchase price in full.
|
LISC |
|
| Insurable Title |
|
A property title that a title insurance company agrees to insure against defects and disputes.
|
Fannie Mae |
|
| Insurable interest |
|
A person's interest in property such that an occurrence of a peril would cause financial loss to that person.
|
LISC |
|
| Insurable value |
|
The value of the portions of the property that are physically destructible.
|
LISC |
|
| Insurance |
|
A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.
|
Fannie Mae |
|
| Insurance Binder |
|
A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.
|
Fannie Mae |
|
| Insured Mortgage |
|
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
|
Fannie Mae |
|
| Interest |
|
The fee charged for borrowing money. Simply put, this is the fee that is charged for borrowing money from lenders. The interest rate is the rate of interest that is in effect when the monthly payment is due. An interest rate ceiling ^for an adjustable-rate mortgage (ARM) ^is the maximum interest rate, as specified in the mortgage note; the interest rate floor is the minimum interest rate, as specified in the mortgage note.
|
Fannie Mae |
|
| Interest Accrual Rate |
|
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.
|
Fannie Mae |
|
| Interest Rate |
|
The rate of interest in effect for the monthly payment due.
|
Fannie Mae |
|
| Interest Rate Buydown Plan |
|
An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specified period, the mortgagor's effective interest rate is "bought down" below the actual interest rate.
|
Fannie Mae |
|
| Interest Rate Ceiling |
|
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
|
Fannie Mae |
|
| Interest Rate Floor |
|
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
|
Fannie Mae |
|
| Interest Rate for HECMs |
|
The interest rate on a Home Equity Conversion Mortgage (HECM) adjusts monthly or yearly. It is tied to the weekly average yield of U.S. Treasury securities adjusted to a constant maturity of one year. The interest charged on the HECM loan will be payable to your lender when the loan terminates.
|
Fannie Mae |
|
| Interest escalation clause |
|
Provides for variable rate of interest according to a standard index.
|
LISC |
|
| Interest rate cap |
|
A provision of an ARM limiting how much interest rates may increase or decrease per adjustment period or over the life of a mortgage. See also Lifetime cap.
|
FHA |
|
| Interest-only loan |
|
A method of loan amortization in which interest is paid periodicaly over the term of the loan and the entire original loan amount is paid at maturity.
|
LISC |
|
| Internal Rate of Return (IRR) |
(IRR) |
The percentage rate earned on each dollar that remains in an investment each year. The IRR of an investment is the discount rate at which the sum of the present value of future cash flows equals the initial cap ital investment.
|
LISC |
|
| Intestate |
|
Without a last will and testament.
|
LISC |
|
| Investment |
|
An item, such as a house, on which money is spent in the hope of getting money or other benefits back in return.
|
LISC |
|
| Investment Property |
|
A property that is not occupied by the owner.
|
Fannie Mae |
|
| Investment value |
|
The value to a specific investor, based on that investor's requirements, tax rate, financing, etc.
|
LISC |
|
| Invitation for Bids |
(IFB) |
Invitation for Bids (IFB): An IFB is the instrument used to solicit bids for proposed contracts using the sealed bidding procurement method.
|
HUD |
|
| Involuntary lien |
|
A lien such as taxes or mechanic's lien imposed without consent of the property owner.
|
LISC |
|
| Joint Tenancy |
|
A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship.
|
Fannie Mae |
|
| Joint venture |
|
An equity participation in which a lender puts up funds and others, such as developers , contribute expertise. Other examples include the participation of non-profits agencies with for-profit agencies where one provides the debt and the other the equity.
|
LISC |
|
| Joists |
|
Wood beams in a house to which the floor is nailed and the ceiling lath of the floor below is nailed.
|
LISC |
|
| Judgment |
|
A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.
|
Fannie Mae |
|
| Judgment Lien |
|
A lien on the property of a debtor resulting from the decree of a court.
|
Fannie Mae |
|
| Judicial Foreclosure |
|
A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court.
|
Fannie Mae |
|
| Jumbo Loan |
|
A loan that exceeds mortgage amount limits. Also called a nonconforming loan.
|
Fannie Mae |
|
| Junior mortgage |
|
Any mortgage on a property that is subordinate to a senior mortgage in priority.
|
LISC |
|
| Kicker |
|
A benefit to the lender beyond ordinary interest, such as the increased appreciation of the property.
|
LISC |
|
| LIBOR-based ARMs |
|
The London Interbank Offered Rate (LIBOR) is based on the interest rate that major international banks are willing to lend and borrow funds for a specified period of time in the London interbank market. The LIBOR is similar to the prime-lending rate posted by major U.S. banks. You can select an adjustable rate mortgage (ARM) that adjusts to the LIBOR at specified periods, usually every six months. This type of ARM typically has a per-adjustment period cap of 1 percent and is offered with either a 5 percent or a 6 percent lifetime rate cap.
|
Fannie Mae |
|
| Land Contract (also known as Land Sales Contract or In |
|
stallment Sales Contract) Method of conveying title to a real property in which title does pass to the buyer until the contract for Deed is fulfilled. The contract for deed usually requires that the purchase price is paid in installments. (Cal-Vet loans are the most common occurrence of this in California)
|
LISC |
|
| Landlocked |
|
Surrounded by adjacent land with no means of access.
|
LISC |
|
| Late Charge |
|
The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.
|
Fannie Mae |
|
| Latent defect |
|
Concealed defect not easily determined from an inspection of the property.
|
LISC |
|
| Lease |
|
A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.
|
Fannie Mae |
|
| Lease-Purchase Mortgage Loan |
|
An alternative Fannie Mae financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payments consists of PITI payments on the first mortgage, plus an extra amount that is earmarked for deposit to a savings account in which money for a down payment will accumulate.
|
FHA |
|
| Lease-purchase Option |
|
Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.
|
Fannie Mae |
|
| Leased fee |
|
The landlord's interest.
|
LISC |
|
| Leasehold |
|
A possessory legal interest in real property acquired by a tenant (lessee) when she enters into a rental agreement with the owner of the property (landlord or lessor).
|
LISC |
|
| Leasehold Estate |
|
A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.
|
Fannie Mae |
|
| Legal Description |
|
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
|
Fannie Mae |
|
| Lessee |
|
The tenant in a lease agreement.
|
LISC |
|
| Lessor |
|
The landlord in a lease agreement.
|
LISC |
|
| Letter of Credit |
|
Letter of Credit: Line of credit to a grant recipient established at time of approval of application.
|
HUD |
|
| Leverage |
|
The use of borrowed funds to increase the effective rate of return on an investment.
|
LISC |
|
| Liabilities |
|
A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
|
Fannie Mae |
|
| Liability |
|
Liability: Assets owed for items received, services received, assets acquired, construction performed (regardless of whether invoices have been received), an amount received but not yet earned, or other Expenses incurred. (GAO) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Liability Insurance |
|
Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party.
|
Fannie Mae |
|
| Lien |
|
A legal claim against a property that must be paid off when the property is sold.
|
Fannie Mae |
|
| Lifetime Payment Cap |
|
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage.
|
Fannie Mae |
|
| Lifetime Rate Cap |
|
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan.
|
Fannie Mae |
|
| Lifetime cap |
|
A provision of an ARM that limits the highest rate that can occur over the life of the loan.
|
FHA |
|
| Line of Credit |
|
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit.
|
Fannie Mae |
|
| Liquid Asset |
|
A cash asset or an asset that is easily converted into cash.
|
Fannie Mae |
|
| Liquid assets |
|
Cash or other assets that can be quickly converted to cash with little or no sacrifice in value.
|
LISC |
|
| Liquidated damages |
|
A specified sum of money agreed upon by contracting parties that will be received by the other or others if one of the parties commits a breach of the contract.
|
LISC |
|
| Listing agent |
|
A real estate agent who lists a house for sale. The listing agent represents the seller of the house.
|
LISC |
|
| Listings |
|
A computerized pool of information, shared by real estate agents, that list houses for sale. Also called Multiple Listing Service or MLS.
|
LISC |
|
| Loan |
|
A sum of borrowed money (principal) that is generally repaid with interest.
|
Fannie Mae |
|
| Loan Application |
|
The loan application is a detailed form designed to provide information from you that your lender will need. Lenders use the application to evaluate whether or not they can give you a loan, and if so, the amount of money they can lend you. The "four Cs" of credit come into play when filling out an application -- they are capacity, credit history, capital and collateral. The loan application form requests information such as: *bank account balances and account numbers, as well as bank branch address; *information about where you work or what sources of income you have; *outstanding debts (including loans and credit cards with names and addresses of creditors). Information needed for the loan application may vary from lender to lender, so prior to filling out the application it's important to discuss with your lender what items your lender will need. If your an approved lender uses Desktop Underwriter, an automated underwriting system, they will not have to ask you for as much information regarding your employment, credit, or residence history. As a result, you won't need to provide as much documentation to back-up the information. Ask your lender if the lender uses this time-saving system.
