Glossary

Abandonment
The voluntary surrender of property, owned or leased, without naming a successor as owner or tenant.
Absolute Auction
An auction in which the subject property is sold to the highest bidder regardless of the amount of the winning bid.
Absorption Rate
An estimate of the expected annual sales or new occupancy of a particular type of land use.
Abstract Exam
A fee related to the title insurance required by the lender. A public record search exam is done to insure that both you and the lender are aware of any liens or encumbrances that could affect the property. For our comparison purposes, an abstract exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Abstract of Title
A written history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.
ACH (Automatic Clearing House)
Electronic Drafting system that debits an authorized bank account and electronically transfers funds scheduled for remittance.
Acceleration Clause
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.
Accepted Contract
A sales contract signed  by both seller and buyer that defines the terms of the sale.
Acquisition Costs
Costs of acquiring property other than purchase price, for example, attorney fees, title insurance, lender's fees.
Addendum
An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. FHA and VA require that an addendum be added to or incorporated in a sales contract, if it is written prior to the appraisal.
Additional Principal Payment
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically according to a pre-selected index. Commonly referred to as an ARM, this is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.
Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjusted Gross Income
A person's total income, as reported on his or her IRS 1040 tax return form, after allowable contributions, deductions and expenses (alimony).
Adjusted Origination Charge
The total of the "origination charge" and the credits or charges for the specific interest rate chosen. The adjusted origination charge cannot change between the GFE and settlement statement without a valid changed circumstance.
Adjustment Period
The period that elapses between the adjustment dates for an adjustable rate mortgage (ARM).
Administrative Fee
A fee charged by a lender to cover the administrative costs of processing your loan request. For our comparison purposes, this fee is typically a lender fee.
Administrator
A person appointed by a probate court to administer the estate of a person who died intestate.
Affordability Analysis
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.
Agricultural Property
Unimproved property available for farming activities.
Alimony
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse.
Amenity
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. Man-made amenities include swimming pools, tennis courts, community buildings and other recreational facilities.
American Land Title Association (ALTA)
A national association of title insurance companies, abstractors, and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms.
Amortization
Loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.
Amortization Schedule
A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principals and shows the remaining balance after each payment is made.
Amortization Term
The amount of time required to amortize the mortgage loan. The amortization is expressed as a number of months. For example, for a 30 year fixed rate mortgage, the amortization term is 360 months.
Amortize
To repay a mortgage with regular payments that cover both principal and interest.
Annual Mortgagor Statement
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.
Annual Percentage Rate (APR)
The cost of credit expressed as an annual rate. The APR includes the interest rate, fees, points, and mortgage insurance, and is therefore a more complete measure of a loan’s cost than the interest rate alone. The loan’s interest rate, not its APR, is used to calculate the monthly principal and interest payment.
Annuity
A specified income paid yearly or at other regular intervals, often on a guaranteed dollar basis.
Applicant
A prospective borrower who has completed an application. An application is series of steps, usually including the completion of documents, a lender requires of those seeking a loan.
Application
The process of applying for a mortgage. The term "application" generally refers to a form that is used to collect financial information from a borrower by a lender.
Application Deposit
Funds required by a lender in advance of processing a loan request. Generally a deposit is collected to cover the costs of an appraisal and credit report and may or may not be refundable.
Appraisal
An estimate of the value of property; made by a qualified professional called an "appraiser".
Appraisal Fee
In order to verify that the value of your home supports the loan amount you request, an appraisal will be ordered by the lender. The appraisal is generally performed by a professional who is familiar with home values in the area and may or may not require an interior inspection of the home. The fee for the appraisal is commonly passed on to the borrower by the lender. For our comparison purposes, the appraisal fee is a third party fee.
Appraised Value
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience and analysis of the property.
Appraiser
A person qualified by education, training and experience to estimate the value of real and personal property.
Appreciation
An increase in the value of property due to either a positive improvement of the area or the elimination of negative factors. Commonly, and incorrectly, used to describe an increase in value through inflation.
APR
To make it easier for consumers to compare mortgage loan interest rates the federal government developed a standard format, called an "Annual Percentage Rate" or APR, to provide an effective interest rate for comparison shopping purposes. Some of the costs that you pay at closing are factored into the APR for ease of comparison. Your actual monthly payments are based on the periodic interest rate, not the APR.
ARM
An ARM (adjustable rate mortgage) is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.
Arm's-Length Transaction
Legal slang meaning that there existed no special relationship between the parties involved in any matter which would taint the result.
As Separate Property
Ownership in real property which is to be specifically excluded from community property.
Assessed Valuation
The value that a taxing authority places on real or personal property for the purpose of taxation.
Assessment
A charge against a property for purpose of taxation. This may take the form of a levy for a special purpose or a tax in which the property owner pays a share of the cost of community improvements according to the valuation of his or her property.
Assessor
A public official who establishes the value of a property for taxation purposes.
Asset
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).
Assignment
The transfer of a mortgage from one person to another.
Assumable Mortgage
A mortgage that can be taken over (assumed) by the buyer when a home is sold.
Assumption
The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.
Assumption Clause
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.
Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
Attorney Opinion
Commonly referred to as a "title opinion". This fee is related to the title insurance required by the lender. It is a document issued by an attorney listing any liens or encumbrances that could affect the property that are a matter of public record. For our comparison purposes, the attorney opinion fee is considered to be a third party fee and may be included in the title insurance or closing fee by some lenders.
Attorney-in-fact
One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.
Backup Contract
A contract to buy property that becomes effective if a prior contract fails to be agreed upon.
Balance Sheet
A financial statement in a table form that shows assets, liabilities and net worth.
Balloon Mortgage
A short-term fixed-rate loan which involves smaller payments for a certain period of time and one large payment for the entire balance due at the end of the loan term.
Balloon Payment
The final payment that is made at the maturity date of a balloon mortgage and pays the loan in full.
Bankrupt
A person, company, or corporation that, through formal court proceeding, is relieved from the payment of all debt after the surrender of some or all assets to a court-appointed trustee
Bankruptcy
A proceeding in a federal court in which a debtor, who owes more than his or her assets, can discharge personal liability for his or her debts. This affects the borrower's personal liability for a mortgage debt but not the lien of the mortgage.
Beneficiary
The person designated to receive the benefits resulting from certain acts.
Bequeath
To transfer personal property through a will or last testament. Compare with devise.
Biweekly Mortgage
A mortgage that requires payment to reduce the debt every two weeks instead of monthly. The 26 (sometimes 27) biweekly payments are each equal to one-half of the monthly payment that would be required with a standard 30 year fixed-rate mortgage. The result is a faster loan balance reduction with substantial savings in interest.
Bill of Sale
A written instrument that transfers title to personal property.
Billing Error
Any mistake in your monthly statement as defined by the Fair Credit Billing Act.
Blanket Insurance Policy
A single policy that covers more than one piece of property (or more than one person).
Blanket Mortgage
A single mortgage that is secured by more than one parcel of real estate.
Bona fide
In good faith without fraud.
Bond
An interest-bearing certificate that serves as evidence of a debt with a maturity date. Typically, bonds represent obligations of a government or business corporation. A real estate bond is a written obligation, usually secured by a mortgage or deed of trust.
Borrower
A person (also known as mortgagor) who receives funds in the form of a loan with an obligation to repay principal with interest.
Breach of Contract
A violation of the terms of any legal obligation or agreement.
Bridge Financing
A loan spanning the gap between the termination of one loan (generally short-term) and the start of another (generally permanent long-term) loan. Also referred to as gap financing.
Bridge Loan
Sometimes called a "swing loan", a bridge loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
Broker
A state-licensed agent who, for a commission or a fee, represents property owners in real estate transactions.
Budget
A detailed plan of income and expenses estimated over a specified period of time. Budgets provide guidelines for managing costs and profits.
Building Code
Regulations established by local governments that control design, construction and materials used in construction. Building codes are usually based on standardized health and safety guidelines.
