Real Estate Glossary
Definitions A-G
Definitions H-N
Definitions O-Z
Other Definitions
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- hazard insurance
Insurance that covers property damage caused by fire, wind, storms, and other similar risks. Sometimes earthquakes and floods are also covered, while other times they are not.
- Home Equity Conversion Mortgage (HECM)
Usually referred to as a reverse annuity mortgage, what makes this type of mortgage
unique is that instead of making payments to a lender, the lender makes payments to you.
It enables older home owners to convert the equity they have in their homes into cash,
usually in the form of monthly payments. 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.
- home equity line of credit
A mortgage loan, usually in second position, that allows the borrower to obtain cash
drawn against the equity of his home, up to a predetermined amount.
- home inspection
An inspection of a prospective home done by a professional, soon after an offer is made, to establish the structural and mechanical integrity of the house
- homeowners' association
Some of the developments that real estate developers build are common interest developments, a category that includes planned–unit developments of single–family houses, condominiums, and cooperative apartments. Before the first unit is sold, of one of these developments, the developer records restrictive covenants — on all of the properties — that "run with the land," meaning that all successive buyers are bound by the same covenants as the original purchaser. These covenants, among other things, form a homeowners association.
A homeowners association is an organization comprised of all owners of units in the development. The vast majority of them are incorporated and are therefore governed by a board, which is a private government.
Homeowners associations collect fees from homeowners, maintain the common areas of the development, and enforce the association's governing documents. These may include detailed rules regarding construction and maintenance of individual homes
- homeowner's insurance
A broad form of real estate insurance coverage that combines hazard insurance with personal liability protection and other coverage.
- homeowner's warranty program
A program operated through the National Association of Home Builders through which participating builders provide home buyers with a warranty ion the workmanship and materials of a home and also warrants against major structural defects. A ten year HOW warranty furnished buy a builder is sufficient evidence to FHA to allow waiver of HUD inspection during construction
- HUD median income [top]
Housing and Urban Development (HUD) estimates median family incomes for metropolitan areas and non-metropolitan counties annually. New estimates are usually available around January or February. HUD median family income estimates are based on 1990 Census median family income estimates updated to the current year with a combination of Bureau of Labor Statistics earning and employment data and Census Divisional P-60 median family income data. The median income figure is the median for all family sizes. HUD does not estimate a median family income by family size. HUD, does, however, estimate income limits by family size at the 50% of median income and the 80% of median income levels.
- HUD-1 settlement statement
A document prepared by a closing agent describing a real estate transaction, including the escrow deposits for taxes, commissions, loan fees, points, hazard insurance, and mortgage insurance. also called closing statement or settlement sheet.
- joint tenancy
A form of ownership by two or more parties who share equal rights in and control of property, with the survivor or survivors continuing to hold all such rights on the death of one or more of the tenants. Joint tenancy is a common form of ownership when two or more persons jointly open a savings account
- judgment [top]
Judicial determination of the existence of an indebtedness, or other legal liability. 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.
- judicial foreclosure
a judgment by a court in favor of foreclosure of a mortgage or deed of trust, which orders that the real property which secured the debt be sold under foreclosure proceedings to pay the debt. The party suing probably has chosen to seek a judicial foreclosure rather than use the foreclosure provisions of the mortgage or deed of trust. Usually this move is made to get a "deficiency judgment" for any amount still owed after the foreclosure sale. In many states (such as California) a foreclosure on the deed of trust limits the recovery to the amount of sale proceeds (sales price minus other debts), so a lawsuit for judicial foreclosure may help the party recover the total money owed to him/her if it was secured by the debtor's real property.
- jumbo loan
Any residential or commercial mortgage with a loan amount exceeding the guidelines of Fannie Mae and Freddie Mac. Also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred
to as conforming loans.
- late charge
A fee a credit grantor charges a borrower for a late payment.
- lease [top]
A written agreement between the property owner and a tenant that stipulates the
payment and conditions under which the tenant may possess the real estate for a specified
period of time.
- 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.
- lease option
An alternative financing option that allows home buyers to lease a home with an option
to buy. Each month's rent payment may consist of not only the rent, but an additional
amount which can be applied toward the down payment on an already specified price.
- legal description
The description of real estate (property) used to identify real estate in legal transactions. A legal description can be found in a deed, mortgage, or other purchase document or may be obtained from a county recorder, tax assessor, or similar official
- lender [top]
A person or entity who loans money to others
- liabilities
Debts owed. In other words, what an individual or a company owes to others. Liabilities include long-term and short-term debt,
as well as any other amounts that are owed to others.
- liability insurance
Insurance coverage to protect against claims alleging that one's negligence or inappropriate action resulted in bodily injury or property damage.