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Fannie Mae |
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| Loan Commitment |
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The commitment letter states the dollar amount of the loan being offered, the number of years you have to repay the loan, the loan origination fee, the points, the annual percentage rate, and the monthly charges. The letter also states the time you have to accept the loan offer and to close the loan. Make sure you understand all aspects of the commitment letter because by signing it, you indicate your acceptance of its terms and conditions.
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Fannie Mae |
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| Loan Limit |
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Loan limit
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Fannie Mae |
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| Loan Origination |
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The process by which a mortgage lender brings into existence a mortgage secured by real property.
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Fannie Mae |
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| Loan Origination Fee |
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The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. For example, a $100,000 mortgage with a loan origination fee of 1 point would mean you pay $1,000.
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Fannie Mae |
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| Loan Terms and Conditions |
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With a reverse mortgage, a lender can call in your loan under certain conditions. But, if you occupy the property as your primary residence, are not absent from the property for 12 consecutive months. You may instruct the lender to pay the taxes and insurance on your behalf from your reverse mortgage funds. The lender will set aside funds from your reverse mortgage to pay for future taxes and insurance, as long as funds are available. Furthermore, as long as you comply with the terms noted above, you can't be forced to sell your home to pay off the reverse mortgage, even if the loan balance grows to exceed the value of your property.
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Fannie Mae |
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| Loan To Value Ratio (LTV) |
(LTV) |
The loan balance on a house compared to the appraised value of a house. In making a mortgage loan, a lender uses the LTV to show that a house is worth more than the loan amount. This is important because, if the ho meowner does not make pay-ments on the mortgage loan, the bank gets the house in return, as payment.
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LISC |
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| Loan balance |
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The amount of money remaining to be paid on an amortizing loan at a given time.
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LISC |
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| Loan or mortgage value |
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That portion of the value of real property recognized by the lender when used to secure a loan.
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LISC |
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| Loan point |
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A charge prepaid by the borrower upon the origination of a loan. One point equals one percent of the loan amount.
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LISC |
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| Loan servicing |
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The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
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FHA |
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| Loan-To-Value Percentage |
(LTV) |
The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.
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Fannie Mae |
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| Loan-To-Value Ratio (L/V) |
(L/V) |
The amount of money borrowed in relation to the total market value of a property. LTV = loan amount divided by the property value.
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LISC |
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| Loan-to-value percentage |
(LTV) |
The relationship between the unpaid principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property.
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FHA |
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| Loan-to-value ratio |
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The ratio of amount borrowed to the property market value, usually expressed as a percentage.
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LISC |
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| Lock-in |
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A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.
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Fannie Mae |
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| Lock-in Period |
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The time period during which the lender has guaranteed an interest rate to a borrower.
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Fannie Mae |
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| Low Income |
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Low Income: Income that does not exceed 80 percent of area median income.
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HUD |
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| Low Income Housing Tax Credits |
(LIHTC) |
Low Income Housing Tax Credits (LIHTC): A way of obtaining financing to develop low-income housing. Government programs provide dollar-for-dollar credit toward taxes owed by the housing owner. These tax credits can be sold, or used to back up bonds that are sold, to obtain financing to develop the housing.
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HUD |
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| Managing risk |
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The steps taken by an investor or manager to control or reduce investment risk.
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LISC |
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| Manufactured Housing |
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Homes and dwellings that are not built at the home site and are moved to the location are considered manufactured housing. Manufactured housing units must be built on a permanent chassis at a factory and then transported to a permanent site and attached to a foundation. All manufactured homes must be built to meet standards set forth by the U.S. Department of Housing and Urban Development (HUD). The standards focus on such aspects as design, strength, energy efficiency, and fire resistance. Manufactured housing represents one of the fastest-growing housing markets in the United States. Nearly all of the mortgage products are available for owners of manufactured housing.
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Fannie Mae |
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| Margin |
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For an adjustable-rate mortgage (ARM), the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change.
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Fannie Mae |
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| Margin (also known as Spread) |
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The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.
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LISC |
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| Market Value |
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You can get a good feel for the market value of a home by asking whether the listing agent compiled a "comparative market analysis" (CMA). This written report on the property examines comparable homes in the area that have recently been sold, are currently on the market, or are currently under contract. The CMA will help you figure out whether the asking price is in line with other comparable houses in the neighborhood.
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Fannie Mae |
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| Market approach |
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The process of comparing the subject property to equivalent properties sold recently to arrive at an estimate of value for a property being appraised.
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LISC |
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| Market interest rate |
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Interest rate currently demanded by lenders and investors.
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LISC |
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| Market rent |
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The current rent that real estate would bring if available for rent.
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LISC |
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| Marketable title |
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A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.
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LISC |
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| Master Association |
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A homeowners' association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a "second-level" association that handles matters affecting the entire development, while the "first-level" associations handle matters affecting their particular portions of the project.
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Fannie Mae |
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| Maturity |
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The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
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Fannie Mae |
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| Maximum Claim Amount |
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Your maximum claim amount is the lesser of two figures: (1) Your home's appraised value; (2) HUD 203(b) limit. The HUD 203(b) limit is the maximum loan amount that FHA will insure for residences in your geographical area. Check with your lender to get the latest figures for your area.
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Fannie Mae |
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| Maximum Financing |
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A mortgage amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product. Thus, maximum financing on a fixed-rate mortgage would be 90 percent or higher, because 95 percent is the maximum allowable LTV percentage for that product.
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Fannie Mae |
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| Meander line |
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The approximate border of a natural body of water.
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LISC |
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| Meandered |
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Area such as a lake on which taxes are not paid.
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LISC |
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| Mechanic's lien |
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A lien that can be filed by mechanics or material suppliers; it is against real property created by statute for the purpose of securing payments for services performed or materials furnished in the construction or repair of buildings or making other improvements to land.
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LISC |
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| Merged Credit Report |
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A credit report that contains information from three credit repositories. When the report is created, the information is compared for duplicate entries. Any duplicates are combined to provide a summary of a your credit.
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Fannie Mae |
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| Meridian |
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Map lines running north and south to locate land under the governmental survey system.
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LISC |
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| Metes and bounds |
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A method of legal description using measurements, boundaries, and directions.
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LISC |
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| Mixed-Income |
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Mixed-Income: Refers to a resident mix that includes families with various income levels within one development. Mixed-income developments combine public housing families with other residents in order to decrease the economic and social isolation of these families.
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HUD |
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| Modernization |
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Modernization: Program authorized by the Housing Act of 1937 for upgrading low-rent public housing projects.
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HUD |
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| Modification |
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The act of changing any of the terms of the mortgage.
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Fannie Mae |
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| Money Market Account |
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A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account.
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Fannie Mae |
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| Money Market Fund |
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A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury bills.
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Fannie Mae |
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| Monthly Fixed Installment |
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That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction.
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Fannie Mae |
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| Monthly Payment Mortgage |
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A mortgage that requires payments to reduce the debt once a month. Your monthly mortgage payment is composed of four components. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. All four of these elements are often referred to as PITI. Your monthly mortgage payment due may be mailed to you in a book of coupons each year, or in a separate coupon every month. Ask your lender if the automated underwriting system is used, which may reduce costs associated with your mortgage.
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Fannie Mae |
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| Monthly housing costs |
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The total of a homeowner's mortgage loan pay-ment and expenses for utilities, general home repair, and upkeep.
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LISC |
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| Moratium |
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A period of time when a lender may waive interest and/or principal payment on a loan.
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LISC |
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| Mortgage |
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A legal document that pledges a property to the lender as security for payment of a debt. Simply put, the mortgage is the legal document that gives the lender a legal claim against your house should you default on your loan payments. The mortgage indicates that a specific amount of money will be loaned at a specific interest rate so that you can buy your home. Another way of thinking of the mortgage is that you have possession of the property but the lender has ownership until you have repaid your loan. The items stated in the mortgage include the homeowner's responsibility to: ^pay principal^pay interest^pay taxes,^pay insurance on time,^pay to maintain hazard insurance on the property, and^adequately maintain the property.The mortgage also includes the basic information found in the note. Should you consistently fail to meet these requirements, your lender can seek full repayment of the balance of the loan, foreclose on the property, or sell the property and use the proceeds to pay off the loan balance and foreclosure costs.A deed of trust is used instead of a mortgage in some states.
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Fannie Mae |
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| Mortgage Banker |
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A company that originates mortgages exclusively for resale in the secondary mortgage market. Mortgage companies originate and service mortgages. In other words, they make loans to consumers. Mortgage companies then typically sell these loans to other lenders and investors. Some mortgage companies may be subsidiaries of depository institutions or their holding companies but do not receive money from individual depositors.
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Fannie Mae |
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| Mortgage Bankers Association of America |
(MBA) |
Mortgage Bankers Association of America (MBA): National organization which seeks to improve mortgage practices and marketing activities.
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HUD |
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| Mortgage Banking Companies |
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Mortgage companies originate and service mortgages. In other words, they make loans to consumers. Mortgage companies then typically sell these loans to other lenders and investors. Some mortgage companies may be subsidiaries of depository institutions or their holding companies but do not receive money from individual depositors.