Business Days
Check with your lending institution to find out what days it considers as business days under the Truth in Lending and Electronic Fund Transfer Acts. Usually excludes weekends and holidays.
Buydown
A process that allows a borrower to obtain a lower interest rate on a mortgage by paying points to a lender. A temporary buydown will reduce the interest rate paid during the first few years of the loan. A permanent buydown reduces the interest rate over the entire life of the loan.
Call Option
A provision in a home loan that gives the mortgagee the right to call the mortgage due and payable at the end of a specified time period for any reason.
Cancellation Clause
A contract provision that gives the right to terminate obligations upon the occurrence of specified events.
Cap
Refers to a provision of an adjustable rate mortgage (ARM) that limits how much the interest rate or payment can increase or decrease.
Cash to Close
Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.
Cash Reserve
A requirement by some lenders that buyers have sufficient cash remaining after closing to make the first mortgage payment.
Cash Out Refinancing
A refinance loan that provides the borrower with cash that exceeds the amount required to pay off existing mortgages on the home. This additional cash can be used by the borrower for any purpose.
Certificate of Eligibility
A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) loan.
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 loan.
Certificate of Title
A statement of opinion rendered by a title company or attorney, stating that a title to real property is legally held by the current owner.
Chain of Title
A history of all documents, including conveyances and encumbrances, that affect title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Changed Circumstance
Under certain limited circumstances as defined by HUD, the lender may issue a revised GFE prior to settlement/closing.
Change Frequency
Term sometimes used to describe the frequency of payment or interest rate changes in an adjustable-rate-mortgage (ARM).
City/County Tax Stamp
A tax that is required in some municipalities if a property changes hands or a new mortgage is obtained. The amount of this tax can vary with each state, city and county. For our comparison purposes, this fee is considered a tax or other unavoidable fee.
Clear Title
A title that is free of clouds, liens, disputed interests or legal questions as to ownership of the property.
Close of Escrow
A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, the close of escrow usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the close of escrow involves the borrower and the lender. Sometimes referred to as the settlement or closing
Closing
A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, a closing usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the closing involves the borrower and the lender. This sometimes is referred to as the settlement or the close of escrow.
Closing Cost Item
A single fee that a home buyer must pay at closing. Closing costs are made up of individual closing cost items such as origination fees, escrow fees, underwriting fees and processing fees. Most closing cost items are included as numbered items on the HUD-1 Settlement Statement.
Closing Costs
Money paid by the borrower in connection with the closing of a mortgage loan. This generally involves an origination fee, discount points, and fees for required third party services, taxes and government recording fees.
Closing Statement
Also referred to as the HUD-1 or the settlement statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
Cloud on Title
Any conditions such as encumbrances, liens or claims revealed by a title search that adversely affect the title to real estate. Clouds on a title often cannot be removed, except by a quitclaim deed release, or court action. Compare with clear title.
Co-Borrower
Additional borrower(s) whose income contributes to qualifying for a loan and whose name(s) appear on documents with equal legal obligations. It sometimes is referred to as a co-maker, one who signs a promissory note along with the primary 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; it can also be referred to as a co-signer.
Coinsurance
A sharing of hazard insurance risk between the insurer and the insured, or others. A coinsurance clause states to what extent a loss will be covered based on the percentage of value insured.
Collateral
Property pledged as security for a debt, such as the real estate pledged as security for a mortgage.
Collection
This is the process of bringing a delinquent debt current and the filing of the necessary notices to proceed with repossession or foreclosure when necessary.
Commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a small percentage of the price of the property or amount borrowed. Sometimes called points.
Commitment (Loan)
An agreement, often in writing, between a Lender and a Borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.
Commitment Letter
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a loan commitment.
Common Area Assessments
Charges against individual unit owners in a condominium complex, or planned unit development (PUD), for additional funds to repair, maintain, or improve the common areas of the project.
Common Areas
Those areas of a property (usually a planned unit development or condominium project) that are used by all owners or tenants. Common areas may include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings and parking areas.
Common Law
The body of law based on general custom in England and used to a certain extent in the United States. Common law sometimes prevails unless superseded by other law.
Community Home Buyer’s Program
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low or moderate income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Community Property
In some western and southwestern states, a form of ownership under which property accumulated through joint efforts of husband and wife is presumed to be owned equally by them unless acquired as separate property of either spouse.
Comparable Properties
Properties used for comparative purposes in the appraisal process that have been recently sold and have characteristics similar to property being appraised, thereby indicating the approximate fair market value of the subject property.
Compound Interest
Interest paid on the original principal balance, and on the accumulated and unpaid interest.
Compensating Factors
Positive characteristics of a borrower's credit, employment or savings history which may be used to offset high debt-to-income ratios in the underwriting process.
Co-mortgager
A second borrower who signs a mortgage loan with a mortgagor. The co-mortgagor's income, assets and debts are combined with the mortgagor's for underwriting and ratio analysis purposes. The co-mortgagor's name must appear on the FHA Certificate of Commitment and the mortgage or deed of trust. In order to meet all of the terms of the VA program's defined guarantee, the co-mortgagor must be either a spouse or another eligible veteran.
Concession
A discount or other inducement given by a landlord or seller to a prospective tenant or buyer to induce them to sign a lease or purchase property.
Condemnation
The taking of private property for public purpose by a government under the right of eminent domain. Also, the determination that a building is not fit for use or is dangerous and must be destroyed.
Conforming Loan
Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). These agencies generally purchase first mortgages up to loan amounts mandated by Congressional directive.
Construction Loan
A short term loan that is used to finance the construction of a new home. During the term of the loan the lender makes payments to the builder as the work progresses and the borrower makes interest payments on only the funds that have been disbursed to the builder. Typically, the construction loan is refinanced into a permanent loan after the home is completed.
Consumer Reporting Agency (CRA)
A company that prepares detailed reports used by lenders to determine a potential borrower’s creditworthiness. These agencies obtain data for these reports from a credit repository as well as from other sources. More commonly referred to as credit bureaus.
Contingency
A condition that must be met before a contract is legally binding. For example, a lender's commitment to provide financing to a borrower may be contingent on receipt of an acceptable appraisal.
Contract
An oral or written agreement to do or not to do a certain thing for consideration.
Conventional Mortgage
A mortgage not obtained under a government insured program (such as FHA or VA).
Convertibility Clause
A provision in some adjustable-rate-mortgages (ARM’s) that allows the borrower to change the ARM to a fixed-rate-mortgage at a specified period within the term of the loan.
Convertible ARM
An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.
Cosigner
Another person who signs your loan and assumes equal responsibility for it.
Cost of Funds Index (COFI)
An index that may be used to determine the interest rate changes of an adjustable rate mortgage (ARM). The Cost of Funds Index, or COFI as it is commonly called, is the weighted average of interest rates that Federal Home Loan banks have paid to their customers recently. Usually, the COFI for the 11th district of Federal Home Loan Banks is used and covers banks in California, Nevada, and Arizona. The index value is announced on the last working day of the month following the month listed.
Courier/Mailing Fee
The fee associated with a lender sending documents to other parties involved in the loan, like an attorney or title company. For our comparison purposes, this fee is considered a third party fee, however some lenders may choose not to pass these costs on to the borrower.
Covenant
A promise written into deeds, mortgages and other financial instruments that obligates or restricts the borrower. The violation of some covenants can result in foreclosure.
Credit
A lender may reduce the actual amount of the closing costs by a credit in order to offer more competitive fees.
Credit Bureau
An agency that gathers and keeps your credit record.
Credit Grade
A value given to an individual to reflect their current and past debt repayment patterns. A grade of "A" is considered to be the best.
Credit History
A record of a person’s debt history, including all open and fully repaid obligations. A credit history helps a lender to determine whether a potential borrower has satisfactory history of repaying debts in a timely fashion.
Credit Life Insurance
A type of insurance, often bought by borrowers, that will pay off the debt if the borrower dies while the policy is in force.
Credit Report
A report documenting the credit history and the current status of a Borrower’s credit standing.
Credit Repository
An institution that collects, maintains, stores and sells financial and publicly recorded information about the payment records of individuals applying for credit.
