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Glosario De Terminos

GLOSSARY OF TERMS - Real Estate

Mortgage Terms

Some Common Real Estate Terms - Spanish English

Need help understanding a mortgage term? Just enter a word or phrase below and click the Search button, or click a letter below for an alphabetized listing.

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A

acceptance

The act of accepting an offer to enter into a contract. Acceptance is binding and legal when both parties agree to the initial terms or after both parties have accepted all counter offers.

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

An interest rate that is adjusted periodically on the basis of changes in a specified index.

adjustable rate mortgage (ARM)

A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.

adjusted basis

The original cost of a property plus the cost of any improvements less depreciation.

adjustment date

The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

adjustment period

The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

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.

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. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.

amortization

The gradual repayment of a mortgage loan by installments.

amortization schedule

A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.

amortization term

The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

amortize

To repay a mortgage with regular payments that cover both principal and interest.

annual mortgagor statement

A report sent to the mortgagor (borrower) 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 a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points). Comparing the Annual Percentage Rates of different loans is regarded as a better way to gauge the overall cost of a loan than simply comparing rates because it takes all of these factors into consideration.

annuity

An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis.

application

A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security.

application fee

A fee that may be charged by a lender, mortgage broker or mortgage banker to accept a mortgage loan application.

appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.

appraisal fee

A fee charged to complete an estimate of the value of real property. This fee may be paid to the lender or directly to the appraiser.

appraised value

An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.

appraiser

An individual who is qualified to estimate the value of real and personal property.

appreciation

An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

assessed value

The value placed on property by a public tax assessor for purposes of taxation.

assessment

The process of placing a value on property for the strict purpose of taxation. May also refer to a levy (tax) against property for a special purpose, such as a sewer assessment.

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-in-fact

One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

B - back to top
: balance sheet; A financial statement that shows assets, liabilities, and net worth as of a specific date. This is generally needed to underwrite people who are self-employed.; balloon mortgage; A mortgage that has level monthly payments of principal and interest that do not fully amortize the loan. The balance is due in a lump sum payment at a specified date, usually at the end of the term.; balloon payment; The final lump sum payment that is made at the maturity date of a balloon mortgage.; bankrupt; A person, firm, or corporation ("debtor") that, through a court proceeding, is relieved from the payment of some or all debts, usually after the surrender of all assets to a court-appointed trustee or the reorganization of the debtor's assets and liabilities. Usually, at least two years must elapse from the discharge of the bankruptcy before lenders will consider making a loan to someone who had declared bankruptcy.; bankruptcy; A proceeding in a federal court in which a debtor who owes more than his or her assets can receive debt relief by transferring his or her assets to a trustee or agreeing to reorganization of assets and liabilities. Usually, at least two years must elapse from the discharge of the bankruptcy before lenders will consider making a loan to someone who had declared bankruptcy.; basis; Basis is used to compute the amount of any taxable gain or loss when selling a property. It includes the orginal cost of the property plus closing costs, selling costs and the cost of any improvements made.; betterment; An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.; bill of sale; A written document that transfers title to personal property.; binder; A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.; biweekly payment mortgage; A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.; blanket insurance policy; A single policy that covers more than one piece of property (or more than one person).; bona fide; In good faith, without fraud.; bond; An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.; breach; A violation of any legal obligation.; bridge loan; A loan which provides funds for a homebuyer to make a downpayment and pay closing costs on a new home before the present home is sold. Also known as "gap financing."; broker; A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. See mortgage broker.; budget; A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.; budget category; A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.; building code; Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.; buydown account; An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.; buydown mortgage; A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.; buyer's attorney's fees; Fees paid by a homebuyer for legal services and/or advice in conjunction with purchasing real estate.