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Fannie Mae |
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| Mortgage Broker |
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An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. The National Association of Mortgage Brokers defines a mortgage broker as "an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages." There are an estimated 20,000 mortgage brokerage operations from coast to coast. They originate more than half of the residential loans in the U.S. A mortgage broker has professional expertise that can assist mortgage seekers in finding the best loan for them. The mortgage broker is also experienced in offering many applicable financing options for a consumer's specific needs.
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Fannie Mae |
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| Mortgage Insurance |
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A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan.
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Fannie Mae |
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| Mortgage Insurance Premium |
(MIP) |
The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
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Fannie Mae |
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| Mortgage Life Insurance |
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A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.
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Fannie Mae |
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| Mortgage agreement |
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A document signed by a borrower and a lender giving the lender the right to take the borrower's house if the borrower does not repay the loan.
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LISC |
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| Mortgage banker |
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A company that originates mortgages exclusively for resale in the secondary market.
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FHA |
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| Mortgage broker |
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An individual or company that for a fee acts as an intermediary between borrowers and lenders.
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FHA |
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| Mortgage commitment |
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A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.
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LISC |
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| Mortgage insurance premium |
(MIP) |
The fee paid by a borrower to FHA or a private insurer for mortgage insurance.
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FHA |
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| Mortgage insurance premium (MIP) |
(MIP) |
The fee paid by a borrower to FHA or a private insurer for mortgage insurance.
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LISC |
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| Mortgage interest rate |
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The rate of interest in effect for the monthly payment due.
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FHA |
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| Mortgage margin |
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The set percentage the lender adds to the index value to determine the interest rate of an ARM.
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FHA |
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| Mortgage note |
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A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time-, the mortgage note is secured by a mortgage.
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FHA |
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| Mortgage note (also none as Promissory Note or Note) |
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Mortgage note (also none as Promissory Note or Note) A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actua l amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
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LISC |
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| Mortgage-Related Closing Costs |
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Mortgage-related closing costs generally are costs associated with your loan application. They vary, but here are some of the most common ones: *Loan origination fee: covers the administrative costs of processing the loan. *Loan discount points: These points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point. *Appraisal fee: pays for the appraisal, which the lender uses to determine whether the value of the property secures the loan should you default. The buyer usually pays this fee. *Credit report fee: covers the cost of the credit report; *Assumption fee: charged if you take over the payments on the seller's existing loan. *Prepaid interest: You are charged interest when you borrow money from a lender, and you will pay interest on the mortgage amount from the date of settlement to the beginning of the period covered by the first monthly mortgage payment. At closing, you may be required to pay in advance the interest for the period; *Escrow accounts: Also called reserves, these accounts are required if your lender will be paying your homeowner's insurance and property taxes.
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Fannie Mae |
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| Mortgagee |
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The lender in a mortgage agreement.
|
Fannie Mae |
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| Mortgagor |
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The borrower in a mortgage agreement.
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Fannie Mae |
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| Multidwelling Units |
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Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
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Fannie Mae |
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| Multifamily Mortgage |
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A residential mortgage on a dwelling that is designed to house more than four families, such as a high-rise apartment complex.
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Fannie Mae |
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| Multiple listing |
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Sharing of property sales listings by a number of real estate brokers with an agreement as to how the costs and commissions are to be split.
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LISC |
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| Mutual Mortgage Insurance Fund |
(MMI) |
Mutual Mortgage Insurance Fund (MMI): One of four separate funds within the FHA Fund; provides funds for home mortgage insurance.
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HUD |
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| National Association of Home Builders |
(NAHB) |
National Association of Home Builders (NAHB): An organization which represents home builders at all levels of government and provides information on new developments in the housing industry. It is also responsible for initiating the Homeowners Warranty Corporation which provides a guarantee of workmanship in residential homes.
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HUD |
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| National Association of Housing and Redevelopment |
(NAHRO) |
An organization which develops new techniques related to the finance, design, construction and management of housing. The NAHRO also plays a key role by consulting with Federal Agencies and the Congress on U.S. housing policy.
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HUD |
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| National Association of Real Estate Brokers |
(NAREB) |
The oldest minority trade association in America founded in 1947 on the principle that all citizens have the right to equal housing opportunities, regardless of race, creed, or color. Internet Site: www.nareb.com
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HUD |
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| National Association of Realtors |
(NAR) |
National Association of Realtors (NAR): An organization which represents the interests of realtors and promotes education, professional standards, and modern techniques in real estate practices.
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HUD |
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| National Tenants Organization |
(NTO) |
National Tenants Organization (NTO): Organization which represents tenants in subsidized housing.
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HUD |
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| Native American Housing Assistance and Self-Determ |
(NAHASD) |
Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA): Legislation enacted on October 26, 1996. NAHASDA reorganizes the system of Federal housing assistance to Native Americans by eliminating several separate programs of assistance and replacing them with a single block grant program. In addition to simplifying the process of providing housing assistance, the purpose of NAHASDA is to provide Federal assistance for Indian tribes in a manner that recognizes the right of Indian self-determination and tribal self-governance.
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HUD |
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| Navigable water |
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A waterway capable of passage by watercraft; navigable if so designated buy a U.S. or state map.
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LISC |
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| Negative Amortization |
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A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization.
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Fannie Mae |
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| Negative leverage |
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Situation where the cost of funds exceeds the rate of return on the real estate.
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LISC |
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| Net Cash Flow |
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The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments.
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Fannie Mae |
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| Net Operating Income (NOI) |
(NOI) |
The property gross earnings less the operating expenses, but before interest and depreciation expenses are deducted.
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LISC |
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| Net Present Value (NPV) |
(NPV) |
The sum of the present values of all future cash flows netted against the initial investment, discounted at a given rate.
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LISC |
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| Net Worth |
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The value of all of a person's assets, including cash, minus all liabilities.
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Fannie Mae |
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| Net lease |
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A lease agreement in which the tenant pays rent plus all taxes, insurance, repairs and other costs.
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LISC |
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| Net-Net-Net Lease (NNN) |
(NNN) |
See tripple net lease.
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LISC |
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| No Cash-Out Refinance |
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A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage).
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Fannie Mae |
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| Nominal interest rate |
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The interest rate stipulated in an agreement.
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LISC |
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| Non-recurring closing costs |
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See Closing costs.
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LISC |
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| Nonconforming use |
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A use of land that lawfully existed before a zoning ordinance that is legally continued after the effective date of the ordinance, even though the use no longer conforms to the new zoning regulations.
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LISC |
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| Nonliquid Asset |
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An asset that cannot easily be converted into cash.
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Fannie Mae |
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| Nontraditional credit history |
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A record of credit performance shown with receipts and bill and check stubs from payments to landlords, utility companies, child-care providers, and others. A method for loan applicants who do not have a credit history from, for example, car-loan or credit card payments.
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LISC |
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| Note |
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A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time. One way to think of the mortgage note is that it is a legal "IOU." Often called the promissory note, it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your payment. The note lists any penalties that will be assessed if you don't make your monthly mortgage payments. It also warns you that the lender can "call" the loan -- demand repayment of the entire loan before the end of the term -- if you violate the terms of your mortgage.
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Fannie Mae |
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| Note Rate |
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The interest rate stated on a mortgage note.
|
Fannie Mae |
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| Notice of Default |
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A formal written notice to a borrower that a default has occurred and that legal action may be taken.
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Fannie Mae |
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| Nuisance |
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The wrongful interference by one person with the use and enjoyment of real estate owned by another.
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LISC |
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| Occupancy Date |
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This provision is a good way to help ensure that your home will be ready for occupancy after the closing takes place. As part of your formal purchase offer, consider including a provision that holds the seller responsible for paying you rent should they not move out on or prior to the agreed-upon date. This allows you, for example, to use the money you receive to pay your own rent if you are leasing your current residence.
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Fannie Mae |
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| Offer |
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When you make an offer on a house, it means you are making a formal bid to buy a home. You can work with your real estate sales professional to put together a written bid that abides by the laws in your state. Your offer should include such aspects as the address of the home, the sales price, the type of mortgage financing you will use to purchase the home, any personal property that might be included as part of the sale, and a target date for closing and occupancy. An earnest money deposit typically accompanies the offer. Your real estate sales professional can provide guidance on other elements of the offer. Once you have made an offer, the seller has the opportunity to accept, decline, or make a counter-offer. If your offer is accepted, you have a ratified sales contract. This contract is the starting point for working with an approved lender to get the mortgage that's right for you.