Credit Scoring System
A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.
Credit-Related Insurance
Health, life or accident insurance designed to pay the outstanding balance of a debt.
Creditor
A person or business that is owed money.
Debit
In a closing statement or settlement, an item that is charged to a buyer or seller. Compare with credit.
Debt
An obligation to pay another.
Debt-To-Income Ratio
The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by their gross monthly income.
Deed of Trust
This document, referred to as a mortgage in some states, pledges a property to a lender or trustee as security for the repayment of a debt.
Deed Stamp
A tax that is required in some municipalities if a property changes hands. The amount of this tax can vary with each state, city and county. For our comparison purposes, this fee is considered a tax or other unavoidable fee.
Deed-in-lieu
A process that allows a borrower to transfer the ownership of a property to the lender in order to avoid loss of the property through foreclosure.
Default
The failure to perform an obligation as agreed in a contract.
Delinquency
The failure to make payments on debts when they are due.
Delivery Fee
A fee charged generally by the title company or attorney for the delivery of documents to your lender. For our comparison purposes, the delivery fee is considered to be a third party fee.
DeMinimus PUD
A Planned Unit Development (PUD) in which the common property has less than a 2% influence upon the value of the premises. The 2% rule of thumb is calculated by dividing the dollar amount of amenities by the total number of units.
Department of Housing and Urban Development (HUD)
A governmental entity responsible for the implementation and administration of housing and urban development programs. HUD was established by the Housing and Urban Development Act of 1965 to supersede the Housing and Home Finance Agency.
Department of Veterans Affairs (VA)
An agency of the federal government that provides services and guarantees residential mortgages made to eligible veterans of the military services
Deposit
A sum of money given to bind a sale of real estate. Also known as earnest money.
Depreciation
A decline in the value of real or personal property. The opposite of appreciation.
Disburse
To pay out on the loan.
Disclosures
Information relevant to specific transactions required by law.
Discount Points
Fees that are collected by the lender in exchange for a lower interest rate. Each discount point is 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate. Sometimes referred to as "points".
Discounted Loan
When the note rate on a loan is less than the market rate, it is a discounted loan. However, the lender requires additional points to raise the yield on the loan to the market rate.
Document Preparation
Lenders will prepare some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement. This fee covers the expenses associated with the preparation of these documents. For our comparison purposes, the document preparation charges are considered to be a lender fee.
Documentary Stamp
A tax levied by some local or state governments at the time the deeds and mortgages are entered into public record. For our comparison purposes, documentary stamps are considered to be a tax and other unavoidable fee.
Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.
Draw Period
Generally associated with home equity lines of credit, the draw period is the period of time that you can access funds from the line. After the draw period expires, a repayment period generally follows.
Due-on-sale Clause
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 loan.
Earnest Money
A sum of cash paid to a seller by a buyer prior to the closing to show that the buyer is serious about buying the house. The earnest money is deducted from the purchase price at closing and is not an additional cost. Sometimes referred to as a binder deposit.
Easement
A right of way giving persons, other than the owner, access to or over a property.
Easement by Prescription
The continued use of another person’s property for a special purpose that can develop into permanent use if certain conditions are met.
Effective Age
An appraiser’s opinion of the physical condition of a structure. The actual age of a building may be longer or shorter than its effective age.
Effective Gross Income
Normal annual income, which may include overtime and bonuses, that is regular, consistent and guaranteed. A person’s salary is usually the prime source, but other income may qualify if it is significant, documented and stable.
Effective Interest Rate
The actual rate of return or yield to an investor. The actual rate of interest paid by a borrower.
Elderly Applicant
As defined in the Equal Credit Opportunity Act, a person 62 or older.
Eminent Domain
The right of a government to seize private property for public use upon payment of its fair market value. Eminent domain is the legal basis for condemnation proceedings.
Encroachment
An improvement that illegally violates another's property or right to use that property.
Encumbrance
Anything that affects the title to a property such as a mortgage, judgement, or easement.
Endorsements
Additions to a title insurance policy for special coverage such as surveys, environmental and state particular endorsements that are not included in the standard insurance policy. For our comparison purposes, the fees for endorsements are considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
Endorser
A person who signs ownership interest over to another party.
Equal Opportunity Act (ECOA)
The federal regulations that requires lenders to make credit equally available to all without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity
An owner's financial position in a property. Equity is the difference between the property's value and the amount that is owed on mortgages.
Equity Loan
A loan based on the borrower's equity in his or her home.
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. In some parts of the country, escrows of taxes and insurance premiums are called impounds or reserves.
Escrow Account
The account that funds are held in by the lender for the payment of real estate taxes and/or homeowner's insurance. Can also refer to the account that funds are held in for the completion of repairs or improvements to a property that cannot be completed prior to closing.
Escrow Agent
The person or organization having a fiduciary responsibility to both the buyer and seller (or lender and borrower) to see that the terms of the purchase/sale (or loan) are carried out. Also called escrow company or escrow depository.
Escrow Analysis
A periodic review of escrow accounts to determine if current monthly deposits balances will provide sufficient funds to pay property taxes, hazard insurance and other bills when they come due.
Escrow Payment
The portion of a borrower’s monthly mortgage payment that is held by the loan servicing company to pay for property taxes, hazard insurance, mortgage insurance and other items as the become due.
Estate
The nature and extent of interest that an individual has in real property (degree of ownership). Also, the combined total of all real and personal property owned by an individual at the time of their death.
Eviction
The legal expulsion of an occupant from real property. Usually exercised by a lessor against a lessee to recover possession of property.
Exam Fee
A fee associated with an inspection by a title company of public records and other documents to determine the chain of ownership of a property. For our comparison purposes, exam fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
Examination of Title
The report on the title of a property from the public records. Not as thorough as a full title search.
Exclusive Listing
A written contract that gives a licensed real estate agent the exclusive right to sell property for a specific time, but reserving the owner’s right to sell the property without the payment of a commission.
Existing Home Sales
Reports the number of existing homes sold, expressed on an annual basis. Can be combined with New Home Sales to determine the total volume of home sales, a strong indicator of future national mortgage origination volume. Frequency: monthly. Source: National Association of Realtors.
Face Interest Rate
The percentage interest rate that is shown on the actual loan note or document.
Fair Credit Reporting Act
A federal consumer protection regulation that controls the disclosure of credit information and establishes procedures for correcting mistakes in your credit file.
Fair Market Rent
The amount that a property would command if it were currently available to rent or lease.
Fair Market Value
The highest price that a willing, but not compelled, buyer would pay, and the lowest price that a willing, but not compelled, seller would accept.
Fannie Mae
FNMA (Federal National Mortgage Association) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
Federal Funds Rate
Interest rate charged by banks, with excess reserves at a Federal Reserve district bank, to banks needing overnight loans to meet reserve requirements. The federal funds rate is the most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate, which are periodically changed by banks and by the Federal Reserve Board, respectively.
Federal Housing Administration (FHA)
An area of the U.S. Department of Housing and Urban Development (HUD) that insures low down payment mortgages granted by some lenders. The loan must meet the established guidelines of FHA in order to qualify for the insurance.
Federal Home Loan Mortgage Corporation
FHLMC (FREDDIE MAC) - A quasi-governmental agency that purchases conventional mortgages in the secondary mortgage market from insured depository institutions and HUD-approved mortgage bankers. It sells participation sales certificates secured by pools of conventional mortgage loans, their principal, and interest guaranteed by the federal government through the FHLMC. It also sells Government National Mortgage Association bonds to raise funds to finance the purchase of mortgages. Popularly know as Freddie Mac.
Federal National Mortgage Association
FNMA (FANNIE MAE) - A taxpaying corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA) as well as conventional home mortgages.
Fee Simple
Absolute ownership of real property; the greatest possible interest a person can have in real estate.
Fee Simple Estate
An unconditional, unlimited estate of inheritance that represents the greatest possible interest in land that can be enjoyed.
FHA Co-insured Mortgage
A mortgage for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the borrower’s default.