- lien
The right to retain the lawful possession of the property of another until the owner fulfills a legal duty to the person holding the property, such as the payment of lawful charges for work done on the property. A mortgage is a common lien
- life cap [top]
For an adjustable-rate mortgage (ARM), a limit on the amount that the enterest rate
can increase or decrease over the life of the mortgage.
- line of credit
An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period. also called credit line.
- liquid asset
A cash asset or an asset that is easily converted into cash.
- loan
A sum of borrowed money (principal) that is generally repaid with interest.
- loan officer [top]
Also referred to by a variety of other terms, such as lender, loan representative,
loan "rep," account executive, and others. The loan officer serves several
functions and has various responsibilities: they solicit loans, they are the
representative of the lending institution, and they represent the borrower to the lending
institution.
- loan origination
The steps by a lending institution up to the time a loan is placed on its books, including solicitation and processing of applications and loan closing
- loan servicing
The acts performed to collect and process loan payments during the life of a loan. They include billing the borrower; collecting payments of principal, interest, and payments into an escrow account; disbursing funds from the escrow account to pay taxes and insurance premiums; and forwarding funds to an investor if the loan has been sold in the secondary market.
- loan-to-value (LTV) [top]
The relationship, expressed as a percent, of the amount of money loaned to the appraised value of the real estate pledged as security for the loan. For example, an $85,000 loan on a $100,000 house would have a loan-to-value ratio of 85 percent
- lock-in
A commitment by a lender guaranteeing a specified interest rate for a specified period of time. also called rate lock.
- lock-in period
The portion of the term of a mortgage loan during which the loan cannot be paid off earlier than scheduled
- margin
Allows investors to use borrowed funds from a broker to make security purchases. Margin is the amount of equity (stated as a percent) in an investment, or the amount that is not borrowed. For example, if an investor uses 60% margin, this would mean that 60% of the investment is financed with the investors own on capital, and that the remaining 40% was borrowed money
- maturity [top]
The date on which a debt becomes due for payment. also called maturity date.
- merged credit report
A credit report which reports the raw data pulled from two or more of the major credit
repositories. Contrast with a Residential Mortgage Credit Report (RMCR) or a standard
factual credit report.
- modification
Occasionally, a lender will agree to modify the terms of your mortgage without
requiring you to refinance. If any changes are made, it is called a modification.
- mortgage
A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.
- mortgage banker [top]
A banker who originates, sells, and services mortgages in the secondary mortgage market.
- mortgage broker
An individual or company which brings borrowers and lenders together for the purpose of loan origination, but which does not originate or service the mortgages. The broker might also negotiate with the lender to try and find the best possible financing deal possible for the borrower.
- mortgagee
The institution, group or individual that lends money secured by pledged real estate; the lender. See mortgagor
- mortgage insurance (MI)>
Insurance protecting a lender against loss from a mortgagor's default. Issued by the FHA or a private mortgage insurer.
- mortgage insurance premium (MIP) [top]
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.
- mortgage life and disability insurance
An insurance policy on the life of a borrower that repays an outstanding mortgage debt upon the death of the insured. Some policies also cover the borrower in the
event of disability. In the event that the borrower dies while the policy is in force, the
debt is automatically satisfied by insurance proceeds. In the case of disability
insurance, the insurance will make the mortgage payment for a specified amount of time
during the disability.
- mortgagor
The owner of real estate who pledges the property as security for the repayment of a debt; the borrower.
- multidwelling units [top]
A commercial or residential building with multiple offices or apartments. The term comes up when referring to inhouse networks that support multiple tenants. ISPs and carriers increasingly offer specialized systems for such facilities
- negative amortization
The result of a mortgage repayment plan in which the borrower makes payments that amount to less than the interest due. Unpaid interest is then added to the outstanding loan balance, causing the outstanding loan balance to increase instead of decrease
- no cash-out refinance
>A refinance transaction which is not intended to put cash in the hand of the borrower.
Instead, the new balance is caculated to cover the balance due on the current loan and any
costs associated with obtaining the new mortgage. Often referred to as a "rate and
term refinance."
- no-cost loan [top]
Many lenders offer loans that you can obtain at "no cost." You should
inquire whether this means there are no "lender" costs associated with the loan,
or if it also covers the other costs you would normally have in a purchase or refinance
transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording
fees, notary fees, and others. These are fees and costs which may be associated with
buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind
that, like a "no-point" loan, the interest rate will be higher than if you
obtain a loan that has costs associated with it.
- note
A legal document that obligates a borrower to repay a mortgage loan at a stated
interest rate during a specified period of time.
- note rate
The total interest rate of an adjustable rate loan consisting of the rate of the governing index plus the gross margin above (or below) that rate
- notice of default [top]
A formal notice to a borrower declaring that a default has occurred and that legal action may be taken.
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