C - back to top
: call option; A provision in the mortgage that gives the lender the right to call the mortgage due and payable in full at the end of a specified period.; cap; A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.; capital; (1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.; capital expenditure; The cost of an improvement made to extend the useful life of a property or to add to its value.; capital gains tax; Tax paid on the gain realized upon the sale of an asset.; capital improvement; A permanent improvement to real property that increases its value and useful life.; cash-out refinance; A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.; cash reserves; See reserves.; certificate of deposit (CD); A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period.; certificate of deposit index; An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit. See adjustable-rate mortgage (ARM).; Certificate of Eligibility; A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.; certificate of title; A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.; chain of title; The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.; change frequency; The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).; clear title; A title that is free of liens or legal questions as to ownership of the property.; closing; A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."; closing agent; The party who conducts the closing meeting. This role may be filled by an attorney, title company, or real estate agents depending on the state where the property is located.; closing costs; Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or real estate agents often provide estimates of closing costs to prospective homebuyers.; closing statement; See HUD-1 statement.; co-borrower; A person who signs a promissory note along with the borrower. Contrast with endorser. See also non-occupant co-borrower.; coinsurance clause; A provision in a hazard insurance policy that states the amount of coverage that must be maintained -- as a percentage of the total value of the property -- for the insured to collect the full amount of a loss.; collateral; An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.; collection; The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.; commission; The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.; commitment letter; A formal offer by a lender stating the terms under which it agrees to lend money to a homebuyer. Also known as a "loan commitment."; commitment period; The length of time that the lender's commitment is valid.; common areas; An area jointly owned by the owners or tenants of a complex or subdivision, for the common use of residents. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, etc.; common area assessments; Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.; community property; A form of ownership recognized in some states under which property acquired during a marriage is presumed to be owned jointly by husband and wife unless acquired as separate property of either spouse.; comparables; An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties similar to the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property. Also called "comps."; compound interest; Interest paid on the original principal balance and on the accrued and unpaid interest.; condemnation; The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.; conditions; Tasks that must be completed before your loan can be funded.; condominium; A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.; condominium conversion; Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.; conforming loan; A mortgage loan which is within the loan amounts and underwriting guidelines that have been established by government sponsored entities for mortgage loans being sold in the secondary market.; concessions; items that are paid for or given by a landlord or seller to induce a prospective tenant or buyer to sign a lease or purchase property.; construction loan; A short-term loan intended to finance the cost of construction, usually of a house. The lender makes payments to the builder at periodic intervals as the work progresses.; consumer reporting agency (or bureau); An organization that compiles information about a consumers' credit histories.; contingency; A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.; contract; An oral or written agreement to do or not to do a certain thing.; conventional mortgage/conventional loan; A real estate mortgage that is not affiliated with the FHA or VA.; convertibility clause; A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.; convertible ARM; An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.; cooperative (co-op); A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.; cooperative corporation; A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.; cooperative mortgages; Mortgages related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units.; cooperative project; A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.; corporate relocation; Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.; cost of funds index (COFI); An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage (ARM).; covenant; A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.; credit; An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.; credit bureau; An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.; credit history; A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.; credit life insurance; A type of insurance available to borrowers that will pay off the mortgage debt if the borrower dies while the policy is in force.; credit report; A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See merged credit report.; credit report fee; Fee charged by a lender to obtain an applicant's credit report for review in conjunction with a mortgage loan application.; creditor; A person to whom money is owed.