FHA Mortgage
A mortgage insured by the Federal Housing Administration (FHA). FHA loans are also known as government mortgages.
Finance Charge
The total dollar amount credit will cost.
Finders Fee
A fee paid to a mortgage broker for finding a mortgage for a potential borrower.
Firm Commitment
A lending institution’s agreement to give a loan to a specific borrower on a specific property.
First Mortgage
A real estate loan that has priority over any subsequently recorded mortgages.
Fixed Installment
The monthly payment due on a mortgage loan which includes both principal and interest.
Fixed Interest Rate
An interest rate which does not change during the loan term.
Fixed-rate Mortgage (FRM)
A mortgage in which the interest rate and payments remain the same for the life of the loan.
Fixtures
Personal property or improvements that become real property when attached to the land or building in a permanent manner.
Float
A term that describes the interest rate for a loan that has not yet been guaranteed by a lender. If the lender has not yet guaranteed or locked the interest rate, it is floating and could change prior to closing.
Flood Certification
An inspection to determine if a property is located in an area prone to flooding also known as a flood plain. The federal government determines whether an area is in a flood plain. Lenders generally rely on the flood certification to determine if flood insurance will be required in order to obtain a mortgage. For our comparison purposes, the cost of the flood certification is considered to be a third party fee, though you may find that all lenders do not pass this fee on to the borrower.
Flood Insurance
Insurance that protects a homeowner from the cost of damages to a property due to flooding or high water. It is required by law that properties located in areas prone to flooding have flood insurance. The federal government determines whether an area is prone to flooding and considered to be in a flood plain.
Foreclosure
A legal procedure in which property mortgaged as security for a loan is sold to pay the defaulting borrower's debt.
Forfeiture
The loss of money, or anything else of value, due to a breach of legal obligation or contract.
Freddie Mac
FHLMC (Federal Home Loan Mortgage Corporation) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
Fully Amortized ARM
An adjustable-rate mortgage (ARM) with monthly payments that are sufficient to liquidate the remaining principal balance over the amortization term.
Gain
An increase in monetary or property value.
Gap Loan
Short-term financing, usually to cover a gap in time between a person’s purchase of a home and that person’s later receipt of funds, usually from the sale of their previous home. Sometimes called a bridge loan or swing loan.
Gated Community
A private, fenced-in housing development, sometimes employing security guards.
Gift Letter
A written explanation signed by the individual giving the gift stating, "This is a bona fide gift and there is no obligation expressed or implied to repay this sum at any time."
Ginnie Mae
Created in 1968 by an amendment to Title III of the National Housing Act (12 USC 1716 et seq.), this federal government corporation is a constituent part of the Department of Housing and Urban Development. Among other governmental functions, it guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Also called Government National Mortgage Association (GNME).
Good Faith Estimate (GFE)
A written estimate of the closing costs the borrower will have to pay at closing. Under the Real Estate Settlement Procedures Act (RESPA), the lender is required to provide this disclosure to the borrower within three days of receiving a loan application.
Government mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA) or, is insured by the Federal Housing Administration (FHA). Compare with conventional mortgage.
Government National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created in 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by FNMA. Commonly called Ginnie Mae.
Grant
A technical term used in deeds of conveyance of property to indicate a transfer.
Grantee
The person to whom an interest in real property is conveyed.
Grantor
The person conveying an interest in real property.
Gross Income
Total income produced by a property before any expenses are deducted.
Gross Monthly Income
Total monthly income earned before tax and other deductions.
Ground Rent
The amount of money that is paid for the use of land when title to a property is held as a lease hold estate rather than a fee simple estate.
Group Home
A residential building designed for unrelated, persons with special needs. These homes provide long-term shelter and support services that are residential in nature.
Growing Equity Mortgage (GEM)
A fixed-rate mortgage that involves scheduled payment increases over a specified period of time. The increase amount of the monthly payment is applied directly to the remaining principal balance.
Guarantee Mortgage
A home loan that is guaranteed by a third party.
Habendum Clause
The “to have and to hold” clause that defines the amount of the estate granted in the deed.
Half Bath
A half bathroom in a home that contains a wash sink and a toilet, but no bathtub or shower stall.
Hazard Insurance
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as homeowner's insurance.
High-Ratio Loan
Mortgage loans in excess of 80 percent of the loan amount divided by the lower of the sales price or appraised value.
Home Equity Conversion Mortgage (HECM)
Also referred to as a "reverse mortgage", a Home Equity Conversion Mortgage is a special type of home loan that allows homeowners to convert the equity in their homes into cash that is paid to them in a lump sum or in a stream of payments. With this type of mortgage repayment not required until the borrower no longer uses the home as a principal residence.
Home Equity Line of Credit (HELOC)
A form of revolving credit in which your home serves as collateral.
Home Equity Loan
A loan secured by a subordinate mortgage on one's principal residence, generally to be used for some non-housing expenditure. A traditional home equity loan provides lump-sum proceeds at the time the loan is closed.
Home Inspection
A complete and detailed inspection that examines and evaluates the mechanical and structural condition of a property. A complete and satisfactory home inspection is often required by the homebuyer. Compare with appraisal.
Home Mortgage Disclosure Act (HMDA)
Federal legislation which requires certain types of lenders to compile and disclose data on where their mortgage and home improvement loans are being made.
Homeowner's Insurance
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as hazard insurance.
Homeowner’s Warranty
A type of insurance policy that covers repairs to certain parts of a home for an agreed upon period of time. It is typically provided by the contractor or seller as a condition of the sale.
Homeowners Association
A nonprofit association that manages the common areas of a condominium project or planned unit development (PUD). In a condominium development, the association has no ownership interest in the common elements. In a PUD, it holds title to the common elements of the project.
Homeowners Association Dues
The fees imposed by a condominium or homeowners' association for maintenance of common areas.
Homeowner's Policy
A multiple peril insurance policy available to owners of private dwellings which covers the dwelling and its contents, as well as personal liability.
Housing Expense Ratio
A standard calculation performed by mortgage lenders to determine if a borrower qualifies for a specific loan type and amount. It is calculated by dividing the monthly housing expense (Principal, Interest, Taxes and Insurance) by the borrower’s monthly gross income. Also referred to as a front-end ratio or a top ratio.
Housing Starts
Economic indicator that measures the number of residential units on which construction is begun each month. Monthly percent changes reflect the rate of change of such activity. The level of housing starts is widely followed as an indicator of residential construction activity. Frequency: monthly. Source: Commerce Department.
HUD
Also known as the U.S. Department of Housing and Urban Development, insures home mortgage loans made by lenders meet minimum standards for such homes.
HUD Median Income
Median family income for a particular county or metropolitan statistical area, as estimated by the Department of Housing and Urban Development (HUD).
HUD-1 Statement
Also referred to as the closing statement or the settlement statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
Implied Contract
A contract created by actions, but not necessarily written or spoken.
Impound Account
A fund set aside for future needs, such as an escrow or reserve account.
In File Credit Report
Unverified credit report which may contain unchecked, duplicated, or overlapping data. It is often used for a quick look at a prospective borrower's credit history.
Income/Expense Ratio
A qualifying ratio used in underwriting a residential mortgage loan which computes the percentage of monthly income required.
Income Property
Real estate developed and improved to produce steady income.
Index
A published interest rate used to establish the interest rate offered on an Adjustable Rate Mortgage (ARM). Some of the most common indices are treasury bills, treasury securities, London Inter-Bank Offering Rates (LIBOR) and the Cost of Funds Index (COFI).
Index of Leading Indicators
An index of eleven indicators designed to forecast the strength of the economy six to nine months in the future. Frequency: monthly. Source: Commerce Department.
Inflation
An increase in the amount of money or credit available relative to the amount of goods or services available. Inflation causes an increase in the general price level of goods and services. Over prolonged periods, inflation can reduce the purchasing power of a dollar, making it worth less.
Initial Interest Rate
The original, starting interest rate of a loan at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes called a teaser rate.