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Fannie Mae |
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| Office of Management and Budget |
(OMB) |
Office of Management and Budget (OMB): An Executive Agency which, assists the President in overseeing the preparation of the Federal budget and to supervise its administration in Executive Branch agencies. In addition, OMB oversees and coordinates the Administration's procurement, financial management, information, and regulatory policies. www.whitehouse.gov/WH/EOP/OMB/html/ombhome.html
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HUD |
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| Office of Thrift Supervision |
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OTS regulates and supervises the nation's thrift industry. OTS' mission is to ensure the safety and soundness of thrift institutions and to support their role as home mortgage lenders and providers of other c ommunity credit and financial services.
|
LISC |
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| Office of the Comptroller of the Currency |
|
Charters, regulates and supervises national banks to ensure a safe, sound and competitive banking system that supports the citizens, communities and economy of the U.S.
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LISC |
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| One-Year Adjustable-Rate Mortgage |
|
This adjustable-rate mortgage (ARM) offers a low initial interest rate with an interest rate that adjusts annually after the first year. The rate cap per annual adjustment is usually 2 percent; the lifetime adjustment caps can be 5 percent or 6 percent. This type of mortgage may be right for you if you anticipate a rapid increase in income over the first few years of your mortgage. That's because it lets you maximize your purchasing power immediately. It may also be the right mortgage for you if you plan to live in your home for only a few years. Advantages: *Maximizes your buying power immediately, especially if you expect your income to rise quickly in the next few years;*A low first-year interest rate and a 2 percent annual rate cap;*Some one-year ARMs let you convert to a fixed-rate loan at certain adjustment intervals.
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Fannie Mae |
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| Ongoing Costs |
|
Home buyers should not forget that there are on-going costs associated with owning a home. They include, but are not limited to: *Monthly mortgage payment;*Mortgage insurance;*Homeowner's insurance;*Property taxes; and,*Utilities, such as gas, oil, water and electricity.Another cost home buyers should consider is how much it will cost to maintain their home. These costs include everything from cleaning and minor repairs to yard work and painting. Condominium owners and people living in planned unit developments should factor in any homeowners' association fees or similar costs.
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Fannie Mae |
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| Open-end mortgage |
|
A mortgage that provides for the borrowing of additional funds.
|
LISC |
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| Operating expenses |
|
Such as real estate taxes, insurance premiums, etc.
|
LISC |
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| Operating ratio |
|
Ratio of operating expenses to effective gross income.
|
LISC |
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| Opportunity cost |
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The "cost" of selecting one alternative is the benefit foregone from the next best alternative.
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LISC |
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| Option |
|
A Contract given by the owner of a property to another person, giving the latter a right to buy or lease the property at a certain price within a specified period of time.
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LISC |
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| Optionee |
|
A person who holds an option.
|
LISC |
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| Optionor |
|
An owner how gives an option to another person.
|
LISC |
|
| Original Principal Balance |
|
The total amount of principal owed on a mortgage before any payments are made.
|
Fannie Mae |
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| Origination |
|
The process that a lender goes through to get complete and correct informa-tion about a loan applicant's income and credit.
|
LISC |
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| Origination Fee |
|
A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount. The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. For example, a $100,000 mortgage with a loan origination fee of 1 point would mean you pay $1,000.
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Fannie Mae |
|
| Overhang |
|
The portion of a roof extending beyond the walls.
|
LISC |
|
| Owner Financing |
|
A property purchase transaction in which the property seller provides all or part of the financing.
|
Fannie Mae |
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| PITI |
|
Principle, interests, taxes and insurance (PITI) are the four components of a monthly mortgage payment.The four components of a monthly mortgage payment. *Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage;*Interest is the fee charged for borrowing money;*Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and hazard insurance.
|
Fannie Mae |
|
| PITI Reserves |
|
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
|
Fannie Mae |
|
| Package mortgage |
|
A mortgage that includes personal property as part of the security.
|
LISC |
|
| Partial Payment |
|
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan.
|
Fannie Mae |
|
| Partially amortized |
|
The payments do not repay the loan over its term and thus a lump sum mortgage loan (balloon) is required to repay the loan.
|
LISC |
|
| Participation mortgage |
|
A loan in which two or more lenders participate.
|
LISC |
|
| Partnership |
|
An association of two or more persons to carry on a business for profit as co-owners.
|
LISC |
|
| Party wall |
|
A wall erected on the line between two adjacent properties for the use of both parties.
|
LISC |
|
| Payment Change Date |
|
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.
|
Fannie Mae |
|
| Payment cap |
|
A provision of some ARMs limiting the amount by which a borrower's payments may increase regardless of any interest rate increase; may result in negative amortization. See Adjustable-rate mortgage.
|
FHA |
|
| Payoff |
|
|
Fannie Mae |
|
| Percentage lease |
|
A lease in which the rent amount is based on a percentage of gross sales (monthly or annually) made by the tenant.
|
LISC |
|
| Percentage rent |
|
The additional rent (over a base amount) paid by tenants to owners based on tenant sales over a specified dollar amount.
|
LISC |
|
| Periodic Payment Cap |
|
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease during any one adjustment period.
|
Fannie Mae |
|
| Periodic Rate Cap |
|
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
|
Fannie Mae |
|
| Permits |
|
With most major home improvement projects, work permits may be required. Permits provide legal permission to undertake a project and are usually given by local governments agencies.Some of the most common permits are for general projects or permits that require you to meet specific local building codes.You may want to check with your local government to determine if there are building restrictions in historic areas or in environmentally-sensitive areas.
|
Fannie Mae |
|
| Personal Property |
|
Any property that is not real property.
|
Fannie Mae |
|
| Pest Inspection Report |
|
Termite InspectionHomes in many parts of the country must be inspected for termites before they can be sold. You should receive a certificate from a termite inspection firm stating that the property is free of both visible termite infestation and termite damage.The cost of the termite inspection is usually paid by the seller, and the seller's real estate sales professional orders the inspection. You need to make sure that the original certificate is delivered to your lender at least three days before closing.This allows the lender to review the certificate and address any potential problems.
|
Fannie Mae |
|
| Physical depreciation |
|
Physical deterioration and concurrent loss in property value caused by wear, tear, and decay.
|
LISC |
|
| Planned Unit Development |
|
A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.
|
Fannie Mae |
|
| Planned Unit Development (PUD) |
(PUD) |
A Land Development project involving a mixture of land uses and densities not available for separately zoned units. Similar to condominiums, it is viewed as an integrated whole. Unlike condominiums, however, t he individual unit owners do own a portion of the land under and around their individual unit.
|
LISC |
|
| Planned unit developments |
(PUDs) |
A planned unit development is a project or subdivision that consists of common property that is owned and maintained by an owners' association for the benefit and use of the individual PUD unit owners.
|
FHA |
|
| Plat |
|
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.
|
LISC |
|
| Plot plan |
|
A drawing showing the placement of a building on a site with precise locations, dimensions, and elevations.
|
LISC |
|
| Plottage |
|
The increase in value of land by assembling smaller properties into one larger site.
|
LISC |
|
| Point |
|
A charge of 1 percent of the loan amount made at origination of mortgage.
|
LISC |
|
| Point of beginning |
|
The starting point in a metes and bounds legal description.
|
LISC |
|
| Point or points |
|
A one-time charge the lender adds to a mortgage loan. A point is 1% of the mortgage loan amount.
|
LISC |
|
| Points |
|
A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.
|
Fannie Mae |
|
| Positive leverage |
|
Borrowed funds are invested at a rate of return higher than the cost of the funds to the borrower.
|
LISC |
|
| Potential rental income |
|
The total amount of rental income for a property if it were 100% occupied and rented at competitive market rates.
|
LISC |
|
| Power of Attorney |
|
A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
|
Fannie Mae |
|
| Pre-Approval |
|
When you work with your lender to get pre-approved, you are getting an indication of how much money you will be eligible to borrow when you apply for a mortgage. This process occurs before you complete an application for a loan.Pre-approval includes a screening of a borrower's credit history, and all information you give to your lender will be verified when you apply for your mortgage.
|
Fannie Mae |
|
| Pre-Qualification |
|
The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.
|
Fannie Mae |
|
| Prearranged Refinancing Agreement |
|
A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.
|
Fannie Mae |
|
| Predatory Lending |
|
Predatory lending refers to abusive mortgage practices, which threaten the financial security of homeowners and the stability of neighborhoods. Predatory mortgage lenders market their products to homeowners with home equity, people with large debts or those in need of home repairs. These lenders use high-pressure sales tactics, inflated fees or interest rates, and unaffordable repayment terms. Many homeowners become financially burdened by these loans and fall at risk of losing their homes.
|
Chicago DOH |
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|
| Prefabricated home |
|
Home built or partially assembled prior to delivery to the building site.
|
LISC |
|
| Preforeclosure Sale |
|
A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.
|
Fannie Mae |
|
| Premium |
|
Amount above the face value of a loan.
|
LISC |
|
| Prepayment |
|
Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.
|
Fannie Mae |
|
| Prepayment Penalty |
|
A fee that may be charged to a borrower who pays off a loan before it is due. If you pay off your mortgage before it is due, you may be charged a fee -- this is referred to as a prepayment penalty. Any amount that is paid to reduce the principal balance of a loan before the due date -- such as the sale of the property, the owner's decision to pay the loan in full, the owner's decision to pay additional money every month to lower the principle or interest -- is considered prepayment.You may want to consider discussing the specifics of this fee as you negotiate the terms of your loan with your lender.