D - back to top; debt; An amount owed to another. See installment loan and revolving liability.; debt-to-income ratio; The percentage of gross monthly income that goes toward paying all long term debts, such as mortgage loans, car loans, student loans, credit cards, etc. If your monthly gross income is $4,500 and the total of your debt payments is $1,620, your debt-to-income ratio is 36% ($1,620 divided by $4,500).; deed; The legal document transferring or conveying title to a property from one party to another.; deed of trust; The document used in some states instead of a mortgage; title is conveyed to a trustee to be held in trust as security for the lender.; deed-in-lieu; With the lender's approval, a borrower may transfer the deed to a property to the lender to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."; default; Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.; delinquency; Failure to make mortgage payments when mortgage payments are due.; Department of Veterans Affairs (VA); See VA.; deposit; Money given to bind the sale of real estate or assure payment or an advance of funds in the processing of a loan. See earnest money deposit.; depreciation; A decline in the value of property; the opposite of appreciation.; discount points; See point.; document preparation fees; Fees charged by a lender or closing agent to prepare the documents associated with providing a mortgage loan.; down payment; The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.; due-on-sale provision; A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.; due-on-transfer provision; This terminology is usually used for second mortgages. See due-on-sale provision.; E - back to top
: earnest money deposit; A deposit made by the potential home buyer to show that he or she is serious about buying the house.; easement; A right of way giving persons other than the owner access to or over a property.; effective age; An appraiser's estimate of the physical condition of a building. The actual age of a building may be different than its effective age.; effective gross income; Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.; effective percentage rate (EPR); Similar to the Annual Percentage Rate (APR), the Effective Percentage Rate (EPR) measures the cost of a mortgage stated as a yearly rate and includes such items as interest, mortgage insurance, and loan origination fee (points). The difference between the EPR and the APR is that the APR calculates the cost of a loan over the entire term of the loan (30 year, for example). The EPR calculates the cost of the loan over the time you expect to keep the loan. This changes the relative costs of different loans because it spreads your closing costs over what is usually a shorter time.; emergency reserves; Funds left after you have made your down payment and paid all closing costs. Some lenders require enough funds in reserve to pay two monthly mortgage payments.; eminent domain; The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.; encroachment; An improvement that intrudes illegally on another's property.; encumbrance; An outstanding lien or claim against real property.; endorser; A person who signs ownership interest over to another party. Contrast with co-borrower.; Equal Credit Opportunity Act (ECOA); A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.; equity; A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage. For example, if the fair market value of your home is $125,000 and your mortgage balance is $119,000, then your equity equals $6,000.; escrow; A deposit of money, valuables or documents with an impartial third party.; escrow account; The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses. See escrow.; escrow analysis; The periodic review of escrow accounts to determine if current monthly deposits are adequate to pay taxes, insurance, and other bills when they are due.; escrow collections; Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.; escrow disbursements; The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.; escrow payment; The portion of a borrower's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, and other items as they become due. Known as "impounds" or "reserves" in some states.; estate; The ownership interest a person has in real property. Also, the total value of all the real property and personal property owned by an individual at the time of their death.; eviction; The legal process to remove an occupant from real property.; examination of title; Reviewing a property's chain of title from the public records or an abstract of the title.; exclusive listing; A written contract that gives a licensed real estate agent the exclusive right to sell a property and collect a commission for a specified time, but reserving the owner's right to sell the property alone without paying a commission.; F - back to top; Fair Credit Reporting Act; A consumer protection law that regulates the disclosure of consumer credit reports by consumer credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.; fair market value; The price at which a property will sell from a willing buyer to a willing seller, each of whom has a reasonable knowledge of all the pertinent facts and neither being under any obligation to buy or sell.; Fannie Mae; A congressionally chartered, shareholder-owned company that supports the secondary market in mortgages on residential property with mortgage purchase and securitization programs.; Federal Housing Administration (FHA); An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.; fee simple; Ownership of real property that is believed to be unrestricted subject to eminent domain, police powers or other restrictions for public benefit.; fee simple estate; An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.; FHA coinsured mortgage; A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default.; FHA mortgage; A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.; finder's fee; A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.; first mortgage; A mortgage that is the primary lien against a property.; fixed installment; The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.; fixed-rate mortgage (FRM); A mortgage loan in which the payments and interest rate do not change during the term of the loan.; fixture; Personal property that becomes real property when attached in a permanent manner to real estate.; float; During the time between loan