Inspector
Professional that examines a home to evaluate its plumbing, electrical work, roof, structural stability, heating and cooling systems, and appliances.
Installment
A regularly scheduled periodic payment that a borrower agrees to make to a lender.
Installment Loan
Borrowed money that is repaid in equal periodic payments. Cars and furniture are often paid for with installment loans.
Insurable Title
A property title that a title insurance company agrees to insure against defects and claims.
Insurance
A form of contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy. The periodic payments are known as insurance premiums.
Insurance Binder
A document stating that insurance is only temporarily in effect. Because the coverage will expire by a certain date, a permanent policy must be obtained prior to the expiration date.
Insured Mortgage
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
Interest
The cost of the use of money.
Interest Accrual Rate
The rate at which interest accrues on a mortgage. Usually, it is also the rate used to calculate the monthly payments.
Interest Rate
The cost of borrowing a lender's money. Interest takes into account the risk and cost to the lender for a loan. The interest rate on a fixed rate mortgage depends on the going market rate and how many discount points you pay up-front. An adjustable rate mortgage's interest is a variable rate made up of the index and the lender's margin.
Interest Rate Buy-down Plan
An arrangement where the property seller, borrower or other party deposits money to an account so that it can be released each month to reduce the borrower's interest rate or monthly payments during a specified period of a loan.
Interest Rate Cap
A provision of an ARM limiting how much interest rates may increase per adjustment period. See also Lifetime cap. Also known as Interest Rate Ceiling
Interest Rate Ceiling
The maximum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage loan note. Also known as Interest Rate Cap.
Interest Rate Floor
The minimum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage loan note.
Interest Rate/APR
The Interest Rate/APR shown are valid if your loan is approved today and closes within 60 days. If your loan is not approved today, you will be offered the interest rate available on the day your loan is approved. The interest rate quoted is based on the information you provided and assumptions made by us regarding your credit and finances. A final interest rate offer will be made after you complete our on-line application to receive a personalized quote. The interest rate charged will vary with the index, and is subject to increase.
Investment Property
A property that is not occupied by the owner.
Joint Account
A credit account held by two or more people so that all can use the account and all assume legal responsibility to repay.
Joint and Several Liability
A situation whereby a creditor can demand full repayment from any and all borrowers. Each borrower is liable for the full debt, not just the prorated share.
Joint Tenancy
A form of co-ownership that gives each tenant equal undivided interest and equal rights in the property, including the right of survivorship.
Joint Venture
An agreement between two or more parties who invest in a property or business.
Judgment Search Fee
A fee charged by a title company to search the public record for judgments filed against a property owner or borrower that could ultimately encumber the title of the property. For our comparison purposes, a judgment search fee is considered to be a third party fee. Some lenders will include this fee in the title insurance cost.
Judgment
A decree 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.
Judgment Lien
A lien on the property of a debtor resulting from a judgment.
Judicial Foreclosure
Type of foreclosure proceeding used in some mortgage states that is handled like a civil lawsuit and conducted entirely under the direction of a court.
Jumbo Mortgage
A loan that exceeds the maximum loan amount allowed by the most common mortgage investors. The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage. Also known as a non-conforming loan.
Kicker
A payment sometimes required by a mortgage loan in addition to normal principal and interest.
Land
Any part of the surface of the earth.
Land Acquisition Loan
A loan made for the purpose of purchasing land only, not improvements on or to the land. Also called an acquisition loan.
Late Charge
The penalty a borrower must pay when a payment is made after the stated due date.
Late Payment
A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.
Lease
A written contract between a property owner and a tenant that expresses the conditions under which the tenant may possess the real estate for a specified period of time and rent.
Lease-purchase Mortgage Loan
A creative financing option that allows homebuyers to lease a home with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance, plus an extra amount that is deposited into a savings account created for a down payment.
Leasehold Estate
A way of holding title to a property wherein the mortgagor does not actually own the property, but instead has a long-term recorded lease on it.
Legal Description
A legal property description that is sufficient to locate and identify the property without verbal testimony.
Lender
The bank, mortgage broker, or financial institution providing the loan funds to a borrower.
Lender Fees
Fees that are kept by the lender to cover some of their expenses and to meet their profitability goals. Typically fees such as origination fees, points, processing/administration fees, underwriting fees and document preparation fees are lender fees. This is the area of fees that you should compare very closely from lender to lender before making a decision.
Lender Paid Mortgage Insurance (LPMI)
Insurance in which the cost of the mortgage insurance is included in the interest rate. Although the interest rate is slightly higher with LPMI, this option usually results in a lower monthly payment and a larger tax deduction.
Lessee
A person or company that signs a lease to get temporary use of property.
Lessor
A person or company that provides temporary use of property usually in return for periodic payment.
Liabilities
A person's financial obligations including both long-term and short-term debt, as well as any other amounts that are owed to others.
Liability Insurance
An insurance policy that offers protection against claims that a property owner's negligence resulted in bodily injury or property damage to another party.
Liability on an Account
Legal responsibility to repay debt.
Lien
A legal claim or attachment against property as security for payment of an obligation.
Lifetime Interest Rate Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the term of the loan.
Lifetime Payment Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the term of the loan.
Line of Credit
An agreement by a commercial bank or other financial institution to extend an open-ended line of credit up to a certain amount for a certain time to a specific borrower. (See also home equity line of credit.)
Liquid Asset
An asset that is easily converted into cash.
Loan
Borrowed money that is usually repaid with interest.
Loan Commitment
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a commitment letter.
Loan Origination
The process by which a mortgage lender creates a mortgage secured by real property.
Loan Term
The number of months that you will make monthly payments. If the loan term is the same as the payment calculation term, you will pay the loan in full during the loan term and no balance will be due. If the payment calculation term is greater than the loan term, a balance or "balloon payment" may be due at the end of the loan term.
Loan to Value Ratio (LTV)
A ratio used by lenders to calculate the loan amount requested as a percentage of the value of a home. To determine the loan to value ratio, divide the loan amount by the home's value. The LTV ratio is used to determine what loan types the borrower qualifies for as well as the cost and fees associated with obtaining the loan.
Lock-in Period
A specified number of days before loan closing during which the range of rates available to a borrower is protected from financial market fluctuations in interest rates. Locking does not guarantee what specific rate will apply at closing, as that depends on specific transaction characteristics and the borrower's credit profile. Also referred to as Lock Period.
London Interbank Offered Rate (LIBOR)
An index used to establish the interest rate of some adjustable rate mortgages (ARM). LIBOR is the London Inter-Bank Offered Rates. This is the interest rate at which the highest rated banks offer to lend to one another in eurodollars. LIBOR offers various maturities, including 1-month, 3-month, 6-month and 1-year, however, the 6-month index is most common for mortgages. LIBOR is quoted daily in the Wall Street Journal's Money Rates.
Loss Payable Clause
An insurance policy provision for payment of a claim to someone other than the insured, who holds an insurable interest in the insured property.
Management fee
The fee charged for professional property management. Usually set at a fixed percentage of total rental income generated by the managed property.
Maturity
The date on which the principal balance of a financial instrument becomes due and payable.
Manufactured Home
Factory-built or prefabricated housing, including mobile homes.
Margin
The set percentage the lender adds to the index rate to determine the interest rate of an ARM.
Market Value
The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed under no pressure to act. The market value may be different from the price a property can actually be sold for at a given time (market price).
Master Association
A homeowners' association sometimes formed in a large condominium project or planned unit development (PUD) that is made up of representatives from associations covering specific areas within the project.
Maturity
The termination or due date, on which final payment on a loan must be paid in full.
Maximum Financing
Usually, a loan amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product.
Merged Credit Report
A credit report that contains information from at least three credit repositories. Any duplicate entries are combined to provide a concise summary of a your credit.
Mobile Home
A factory-assembled residence consisting of one or more modules, in which a chassis and wheels are an integral part of the structure, and can be readied for occupancy without removing the chassis and/or wheels.
Modular House
A factory-assembled residence built in units or sections, transported to a permanent site and erected on a foundation. Excludes mobile homes.