|
Fannie Mae |
|
| Prepayment priviledge |
|
The right of a borrower to pay a mortgage ahead of the scheduled due date.
|
LISC |
|
| Prequalification |
|
The process of determining how much money a prospective homebuyer will be eligible to borrow before a loan is applied for.
|
FHA |
|
| Present value |
|
The sum of all future benefits accruing to the owner of an asset when such benefits are discounted to the present by an appropriate discount rate.
|
LISC |
|
| Price |
|
The dollar amount that was offered, asked, or actually paid for a property.
|
LISC |
|
| Prime Rate |
|
The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.
|
Fannie Mae |
|
| Prime rates |
|
The interest rate charged by lenders to their best rated customers.
|
LISC |
|
| Principal |
|
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage. One of the terms you're likely to hear when you talk about a mortgage with your lender is principal. The principal is the amount originally borrowed or the amount that remains to be paid once you have started making payments. It is also the part of the monthly mortgage payment that reduces the remaining balance of a mortgage.The principal balance is the outstanding amount of principal on a mortgage; it does not include interest or any other charges.
|
Fannie Mae |
|
| Principal Balance |
|
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. (see also "Remaining Balance")
|
Fannie Mae |
|
| Private Mortgage Insurance |
(PMI) |
Also known as Mortgage Insurance, PMI is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
|
Fannie Mae |
|
| Probate sale |
|
A sale held to sell property, including houses, of a person who has died.
|
LISC |
|
| Promissory Note |
|
A written promise to repay a specified amount over a specified period of time.
|
Fannie Mae |
|
| Property Tax |
|
|
Fannie Mae |
|
| Property inspection |
|
The examination of a house by a licensed inspector to see if its structure is sound and if its mechanical systems, such as plumbing and heating, are working.
|
LISC |
|
| Proration |
|
Allocation of costs and income between the buyer and seller of real estate at the time of the transaction closing, based upon the time of ownership of each.
|
LISC |
|
| Public Auction |
|
A meeting in an announced public location to sell property to repay a mortgage that is in default.
|
Fannie Mae |
|
| Public Housing Agency |
(PHA) |
Public Housing Agency (PHA): Organization created by local government which administers HUD's Low-Income Public Housing Program and other HUD programs.
|
HUD |
|
| Purchase Agreement |
|
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. The Purchase and Sale Agreement is a written contract that is signed by the buyer and seller. It states the terms and conditions under which a property will be sold. It includes:^description of property,^price offered,^down payment,^earnest money deposit,^financing,^personal items to be included,^closing date,^occupancy date,^length of time the offer is valid,^special contingencies, and^inspection.
|
Fannie Mae |
|
| Purchase Money Transaction |
|
The acquisition of property through the payment of money or its equivalent.
|
Fannie Mae |
|
| 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. The Purchase and Sale Agreement is a written contract that is signed by the buyer and seller. It states the terms and conditions under which a property will be sold. It includes: *description of property; *price offered; *down payment; *earnest money deposit; *financing; *personal items to be included; *closing date; *occupancy date; *length of time the offer is valid; *special contingencies; *inspection.
|
Fannie Mae |
|
| Purchase money mortgage |
|
A mortgage taken by the seller as pat of the purchase price.
|
LISC |
|
| Pyramiding |
|
A process of acquiring additional properties by refinancing existing properties.
|
LISC |
|
| Qualifying Guidelines |
|
There are two main elements lenders consider when determining whether you and any co-borrowers qualify for a specific mortgage. The first is your monthly mortgage costs, including mortgage payments, property taxes and insurance. If you're considering buying a condominium or cooperative, any associated fees are also considered. Your mortgage costs should not exceed 28 percent of your gross monthly (pre-tax) income. The second qualifying guideline relates to your total monthly housing costs and other debts you and any co-borrowers have. These costs should not exceed 36 percent of your gross monthly income. Lenders follow these guidelines because they believe these percentages allow homeowners to pay off their mortgages fairly comfortably without the worry of loan defaults and foreclosures. However, these guidelines can be exceeded in certain cases, such as borrowers with a good credit history or with a larger down payment.
|
Fannie Mae |
|
| Qualifying Ratios |
|
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
|
Fannie Mae |
|
| Quiet enjoyment |
|
Right of property owner to use his property without adverse claims of another to title or interest.
|
LISC |
|
| Quit Claim Deed |
|
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
|
Fannie Mae |
|
| Quitclaim deed |
|
A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By acc epting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. (see Deed.)
|
LISC |
|
| RHS Loans |
|
The Rural Housing Service (RHS), a branch of the U.S. Department of Agriculture, offers low-interest-rate homeownership loans with no down payment requirements to low- and moderate-income persons who live in rural areas or small towns. Check with your local RHS office or a local lender for eligibility requirements. For the location of RHS State Offices and details on RHS loans, see the RHS home page.
|
Fannie Mae |
|
| Radon |
|
A radioactive gas found in some homes that in sufficient concentrations can cause health problems.
|
Fannie Mae |
|
| Rafter |
|
A board that supports the roof of a house.
|
LISC |
|
| Rate Caps |
|
Lenders offer caps with their adjustable rate mortgages (ARMs) so you can have more control over your monthly mortgage payment. Usually, there are two types of rate caps: *A per-adjustment cap, which specifies the most your interest rate can rise from one adjustment period to the next,and *a lifetime adjustment cap, which specifies how much your interest rate can rise over the life of your loan. Ask your lender about both caps when evaluating any ARM product.
|
Fannie Mae |
|
| Rate Lock |
|
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time. (see also "Lock-in")
|
Fannie Mae |
|
| Rate-Improvement Mortgage |
|
A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.
|
Fannie Mae |
|
| Ratified Sales Contract |
|
A ratified sales contract means both the buyer and the seller have signed off on the final offer. It also acts as a starting point for the loan application interview. The ratified sales contract specifies the amount of your down payment, the price you will pay for the house, the type of mortgage financing you will seek, your proposed closing and occupancy dates, and other contingencies. You will give all this information to your loan officer when you meet to discuss your financing options.
|
Fannie Mae |
|
| Raw land |
|
Land with no improvements.
|
LISC |
|
| Real Estate Agent |
|
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
|
Fannie Mae |
|
| Real Estate Attorney |
|
Many homeowners hire a real estate attorney to represent them during the loan application process. If you do so, your attorney will review the sales contract and represent you at closing.
|
Fannie Mae |
|
| Real Estate Broker |
|
A middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.
|
LISC |
|
| Real Estate Investment Trust (REIT) |
(REIT) |
Passive investment vehicle whose distributions are taxed only to the investors who receive them.
|
LISC |
|
| Real Estate Settlement Procedures Act |
(RESPA) |
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
|
Fannie Mae |
|
| Real Property |
|
Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
|
Fannie Mae |
|
| Real estate |
|
Land including the buildings or other improvements upon the land. Also includes the airspace above the parcel and the contents below the surface.
|
LISC |
|
| Real estate sales professional |
|
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
|
FHA |
|
| Realtor® |
|
A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
|
Fannie Mae |
|
| Recasting |
|
Changing terms of a loan while retaining the same loan.
|
LISC |
|
| Recission |
|
The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.
|
Fannie Mae |
|
| Recorder |
|
The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."
|
Fannie Mae |
|
| Recording |
|
The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
|
Fannie Mae |
|
| Recurring closing costs |
|
See Closing Costs.
|
LISC |
|
| References |
|
Names and phone numbers of previous customers of a contractor. It's a good idea to call a contractor's references before hiring him, to make sure he has done good work in the past.
|
LISC |
|
| Refinance Transaction |
|
The process of paying off one loan with the proceeds from a new loan using the same property as security.
|
Fannie Mae |
|
| Refinancing |
|
|
|
|
| Rehab |
|
Short for "rehabilitation." To rebuild an existing house or building, to make the space more livable or usable and more valuable.
|
LISC |
|
| Rehabilitation Escrow Account |
|
A contingency reserve will be set up that contains funds borrowed to finance your home improvements. These will be placed into an escrow account upon the closing of your mortgage. Payments to the contractor will be periodically made from this fund as construction occurs. You will be paid interest on the funds that are in the escrow account that have not been paid to the contractor.
|
Fannie Mae |
|
| Rehabilitation Mortgage |
|
A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.
|
Fannie Mae |
|
| Remaining Balance |
|
The amount of principal that has not yet been repaid. (see also "Principal Balance")
|
Fannie Mae |
|
| Remaining Term |
|
The original amortization term minus the number of payments that have been applied.
|
Fannie Mae |
|
| Remodeling |
|
To rebuild and improve a house or building, often changing its "model" or layout or adding rooms.
|
LISC |
|
| Renegotiable Rate Mortgages (RRM) |
(RRM) |
A mortgage where the interest rate is renegotiated at intervals, usually every three to five years.