application and closing, the interest rate for the loan is not locked. It can change based on changes in the financial markets.; flood insurance; Insurance that reimburses the policyholder for physical property damage resulting from flooding. It is required for properties located in federally-designated flood areas.; foreclosure; The legal action allowing a lender to sell a borrower's property in an attempt to satisfy the debt.; forfeiture; The loss or surrender of money, property, rights, or privileges due to a breach of legal obligation.; 401(k)/403(b); An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not-for-profit organizations.; 401(k)/403(b) loan; Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Monies must be repaid to avoid serious penalty charges.; Freddie Mac; A congressionally chartered, shareholder-owned company that supports the secondary market in mortgages on residential and multifamily property with mortgage purchase and securitization programs.; fully amortized ARM; An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.; G - back to top
: good faith estimate (GFE); A written estimate provided by a mortgage lender of the closing costs a borrower can expect to pay at or before settlement. This estimate must be mailed or delivered to all loan applicants within three business days after a loan application is received.; government mortgage; A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Contrast with conventional mortgage.; Government National Mortgage Association (GNMA); A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Also known as Ginnie Mae.; grantee; The person who is the recipient of an interest in real property.; grantor; The person who transfers an interest in real property to another person.; gross income; Total income before any taxes or expenses are deducted.; guaranteed loan; Any loan guaranteed by a government agency, such as the FHA or VA, or other interested party.; H - back to top
: hazard insurance; Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.; Home Equity Conversion Mortgage (HECM); A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Sometimes called a reverse mortgage.; home equity line of credit; A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.; home inspection; A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.; homeowners' association (HOA); A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.; homeowners' association dues; A monthly or quarterly fee paid to a homeowners' association.; homeowner's insurance; An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.; homeowner's warranty (HOW); A type of insurance that covers repairs to specified parts of a house for a specific period of time. It may be provided by the builder or property seller as a condition of the sale.; housing expense ratio; The percentage of gross monthly income that goes toward paying housing expenses. If you earn $4,500 (gross) and your house expense is $1,500, you have a 33% housing ratio (1,500 is one third of 4,500).; HUD median income; Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).; HUD-1 statement; A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."; I - back to top; impound account; See escrow account.; income property; Any property developed or improved to produce income.; index; A published rate, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on an adjustable-rate mortgage (ARM).; inflation; An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.; initial interest rate; The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as "start rate" or "teaser."; inspection fees; Fees paid by a homebuyer for professional inspections of the property being purchased. The most common inspections are structural/mechanical inspection, termite inspection, and radon test. Others may be necessary depending on the property.; installment; The regular periodic payment that a borrower agrees to make to a lender.; installment loan; Borrowed money that is repaid in equal payments, known as installments. A car loan is often paid for as an installment loan.; insurable title; A property title that a title insurance company agrees to insure against defects and disputes.; insurance; A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.; insurance binder; A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.; insured mortgage; A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.; interest; The fee charged for borrowing money. Also, a right, title, or share in property.; interest accrual rate; The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.; interest rate; The cost to borrow money expressed as a percentage per year.; interest rate buydown plan; An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specified period, the mortgagor's effective interest rate is "bought down" below the actual interest rate.; interest rate ceiling; For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.; interest rate floor; For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.; interim interest; An amount you will pay when your loan is funded. It's the interest due on your loan to cover the number of days from the day you get your money to the beginning of the next month. For example, if your loan is funded on September 15, you would pay 15 days of interest when the loan closes to cover the period between September 15th and the 30th. Your first payment in this scenario would be due on October 1. You may hear interim interest also referred to as "odd days interest."; investment property; A property that is not occupied by the owner.; IRA (Individual Retirement Account); A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds.; J - back to top; joint tenancy; A form of co-ownership that gives each tenant an equal undivided ownership in the property, including the right of survivorship.; judgment; A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.; judgment lien; A lien on debtor's property resulting from the decree of a court.; judicial foreclosure; A type of foreclosure proceeding that is handled as a civil lawsuit and conducted entirely under the supervision of a court. Used only in certain states.; jumbo loan; A mortgage loan that exceeds the legislated purchase limits of Fannie Mae and Freddie Mac. Also called a non-conforming loan.; K - back to top; No entries for this letter.; L - back to top; land survey; See survey.; late charge; The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.