Monthly Payment
Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan.
Mortgage
The conveyance of an interest in real property given as security for the payment of a loan.
Mortgage Banker
A company that for a fee matches borrowers with lenders.
Mortgage Commitment
An agreement between lender and borrower detailing the terms of a mortgage loan such as interest rate, loan type, term and amount.
Mortgage Insurance
Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The borrower usually pays the cost of the insurance and is most often required if the loan amount is more than 80% of the home's value. Sometimes referred to as Private Mortgage Insurance (PMI).
Mortgage Insurance Premium (MIP)
Amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (PMI) company.
Mortgage Life Insurance
A type of term life insurance often bought by mortgagors. In the event that the borrower dies while the policy is in force, the debt is automatically repaid by insurance proceeds. Not to be confused with mortgage insurance.
Mortgage Note
A written promise to pay a sum of money at a stated interest rate during a specified term. The note contains a complete description of the conditions under which the loan is to be repaid and when it is due.
Mortgage Registration Fee
A fee or tax charged by some state and local governments when a mortgage is obtained. For our comparison purposes, the mortgage registration fee is considered to be a tax and other unavoidable fee.
Mortgage Tax
A tax charged by some state or local governments that is paid to the state when a mortgage is obtained. For our comparison purposes, the mortgage tax is considered to be a tax and other unavoidable fee.
Mortgagee
The lender on a mortgage transaction.
Mortgagor
The person who receives funds from a lender in exchange for a security interest in the property. Commonly known as the borrower.
Multifamily Mortgage
A residential mortgage on a dwelling that is designed to house more than four families, such as an apartment complex.
Name Search
A fee charged by title companies in some states to cover the cost of searching the public record for court orders against the current owner or proposed purchaser that could affect the title of the property. For our comparison purposes, the name search fee is considered to be a third party fee.
National Association of Realtors®
An organization of Realtors®, devoted to encouraging professionalism in real estate activities
National tenant
A lessee with a presence and established reputation in most of the United States. These tenants are typically well-known and usually have better credit than local tenants.
Negative Amortization
A loan payment schedule in which the outstanding principal balance goes up, rather than down, because the payments do not cover the full amount of interest due. The unpaid interest is added to the principal.
Net Cash Flow
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.
Net Closing Costs
For our comparison purposes, the net closing costs are the total closing costs quoted by a lender, less any credit or rebate that is offered.
Net Worth
The total value of all of a person's or company's assets, minus all liabilities.
No Cash Out Refinance
A refinance loan is an amount that pays off the existing mortgage balance on the property and does not provide the borrower with any cash at closing.
Non-Conforming Loan
Conventional home mortgages not eligible for sale and delivery to either FNMA or FHLMC because of various reasons, including loan amount, loan characteristics or underwriting guidelines.
Non-liquid Assets
Any assets that cannot easily be converted into cash.
Note
The written agreement signed by the borrower at closing that contains the promise to repay the loan. The note also contains the terms of the loan, such as interest rate, payment, and term.
Note Rate
The interest rate stated on a mortgage note. Also called nominal rate or face interest rate.
Notice of Default
Formal written notice to a borrower that a default on a loan has occurred and that legal action may be taken.
Occupancy
The use of a property as a full-time residence, either by the title holder (owner-occupancy) or by another party through a formal agreement (rental).
Origination Charge
One amount that includes all charges (other than points) that all loan originators (lenders and brokers) involved in the transaction will receive for originating the loan. This includes any application, processing, and underwriting fees, and payments from the lender to the broker for origination.
P&I
The monthly principal and interest payment required when repaying a mortgage in accordance with its terms.
Partial Payment
A loan payment that is not great enough to cover the scheduled monthly payment on a mortgage.
Payment Change Date
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). The payment change date usually occurs in the month immediately after the adjustment date.
Payoff Figures
The unpaid principal balance and escrow amounts to be used for payment in full of the mortgage or for closing sale of the property.
Percentage Point
One percent of the loan or a measure of the interest rate.
Periodic Payment Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase during a single adjustment period.
Periodic Rate Cap
On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase during a single adjustment period.
Personal Property
Any and all property that is not real property.
PITI (Principal, Interest, Taxes, and Insurance)
The most common components of a monthly mortgage payment.
Planned Unit Development (PUD)
A comprehensive development plan for a large land area. A PUD usually includes residences, roads, schools, recreational facilities, commercial, office and industrial areas. Also, a subdivision having lots of areas owned in common and reserved for the use of some or all of the owners of the separately owned lots. See also DeMinimus PUD.
Plans And Specifications
Architectural and engineering drawings and specifications for construction of a building or project. They include a description of materials to be used and the manner in which they are to be applied.
Plat Drawing & Conservation Fee
A fee charged by title companies in some states for obtaining a map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements. This drawing is required to obtain title insurance. For our comparison purposes, the plat drawing and conservation fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
Plat Registration
A fee charged by title companies in some states to review the registration of a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels. For our comparison purposes, the plat registration fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
Points
Fees that are collected by the lender in exchange for a lower interest rate. Commonly called discount points, each point is equal to 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate.
Power of Attorney
A written legal instrument that authorizes another person to act on one's behalf. A power of attorney can grant either complete or limited authority.
Pre-foreclosure Sale
A process in which the lender allows a borrower to avoid foreclosure by selling the property for less than the amount that may be owed to the lender.
Preliminary Title Report
The results of a title search by a title company prior to issuing a title binder or commitment to insure clear title.
Pre-qualification
Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.
Prepaids
Expenses of property ownership or expenses incurred while obtaining a mortgage that must be paid in advance. Prepaids typically include real estate taxes and hazard insurance.
Prepayment
Any amount that is paid to reduce the principal balance, not interest, of a loan before the due date.
Prepayment Penalty
A fee charged to a borrower who pays off a loan before it is due.
Prime Rate
The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.
Prequalification
The process of determining how much money a prospective home buyer may be eligible to borrow before a loan is applied for.
Primary Residence
A residence which the borrower intends to occupy as the principal residence.
Principal
The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
Principal Balance
The remaining balance due on a debt, exclusive of accrued interest.
Private Mortgage Insurance
This may be required by your Lender if the loan does not meet the normal standards of the Lender. The most common reason for this is a smaller down payment made by the borrower than the Lender usually requires. This insurance protects the Lender from a loss if the borrower defaults. It does NOT protect the borrower, though it may allow the Borrower to qualify for the loan. The borrower pays the cost for PMI.
Processing
The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer.
Purchase Contract (Agreement/Offer)
An agreement between a buyer and seller of real property, setting forth the price and terms of the sale. Also known as a sales contract.
Qualifying Ratios
Calculations performed by lenders to determine your ability to repay a loan. The first qualifying ratio is calculated by dividing the monthly PITI by the gross monthly income. The second ratio is calculated by dividing the monthly PITI and all other monthly debts by the gross monthly income.
Qualifying Thrift Lender
A lender who specializes in home mortgage finance under the rules established by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
Quantity Survey
A method used by appraisers to estimate how much it would cost to reproduce an improvement.
Quitclaim Deed
A deed that transfers, without warranty, whatever interest or rights a grantor may have at the time the transfer is made. Often used to remove a possible cloud on the title.
RAM
Reverse annuity mortgage.
Ranch House
Once described a low, one-story house typical of the western United States. The term is now used to describe just about any one-story home.
Rate
The annual rate of interest for a loan. Also called the interest rate.
Rate Change Cap
The maximum amount that an interest rate can change, either at an adjustment period or over the entire life of the loan. Commonly associated with an adjustable rate mortgage (ARM).
Rate Improvement Mortgage
A fixed-rate mortgage (FRM) that includes a clause allowing the borrower the option to reduce the interest rate one time (without refinancing) during the first few years of the loan term.
Rate Lock
An agreement by a lender to guarantee the interest rate offered for a mortgage provided that the loan closes within the specified period of time.
Rate of Interest
Same as interest rate.
Real Assets
Real estate or real property owned by an individual or business.