|
LISC |
|
| Rent |
|
Consideration paid for the use of property.
|
LISC |
|
| Rent Loss Insurance |
|
Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
|
Fannie Mae |
|
| Rent with Option to Buy |
|
There are two different Rent With Option to Buy options:(1) Lease-Purchase Mortgage Loan: An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate.(2) Lease-Purchase Option: Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.
|
Fannie Mae |
|
| Rentable area |
|
The actual square foot area for which the tenant will pay rent. Compare with gross area and usable area.
|
LISC |
|
| Repayment Plan |
|
An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions."
|
Fannie Mae |
|
| Replacement Reserve Fund |
|
A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.
|
Fannie Mae |
|
| Repossess |
|
To take back a property, such as a car, when the borrower or owner does not make payments due on the property. Done by a lender or seller.
|
LISC |
|
| Request for Proposals |
(RFP) |
Request for Proposals (RFP): A RFP is the instrument used to solicit proposals/offers for proposed contracts using the negotiated procurement method.
|
HUD |
|
| Request for Quotations |
(RFQ) |
Request for Quotations (RFQ): A RFQ is the instrument used to solicit price quotes for proposed contracts using the simplified acquisition procurement method.
|
HUD |
|
| Restrictive covenants |
|
Private restrictions limiting the use of real property. are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only betwee n the original seller and buyer. The determination whether a covenant runs with the land or is personal is governed by the language of the covenant, the intent of the parties, and the law in the State where the land is situated. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title. Restrictive covenants may limit the density of buildings per acre, regulate size, style or price range of buildings to be erected, or prevent particular businesses from operating.
|
LISC |
|
| Reverse Annuity Mortgage |
|
Loan to a homeowner which is paid as an annuity with interest increasing on the accumulated balance. The loan is paid back in full upon the sale or refinancing of the property.
|
LISC |
|
| Reverse Mortgage |
|
|
Fannie Mae |
|
| Revolving Liability |
|
A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
|
Fannie Mae |
|
| Right of First Refusal |
|
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
|
Fannie Mae |
|
| Right of Ingress or Egress |
|
The right to enter or leave designated premises.
|
Fannie Mae |
|
| Right of Survivorship |
|
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
|
Fannie Mae |
|
| Right-of-way |
|
The right to cross over or under another person's property for ingress, egress, utility lines, or sewers.
|
LISC |
|
| Riparian rights |
|
Rights of an owner of property abutting water to use the water and have uninterrupted flow.
|
LISC |
|
| Risk Assessment |
|
Risk Assessment: The identification and analysis of relevant external and internal risks to achievement of established objectives, forming a basis for determining how risks should be managed. (JFMIP Framework) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Rollover mortgage |
|
A loan having a call date earlier than the full amortization period.
|
LISC |
|
| Run with the land |
|
When easements or restrictions do not expire when ownership in transferred.
|
LISC |
|
| Rural Development (RD) |
(RD) |
Formerly the Farmers Home Administration, RD is part of the U. S. Department of Agriculture. It administers grant and loan programs to promote and support housing and essential community facilities development in r ural communities.
|
LISC |
|
| Rural Housing Service |
(RHS) |
An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.
|
Fannie Mae |
|
| Sale cost |
|
The brokerage commissions and fees, and any additional transaction costs that are incurred during the sale of the property.
|
LISC |
|
| Sale price |
|
The total amount paid to the seller at time of sale.
|
LISC |
|
| Sale proceeds after tax |
|
The sale proceeds before tax minus the tax liability on the sale.
|
LISC |
|
| Sale proceeds before tax |
|
The sale price minus the sale costs and the mortgage loan balance.
|
LISC |
|
| Sale-Leaseback |
|
A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
|
Fannie Mae |
|
| Sales agreement |
|
See Agreement of sale.
|
LISC |
|
| Sales comparison approach |
|
A way to determine market value by comparing a subject property to properties with the same or similar characteristics.
|
LISC |
|
| Savings and Loans |
|
Among the customers of Savings and Loans (S&Ls) are individual savers and residential and commercial property mortgage borrowers. Their traditional role for savings and loans is to accept deposits and make mortgage loans, but it has expanded recently to a focus on one- to four-family residential mortgages, multifamily mortgages and commercial mortgages. These institutions are growing bigger, and the lines between S&Ls and commercial banks are not as defined as in the past. Deposit insurance is provided through the Savings Association Insurance Fund, a subsidiary of the Federal Deposit Insurance Corporation.
|
Fannie Mae |
|
| Second Mortgage |
|
A mortgage that has a lien position subordinate to the first mortgage.
|
Fannie Mae |
|
| Secondary Mortgage Market |
|
The buying and selling of existing mortgages.
|
Fannie Mae |
|
| Secondary financing |
|
See Junior mortgages.
|
LISC |
|
| Secondary mortgage market |
|
The buying and selling of existing mortgages.
|
FHA |
|
| Section |
|
A unit of land measure. One mile square containing 640 acres.
|
LISC |
|
| Section 202 |
|
Section 202: Loans for the construction or rehabilitation of housing for the Elderly and Handicapped, authorized by the Housing Act of 1950.
|
HUD |
|
| Section 8 |
|
Housing Assistance Payments Program, authorized by the Housing and Community Development Act of 1974.
|
HUD |
|
| Section 8 program |
|
Program of rent supplements developed by HUD and allocated to local governments.
|
LISC |
|
| Secured Loan |
|
A loan that is backed by collateral.
|
Fannie Mae |
|
| Security |
|
The property that will be pledged as collateral for a loan.
|
Fannie Mae |
|
| Seller Take-Back |
|
An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.(see also "Owner Financing")
|
Fannie Mae |
|
| Semi-detached house |
|
A house that is attached to another property, such as a duplex or townhouse.
|
LISC |
|
| Senior mortgage |
|
A mortgage, usually a first mortgage, having priority over another.
|
LISC |
|
| Septic tank |
|
An underground tank used for sewage treatment where city sewerage is not available.
|
LISC |
|
| Servicer |
|
An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
|
Fannie Mae |
|
| Servicing |
|
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
|
Fannie Mae |
|
| Setback |
|
A distance from the curb to the building. Often a minimum setback is specified by ordinance or code..
|
LISC |
|
| Settlement |
|
The final step before you get the keys to your home is a formal meeting called the closing. It is at this meeting in which ownership of the home is transferred from the seller to the buyer. Also called a settlement in some parts of the country, the meeting is typically attended by the buyer(s), the seller(s), their attorneys if they have them, both real estate sales professionals, a representative of the lender, and the closing agent. The purpose is to make sure the property is physically and legally ready to be transferred to you. Several closing costs will be paid at this meeting. These expenses are over and above the price of the property and are incurred when ownership of a property is transferred. Closing costs generally include a loan origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance, and a survey. Closing costs vary according to the area of the country.
|
Fannie Mae |
|
| Settlement Sheet |
|
The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The (blank) form is published by the U.S. Department of Housing and Urban Development (HUD).Items on the statement include: *real estate commissions; *loan fees; *points; *escrow amounts.The form is filled out by your closing agent and must be signed by the buyer and the seller. The buyer should be allowed to review the HUD-1 Settlement Statement on the business day before the closing meeting to know the closing costs in advance.The HUD-1 Settlement Statement is also known as the "closing statement" or "settlement sheet."
|
Fannie Mae |
|
| Settlement Statement |
|
Settlement SheetThe HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The (blank) form is published by the U.S. Department of Housing and Urban Development (HUD).Items on the statement include: ^real estate commissions,^loan fees,^points, and^escrow amounts.The form is filled out by your closing agent and must be signed by the buyer and the seller. The buyer should be allowed to review the HUD-1 Settlement Statement on the business day before the closing meeting to know the closing costs in advance.The HUD-1 Settlement Statement is also known as the "closing statement" or "settlement sheet."
|
Fannie Mae |
|
| Settlement attorney |
|
A lawyer who organizes the closing on a house sale, by preparing necessary papers, paying fees, and conducting the settlement meeting between seller and buyer.
|
LISC |
|
| Settlement costs |
|
See closing costs.
|
LISC |
|
| Settlement sheet |
|
The computation of costs payable at closing that determines the seller's net proceeds and the buyer's net payment.
|
FHA |
|
| Shared Appreciation Mortgage (SAM) |
(SAM) |
A mortgage loan agreement in which the lender shares in the appreciation of the real property.
|
LISC |
|
| Simple interest |
|
Interest charged only on the outstanding principal.
|
LISC |
|
| Single-Family Properties |
|
One- to four-unit properties including detached homes, townhomes, condominiums, and cooperatives.
|
Fannie Mae |
|
| Single-Room Occupancy |
(SRO) |
Single-Room Occupancy (SRO): The Section 221(d) program provides mortgage insurance for multifamily properties consisting of single-room occupancy (SRO) apartments. These apartments are intended for people--usually a single person--who have a source of income but are priced out of the rental apartment market. HUD Web site @ www.hud.gov:80/progdesc/221d--df.html
|
HUD |
|
| Site |
|
A plot of ground upon which anything is, has been, or will be located.
|
LISC |
|
| Site Appraisal and Market Analysis |
(SAMA) |
Site Appraisal and Market Analysis (SAMA): Certain processing procedures required for commitment of FHA mortgage insurance on most Multifamily projects and large subdivisions.
|
HUD |
|
| Situs |
|
Location.
|
LISC |
|
| Small Business Administration |
(SBA) |
Small Business Administration (SBA): The SBA offers a wide variety of assistance to small and small disadvantaged businesses. HUD contracting offices work closely with the SBA in seeking small business suppliers. Local SBA offices frequently can direct firms to agencies that purchase the products they offer. The SBA can also provide names and addresses of prospective military and civilian agency customers. Information about the SBA's programs and services are available for the internet at: SBA Web site at www.sba.gov
|
HUD |
|
| Special Assessments |
|
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.
|
LISC |
|
| Special Deposit Account |
|
An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.
|
Fannie Mae |
|
| Special lien |
|
A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien. (See lien.)
|
LISC |
|
| Special warranty deed |
|
A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has, or which might in the future, impair the grantee's title.
|
LISC |
|
| Specifications |
|
A detailed description of the size, shape, materials, and other details of a building or remodeling project.
|
LISC |
|
| Spot zoning |
|
Zoning that sets aside certain areas for purposes different from the general area requirements.
|
LISC |
|
| Standard Payment Calculation |
|
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
|
Fannie Mae |
|
| Step up lease |
|
A lease in which the rental amount paid by the lessee increases by a preset rate at predetermined intervals.
|
LISC |
|
| Step-Rate Mortgage |
|
A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.
|
Fannie Mae |
|
| Stud |
|
Vertical timber in a wall.
|
LISC |
|
| Subcontractor |
|
A contractor that a contractor hires. If you hire a contractor to remodel your kitchen, for instance, he might hire a plumber as a subcontractor to add new pipes for a dishwasher.
|
LISC |
|
| Subdividing |
|
Separation of a parcel of land into smaller parcels.
|
LISC |
|
| Subdivision |
|
A housing development that is created by dividing a tract of land into individual lots for sale or lease.
|
Fannie Mae |
|
| Subject property |
|
The property under analysis or appraisal.
|
LISC |
|
| Subject-to purchase |
|
When one purchases subject to a mortgage, the purchaser agrees to make the monthly mortgage payments on an existing mortgage, but the original mortgagor remains personally liable if the purchaser fails to make the monthl y payments. Since the original mortgagor remains liable in the event of default, the mortgagee's consent is not required to a sale subject to a mortgage. Both "Assumption of Mortgage" and "Purchasing Subject to a Mortgage" are used to finance the sale of property. They may also be used when a mortgagor is in financial difficulty and desires to sell the property to avoid foreclosure.
|
LISC |
|
| Sublease |
|
The transfer of a legal interest in leased premises by a tenant to another person that is less than the tenant's leasehold interest.
|
LISC |
|
| Subordinate |
|
To make a mortgage subservient to another mortgage.
|
LISC |
|
| Subordinate Financing |
|
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
|
Fannie Mae |
|
| Subsidized Second Mortgage |
|
An alternative financing option known as the Community Seconds® mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.
|
Fannie Mae |
|
| Subsidy |
|
Subsidy: Generally, a payment or benefit made where the benefit exceeds the cost to the beneficiary. (GAO) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97
|
HUD |
|
| Supportive Housing Program |
(SHP) |
Supportive Housing Program (SHP): The Supportive Housing Program promotes the development of supportive housing and supportive services, including innovative approaches that assist homeless persons in the transition from homelessness and enable them to live as independently as possible. SHP funds may be used to provide transitional housing, permanent housing for persons with disabilities, innovative supportive housing, supportive services, or safe havens for the homeless. HUDWEB, Continuum of Care and Veterans Programs Glossary
|
HUD |
|
| Surrender |
|
Reconveyance of property or lease to mortgagee or landlord.
|
LISC |
|
| Survey |
|
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features. Your lender may require you to have a survey of the property performed. This process confirms that the property's boundaries are correctly described in the purchase and sale agreement. Also called a plot plan, the survey may show a neighbor's fence is located on the seller's property or more serious violations may be discovered. These violations must be addressed before the lender will proceed. The buyer usually pays to have the survey done, but some cost savings may be found by requesting an "update" from the company that previously surveyed the property.
|
Fannie Mae |
|
| Surveyor |
|
A professional who checks the boundaries of a property.
|
LISC |
|
| Sweat Equity |
|
Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.
|
Fannie Mae |
|
| Takeout commitment |
|
Promise by a lender to provide a permanent loan to pay off a construction loan.
|
LISC |
|
| Tax |
|
An enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.
|
LISC |
|
| Tax Abatement |
|
|
|
|
| Tax Deduction |
|
|
Fannie Mae |
|
| Tax assessor |
|
A government employee who determines a property value for tax purposes.
|
LISC |
|
| Tax credit |
|
Allowable reduction in the amount of income tax owed.
|
LISC |
|
| Tax deferred exchange |
|
Trade of like-kind property that does not trigger recognition of taxable gain at the time of the exchange.
|
LISC |
|
| Tax lien |
|
A charge against property that makes it security for unpaid taxes.
|
LISC |
|
| Taxes and Insurance |
|
A commonly used term in real estate is PITI. This abbreviation stands for principal, interest, taxes and insurance. The tax and insurance components of a mortgage payment are generally held by the lender in an escrow account. The lender pays any property tax and homeowner's insurance bills as they are due, ensuring they are paid on time. A home buyer's monthly mortgage payment generally covers expenses through the escrow account. If you don't have your homeowner's insurance and property taxes paid out of a lender escrow account, your local government and your property insurance company will send payment notices directly to you. It is your responsibility to make sure you pay these bills on time. If you're planning to purchase a condominium or cooperative, talk to your lender about how they view condo and co-op fees. Most likely, they are considered housing costs and not a part of PITI. However, this can vary from lender to lender.
|
Fannie Mae |
|
| Tenancy by entirety |
|
A type of joint ownership of property that provides right of survivorship and is available only to a husband and wife.
|
FHA |
|
| Tenancy by the Entirety |
|
A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. Contrast with tenancy in common.
|
Fannie Mae |
|
| Tenancy in Common |
|
A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenacy.
|
Fannie Mae |
|
| Tenant improvements |
|
A lease provision that obligates the owner to incur a prespecified dollar. Allowance amount to prepare the space for the tenant's occupancy.
|
LISC |
|
| Tenant-Stockholder |
|
The obligee for a cooperative share loan, who is both a stockholder in a cooperative corporation and a tenant of the unit under a proprietary lease or occupancy agreement.
|
Fannie Mae |
|
| Term |
|
The length of time in which a loan is to be repaid. A 30-year mortgage loan has a 30 year term.
|
LISC |
|
| Term loan |
|
A loan having the entire principal due at maturity.
|
LISC |
|
| Termite Inspection |
|
Homes in many parts of the country must be inspected for termites before they can be sold. You should receive a certificate from a termite inspection firm stating that the property is free of both visible termite infestation and termite damage. The cost of the termite inspection is usually paid by the seller, and the seller's real estate sales professional orders the inspection. You need to make sure that the original certificate is delivered to your lender at least three days before closing. This allows the lender to review the certificate and address any potential problems.
|
Fannie Mae |
|
| Terms |
|
All conditions placed on a loan, including the interest rate, any finance charges, and the length of the loan.
|
LISC |
|
| The Equal Credit Opportunity Act |
(ECOA) |
|
|
|
| There are several chapters of bankruptcy. A lender w |
|
ost likely encounter the following chapters:
|
LISC |
|
| Third-Party Origination |
|
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market. (see also "Mortgage Broker")
|
Fannie Mae |
|
| Thirty Year Fixed Rate Loan |
|
|
Fannie Mae |
|
| Three/two (3/2) option |
|
An alternative financing plan that enables households whose earnings are no more than 115 percent of the median income in their regional area to make a 3 percent down payment with their own funds, coupled with a 2 per cent gift from a relative or a 2 percent grant or unsecured loan from a nonprofit or state or local government program.
|
LISC |
|
| Thrifts |
|
Thrifts are depository institutions that primarily serve consumers and include both savings banks and savings and loan (S&L) institutions. These institutions originate and service mortgage loans. A thrift may choose to hold a loan in its own portfolio or sell the loan to an investor.
|
Fannie Mae |
|
| Time Value Of Money (TVM) |
(TVM) |
An economic principle recognizing that a dollar today has greater value than a dollar in the future because of its earning power.
|
LISC |
|
| Time value of money |
|
Relation of value at one time to value at another through discounting or compounding at a certain interest rate.
|
LISC |
|
| Title |
|
A legal document evidencing a person's right to or ownership of a property.
|
Fannie Mae |
|
| Title Company |
|
A company that specializes in examining and insuring titles to real estate.