Real Estate Agent
A person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers. Also referred to as Real Estate Broker.
Real Estate Broker
The seller of a house pays a real estate broker to attract potential buyers and help negotiate the contract between the seller and the buyers. The broker identifies available properties for buyers and shows them properties that meet their personal criteria. Also referred to as Real Estate Agent.
Real Estate Settlement Procedures Act (RESPA)
A federal law requiring lenders to provide home mortgage borrowers with information on known or estimated settlement costs. It also establishes guidelines for escrow account balances, and requires mortgage lenders and brokers to give borrowers advance notice of closing costs in the form of a Good Faith Estimate.
Real Property
Land and anything permanently affixed to the land, including structures, trees, minerals, and the interest, benefits and rights thereof.
Realtor®
A real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors.
Reconveyance Fee
This fee is charged by title companies or attorneys in some states and covers the cost of removing your current lender's lien from your property title when you refinance. For our comparison purposes, a reconveyance fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Recordation Exam
A fee charged by the title company in some states to review documents, to assure they meet the state standards prior to being recorded. For our comparison purposes, a recordation exam is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Recorder
The public official who keeps records of transactions that affect real property in a specific geographic area (usually a county). Often known as a County Recorder or County Clerk.
Recording Fees
A fee charged by the local government to record mortgage documents into the public record so that any interested party is aware that a lender has an interest in the property. For our comparison purposes, a recording fee is considered to be a tax or other unavoidable fee.
Refinancing
The repayment of a debt from the proceeds of a new loan using the same property as security.
Rehabilitation Mortgage
A loan granted to cover the costs of repairing or improving an existing property. Sometimes also used to acquire property with the intent to improve it.
Release Fee
The fee charged to release a lien to free real estate from a mortgage.
Remaining Balance
The amount of principal owed on a loan that has not yet been fully repaid.
Remaining Term
The number of payments left to be made on a loan before it is fully amortized (paid in full).
Rent Loss Insurance
An insurance policy that protects a landlord against loss of rent or value due to natural casualties that renders the premises unsuitable for use, and therefore excuses the tenant from paying rent.
Repayment Plan
An agreement between a lender and a borrower, made to help the borrower repay delinquent installments.
Replacement Reserve
An amount set aside from net operating income for replacement of short-lived common property in cooperative housing projects such as condominiums.
Rescission
The cancellation of a contract by the operation of a law or by mutual consent. In some circumstances, borrowers have the right to cancel a transaction within three business days after closing.
RESPA
See Real Estate Settlement Procedures Act.
Reverse Mortgage
See Home Equity Conversion Mortgage (HECM).
Revolving Credit
A credit agreement (typically a credit card) that allows a customer to borrow against a pre-approved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.
RHS
See Rural Housing Service.
Right of First Refusal
A contract provision that requires a property owner to give another party the first opportunity to purchase or lease the property before it is offered to others.
Right of Ingress or Regress
The right to enter or leave specific property or premises.
Right of Survivorship
In joint tenancy, the right of surviving joint tenants to acquire the interest of a deceased joint tenant.
Rural Housing Service (RHS)
An agency within the United States Department of Agriculture that provides financing to farmers and other qualified borrowers buying property in rural areas, who are unable to obtain loans elsewhere.
Safe Harbor
A set of rules and regulations that will guarantee compliance with the law, if followed.
Safe Rate
An interest rate provided by low-risk investments such as high grade bonds or secured first mortgages.
Sale-leaseback
A technique in which a seller deeds property to a buyer, who simultaneously leases the property back to the seller.
Sales Contract
An agreement between a buyer and seller to purchase real estate. A sales contract, also known as an offer to purchase or a binder, secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money that was paid is forfeited unless the binder expressly provides that it is to be refunded.
Sales Disclosure
A state specific form that may need to be filed, disclosing everything about the sale of the home.
Satisfaction of Mortgage
The recordable instrument issued by the lender verifying full payment of a mortgage debt.
Search and Exam Fee
A fee charged by a title company or attorney in some states to perform a check of the title records that verifies the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a search and exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Search and Survey
A fee charged by a title company in some states to perform a check of the public record to verify that the buyer is purchasing a home from the legal owner and there are no liens, overdue assessment, or other claims that would adversely affect the transfer of title. In addition, a search is performed to insure that there are no issues that a survey would show that could affect the property. For our comparison purposes, a search and survey fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Search Fee
A fee charged by a title company or attorney in some states to cover the cost of searching the public record to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a search fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Second Home (Vacation Home, Weekend Home)
A residence other than the borrower's primary residence which the borrower intends to occupy for a portion of each year. Must be suitable for year-round occupancy.
Second Mortgage
A mortgage that has rights that are subordinate to the rights of the first mortgage holder.
Secondary Mortgage Market
The buying and selling of existing mortgages, primarily residential first mortgages.
Section 203(k) Loan Program
HUD's primary program for the rehabilitation and repair of single-family properties. A 203 (k) loan is a first mortgage that covers the costs of rehabilitation and purchase or refinance of an eligible property. The goals of the Section 203(k) loan program are community and neighborhood revitalization and expanded opportunities for homeownership for low- and moderate-income families.
Secured Loan
A loan that is backed by collateral.
Security
The collateral offered to a lender in exchange for a loan. When a lender provides a mortgage, you provide your home as the security. This means that if payments are in default, the lender has the right to take title to the property.
Security Instrument
Mortgage or deed of trust evidencing the pledge of real estate as collateral for the loan.
Security Interest
The lender's right to take property that has been offered as security.
Seller Contributions
Payment by the seller or any other interested party of some or all of the purchaser's usual closing costs. Investors and insurers sometimes limit the amount of seller contribution and require lenders to adjust the property's value if contributions exceed limitations. Undisclosed seller contributions (such as decorating allowances, appliances, or payment of moving expenses) are made to borrowers outside of closing and are also subject to investor and insurer restrictions.
Seller Take-Back
An arrangement in which the owner of a property provides financing.
Servicer
A company that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer may or may not be the original lender.
Settlement
A meeting of parties involved in a real estate transaction to finalize the process. In the case of a purchase, the settlement usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the settlement involves the borrower and the lender. Sometimes referred to as the closing or the close of escrow.
Settlement or Closing Fee
A fee charged by a title company, closing agent or attorney to act as a representative and agent for the lender to perform the closing of a real estate transaction.
Settlement Statement
Also referred to as the HUD-1 or the closing statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
Standard Payment Calculation
The process used to determine the monthly payment required to repay the remaining principal balance of a loan in fairly equal installments, over the remaining term of the loan at the current interest rate.
State Tax Stamps
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
State/Local Tax Fees
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
Step Mortgage
A type of adjustable-rate mortgage (ARM) that allows for the interest rate to increase according to a specified schedule. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan. Sometimes called a step-rate mortgage.
Subdivision
A housing development that is created by dividing a large parcel of land into many individual lots for sale.
Subordinate Financing
Any mortgage or other lien that has a lower priority than that of the first mortgage.
Survey
A fee associated with obtaining a precise measurement of a piece of property by a licensed surveyor. The survey is typically a written map of the property showing locations of buildings and boundaries. In some states a survey is required by a title company to issue a title insurance policy. For our comparison purposes, a survey fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Survey Affidavit
A fee charged by a title company to issue an insurance policy without requiring that a full survey be completed. For our comparison purposes, a survey affidavit fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Sweat Equity
Contribution to the construction of a property in the form of labor or services, instead of cash.
Swing Loan
Sometimes called a bridge loan, a swing loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
Takeout Financing
A firm commitment to provide permanent long-term financing after a construction project is completed.
Tangible Property
Real estate and other property of value which can be seen and touched.
Tax Base
The total value of property, income, or other taxable assets subject to taxation.
Tax Certificate
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
Tax Lien
A claim against property for unpaid taxes.
Tax Service Fee
A fee charged to a borrower by a lender so that another company will assume responsibility for verifying the amount of real estate taxes due and that taxes have been paid over the life of the loan. For our comparison purposes, a tax service fee is considered to be a third party fee, however, some lenders may not charge for this service.