|
Fannie Mae |
|
| Title Insurance |
|
Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property. Your lender will require that you buy title insurance to ensure that you are receiving a "marketable title." There are two types of title insurance policies: *Lender's policy (mandatory): This protects the lender should a flaw in the title be detected after the property has been purchased; *Owner's policy (optional, but recommended): This protects you should a flaw in the title be detected after the property has been purchased. Generally, the buyer pays the cost of both policies. Check with your insurer, because you may receive a price break if you seek a combined lender/owner policy or if you purchase a "reissue" policy from the company that previously insured the title.
|
Fannie Mae |
|
| Title Search |
|
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.In order to make sure the borrower will receive clear title to the property, lenders require a title search. It attempts to uncover any "encumbrances" on the title and makes sure the seller is the actual owner of the property. Encumbrances include any liens ^legal claims against a property filed by creditors as a means to collect unpaid bills. Liens can also be filed by the Internal Revenue Service for nonpayment of taxes. Any such claims must be paid by the seller ^this often occurs either before or at the closing.
|
Fannie Mae |
|
| Title company |
|
A company that specializes in examining and insuring titles to real estate.
|
FHA |
|
| Title insurance |
|
Insurance to protect the lender lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of property.
|
FHA |
|
| Title search |
|
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
|
FHA |
|
| Title search or examination |
|
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstandi ng restrictive convenants filed in the record, which would adversely affect the marketability or value of title.
|
LISC |
|
| Topography |
|
The nature of the surface of land, such as level, rolling, and so forth.
|
LISC |
|
| Total Expense Ratio |
|
Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.
|
Fannie Mae |
|
| Total monthly debt |
|
The total amount of credit card, car loan, and other debt payments a person must pay each month. Used to figure out debt-to-income ratios.
|
LISC |
|
| Total monthly income |
|
The amount of money that comes into a household every month from a job or jobs, interest or dividends, alimony, disability payments, and public assistance. A lender uses the total monthly income figure to decide how muc h house payment a loan applicant can afford. Also called gross monthly income.
|
LISC |
|
| Townhouse |
|
A townhouse is similar to a condominium in that it's a type of joint real estate where each housing unit is individually owned. However, it has two or more stories, rather than the typical one floor found in a condominium. Townhouses are available in many shapes and sizes, and most may have yards or common spaces that can be used by the owners.
|
Fannie Mae |
|
| Tract |
|
An area of land.
|
LISC |
|
| Trade Equity |
|
Equity that results from a property purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.
|
Fannie Mae |
|
| Trade fixture |
|
An item of personal property attached to leased premises by a tenant for purposes of use in his trade or business.
|
LISC |
|
| Transfer Tax |
|
State or local tax payable when title passes from one owner to another.
|
Fannie Mae |
|
| Transfer of Ownership |
|
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.
|
Fannie Mae |
|
| Transfer tax |
|
State or local tax payable when title passes from one owner to another.
|
FHA |
|
| Treasury Index |
|
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. (see also Adjustable-Rate Mortgage)
|
Fannie Mae |
|
| Triple-net lease |
|
A lease in which the tenant pays, in addition to rent, all expenses related to the operation of the property.
|
LISC |
|
| Trust deed |
|
See Deed of Trust.
|
LISC |
|
| Trustee |
|
A fiduciary who holds or controls property for the benefit of another.
|
Fannie Mae |
|
| Truth in lending act |
|
A federal law that requires lenders to provide complete and correct information, in writing, about how much a borrower owes when payments are due and how much they are, and what interest rates and other charges are.
|
LISC |
|
| Truth-in-Lending |
|
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges. Your lender should provide you with the Truth-in-Lending (TIL) Statement within three business days of your loan application. This document outlines the costs of your loan, and it is given to you so you can compare the costs with those of other lenders.
|
Fannie Mae |
|
| Two- to Four- Family Property |
|
A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
|
Fannie Mae |
|
| U.S. Department of Housing and Urban Development (HUD) |
(HUD) |
A federal govern-ment agency responsible for managing many of the nation's housing programs and for protecting rights of homebuyers, homeowners, sellers, and renters.
|
LISC |
|
| U.S. Department of Veterans Affairs |
(VA) |
The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs.The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans.If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office.
|
Fannie Mae |
|
| U.S. Department of Veterans Affairs (VA) |
(VA) |
A federal government agency responsible for programs for former members of the armed services.
|
LISC |
|
| US Department of Housing and Urban Development |
(HUD) |
|
Fannie Mae |
|
| Underimprovement |
|
A property not being used to its fullest and best potential.
|
LISC |
|
| Underwriting |
|
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.
|
Fannie Mae |
|
| Unsecured Loan |
|
A loan that is not backed by collateral.
|
Fannie Mae |
|
| Unsecured credit |
|
Any credit that is not secured by property (such as a house). A credit card is unsecured credit, a mortgage loan is secured.
|
LISC |
|
| Urban Development Action Grant |
(UDAG) |
Urban Development Action Grant (UDAG): Program administered by the Assistant Secretary for Community Planning and Development, used to provide funding for projects in economically-distressed cities.
|
HUD |
|
| Urban Homesteading |
|
Urban Homesteading: The Housing and Community Development Act of 1974 authorized sale of publicly-owned properties to qualified individuals at minimal cost based on individual's agreement to rehabilitate and occupy the property for a set period of time. This program was expanded by the Housing and Community Development Act of 1987, which authorized resident management and ownership of public housing (see "Resident Ownership").
|
HUD |
|
| Usable area |
|
Rentable area less certain common areas that are shared by all tenants (corridors, storage, bathrooms, etc.). = rentable area - common areas.
|
LISC |
|
| Usury |
|
Interest on a loan at a rate higher than allowed by law.
|
LISC |
|
| Usury laws |
|
State laws limiting the maximum interest rate which can be charged on loans.
|
LISC |
|
| VA (Veterans Administration) Loan |
|
Loan guaranteed by the Veterans Administration.
|
LISC |
|
| VA Loans (Department of Veterans Affairs) |
|
The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs.The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans.If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office.
|
Fannie Mae |
|
| VA Mortgage |
|
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
|
Fannie Mae |
|
| VA loans |
|
A loan that is guaranteed by the Veterans Administration.
|
LISC |
|
| Vacancy |
|
Loss Rent that is not collected due to turnover or sustained vacancy of a commercial space.
|
LISC |
|
| Valuable consideration |
|
Consideration in the form of money, promises, or property.
|
LISC |
|
| Variable Rate Mortgage |
|
|
Fannie Mae |
|
| Variable Rate Mortgage (VRM) |
(VRM) |
See Adjustable Rate Mortgages.
|
LISC |
|
| Variable expenses |
|
Costs, such as utilities, that vary with a building's occupancy rate.
|
LISC |
|
| Variable-Rate Mortgage (VRM) |
(VRM) |
A mortgage loan for which the interest varies according to an index.
|
LISC |
|
| Variance |
|
The right to deviate from the use of land prescribed by an existing zoning ordinance.
|
LISC |
|
| Vendee |
|
The buyer.
|
LISC |
|
| Vendor |
|
The seller.
|
LISC |
|
| Verification |
|
The process of making sure or verifying that all of a borrower's loan applica-tion information is accurate.
|
LISC |
|
| Vested |
|
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
|
Fannie Mae |
|
| Walk-Through |
|
Final Walk-through Inspection -- Your sales contract should include a clause that allows you to examine the property you want to purchase within the 24 hours before closing.This walk-through, during which you will be accompanied by the real estate sales professional, is your chance to ensure that the seller has vacated the house and left behind whatever property was agreed upon.Make sure to check that all lights, appliances, and plumbing fixtures are in working order.You will also want to make sure that all conditions of the sales contract have been met. If they aren't, or you observe major problems, you have the right to delay the closing until the problems are corrected.One other option is to make sure money to correct the problems is placed in an escrow account at closing to cover the cost of repairs.
|
Fannie Mae |
|
| Warranty |
|
A guarantee by a seller or manufacturer that a product is what it is claimed to be, that it is in working order, and, in some cases, that the seller or maker will repair the product.
|
LISC |
|
| Warranty |
|
|
Fannie Mae |
|
| Water rights |
|
Rights associated with the use of water adjacent to, in, or underneath the property.
|
LISC |
|
| What-If Scenario |
|
A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.
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Fannie Mae |
|
| Will |
|
Document executed during a person's lifetime that conveys the person's property at death.
|
LISC |
|
| Wiring diagram |
|
A diagram of the electrical wiring in a house, showing where all the cir-cuits and plugs are.
|
LISC |
|
| Wraparound Mortgage |
|
A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.
|
Fannie Mae |
|
| Yield |
|
Return on an investment or loan.
|
LISC |
|
| Zoning |
|
A county or city law stating the types of use to which properties can be put in specific areas.
|
LISC |
|
| Zoning Ordinance |
|
|
Fannie Mae |
|
| Zoning ordinances: |
|
The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage.
|
LISC |
|