Taxes and Other Unavoidable Fees
Fees that we consider to be taxes and other unavoidable fees include State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If you see a tax or recording fee in the fee comparison table that is listed by some of the sites and not others, don't assume that you won't have to pay it. It probably means that the lender who doesn't list the fee hasn't done the research necessary to provide accurate closing cost information nationwide. Contact one of the sites directly for more information or talk to your real estate agent or attorney for guidance.
Tenancy
The use of real estate under any kind of right of title.
Tenancy by the Entirety
Type of joint tenancy that provides the right of survivorship and is available only to a husband and wife. Compare with tenancy in common.
Tenancy in Common
Type of joint tenancy without the right of survivorship. Compare with tenancy by the entirety and with joint tenancy.
Term
The loan term is the number of months that you will make monthly payments. If the loan term is the same as the payment calculation term, you will pay the loan in full during the loan term and no balance will be due. If the payment calculation term is greater than the loan term, a balance or "balloon payment" may be due at the end of the loan term.
Third Party Fees
Third party fees are usually fees that the lender will collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee and a title company or an attorney is paid the title insurance fees. Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees. Typically, you’ll see some minor variances in third party fees from lender to lender since a lender may have negotiated a special charge from a provider they use often or chooses a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee or courier/mailing fees.
Title
The legal evidence of ownership rights to real property.
Title Company
A company that specializes in examining titles to real estate and issuing title insurance.
Title Examination
A fee charged by a title company or attorney in some states to cover the cost of searching the public record to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a title examination fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Title Insurance
An insurance policy that protects the lender (and sometimes the property owner as well) against loss due to disputes over the ownership of a property and defects in the title that were not found in the search of the public record. For our comparison purposes, the title insurance cost is considered to be a third party fee.
Title Insurance Policy
A contract in which an insurer, usually a title insurance company, agrees to pay the insured party a specific amount for any loss caused by defects of title on real estate in which the insured has an interest as purchaser, mortgagee, or otherwise.
Title Opinion
A statement issued by an attorney as to the quality of title after examining an abstract of title. Also, referred to as an Attorney Opinion. For our comparison purposes, a title opinion fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Title Search
An examination of public records to disclose the past and current facts regarding the ownership of a given piece of real estate.
Total Closing Costs
This is the total of all the items that must be paid at closing related to your new mortgage. Since the exact charges for some of these items cannot be obtained until the time of closing, the figure may only be an estimate.
Total Debt Ratio
A standard calculation performed by mortgage lenders to determine if a borrower qualifies for a specific loan type. It is calculated by dividing the monthly housing expense (Principal, Interest, Taxes and Insurance plus all other monthly debt obligation) by the borrower's monthly gross income. Also referred to as a back end ratio or a bottom ratio.
Trade Equity
Equity that results from a buyer giving an existing property as trade for all, or part of, the down payment on the subject property.
Transfer of Ownership
Any legal method by which the ownership of property changes hands.
Transfer Tax
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee. May also be referred to as an Intangible Tax.
Treasury Bills
An index used to establish interest rates for adjustable rate mortgages. It is based on the interest rate paid to private investors by the US Government to obtain funding for the national debt and other expenses. Sometimes called T-bills, they are available in denominations of 3-months, 6-months and 1-year. The 3-month and 6-month Treasury bills are auctioned every Monday, and the 1-year Treasury bills are auctioned on Tuesday. The resulting figures are released to the public the next day. This index can have either a weekly or a monthly value.
Treasury Bond
Negotiable, long-term U.S. Government debt obligation with a maturity of ten years or longer, issued in minimum denominations of $1,000.
Treasury Index
An index that is used to determine interest rate changes for some adjustable-rate mortgage (ARM) programs. It is often based on the U.S. Treasury's daily yield curve.
Treasury Note
An intermediate U.S. Government security with a maturity of 1 to 10 years. Denominations range from $1,000 to $1 million or more. The notes are sold by cash subscription, in exchange for outstanding or maturing government issues, or at auction.
Treasury Securities
An index used to establish interest rates for adjustable rate mortgages. It is based on the yields of actively traded 1-year, 3-year, or 5-year Treasury Securities adjusted to constant maturities. The Treasury Security indices are calculated by the U.S. Treasury and reported by the Federal Reserve Board. These indices have either a weekly or a monthly value. The weekly indices are released on Monday afternoon for the previous week. Monthly values for these indices are generally available on the first Monday of the following month.
Trust Deed
The instrument given by a borrower (trustor) to a trustee vesting title to a property in the trustee to ensure the borrower's fulfillment of an obligation. A mortgage.
Trustee
A fiduciary who holds property in trust for another to secure performance of an obligation or act.
Truth-in-Lending Act
A Federal law requiring full disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms and financial institutions.
Two-step Mortgage
A type of adjustable-rate mortgage (ARM) that has one interest rate for the first few years (typically 5 or 7), and a different rate for the remainder of the amortization term.
UCC
See Uniform Commercial Code.
Underlying Mortgage
Generally refers to the first mortgage when there is a wraparound mortgage.
Underwriting
Analysis of risk and setting of an appropriate rate and terms for a mortgage on a given property for given borrowers.
Underwriting Fee
A fee charged by some lenders to cover the cost of the lender's analysis of the risk associated with a loan. For our comparison purposes, an underwriting fee is considered to be a lender fee.
Undivided Interest
An ownership right to use and occupy property that is shared among more than one owner. No single co-owner may have exclusive rights or possession to any part of the property.
Uniform Commercial Code (UCC)
Group of laws that are applicable to commercial transactions. Only a few of the laws have relevance to real estate transactions.
Unsecured Loan
A loan that is not backed by collateral.
URLA
Uniform residential loan application.
VA Loan
A mortgage for veterans and service persons. The loan is guaranteed by the Department of Veterans Affairs (VA) and requires low or no down payment.
Vacancy Rate
The percentage of all units or space that is not leased, not rented or is unoccupied.
Vacant Land
Land that is not currently being used.
Vacation home
A home used by the owners only occasionally or seasonally, primarily for recreational purposes.
Vested
Having the right or privilege to use a portion of a fund, such as an individual retirement account (IRA).
Waiver
The voluntary abandonment or surrender of some claim, right, or privilege.
Warehousing
The packaging together of many mortgages for the purpose of selling them in the secondary market, usually by a mortgage banker who has originated the loans.
Warranty
A promise contained in a contract.
Water Table
Usually defined as the upper-most level at which underground water is normally encountered in a particular area.
Wholesale Origination
A loan origination strategy by which loans are purchased from mortgage brokers, mortgage bankers, or other loan originators (banks, thrifts etc.) The loans may be purchased prior to closing, at closing or after the loans are closed depending on the arrangement between the originator and the wholesale lender. Wholesale origination enables a lender to acquire mortgage servicing rights without incurring the fixed costs associated with a retail origination strategy.
Wire Transfer Fee
A fee charged by some lenders to cover the cost of wiring the mortgage funds to the appropriate parties, such as the title company or attorney, so that they are available for closing. For our comparison purposes, a wire transfer fee is considered to be a third party fee. However, some lenders may not charge for this service.
Wraparound Loan
A loan that includes the remaining balance on an underlying first loan. Instead of having separate first and second mortgages, a wraparound loan has both.
Yield
A measurement of the rate of earnings from an investment, usually expressed as a percentage.
Yield To Maturity (YTM)
The lender's percentage of annual return on actual funds loaned, assuming that the loan will be paid in full at maturity.
Zero Point Option
An option which allows the borrower to opt to pay a slightly higher loan interest rate in lieu of paying the loan origination points generally charged for the particular loan product.
Zone
A geographic area reserved and defined by local ordinance for specific limited use. Zones are almost always subject to certain restrictions or conditions.
Zoning
The local government's specifications for the use of property in certain areas.
Zoning map
A map of the local geographic area that defines current zoning designations and land use.
Zoning Ordinances
The acts of an authorized local government establishing building codes, and setting regulations for property usage.