homeowner's warranty
A type of insurance often purchased by homebuyers that
will cover repairs to certain items, such as heating or air
conditioning, should they break down within the coverage period. The
buyer often requests the seller to pay for this coverage as a
condition of the sale, but either party can
pay. (Top *
A-G * O-Z)
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). (Top
* A-G * O-Z)
HUD-1 settlement statement
A document that provides
an itemized listing of the funds that were paid at closing. Items
that appear on the statement include real estate commissions, loan
fees, points, and initial escrow (impound) amounts. Each type of
expense goes on a specific numbered line on the sheet. The totals at
the bottom of the HUD-1 statement define the seller's net proceeds
and the buyer's net payment at closing. It is called a HUD1 because
the form is printed by the Department of Housing and Urban
Development (HUD). The HUD1 statement is also known as the "closing
statement" or "settlement sheet." (Top
* A-G * O-Z)
Interest
- see APR (Top
* A-G * O-Z)
joint tenancy
A form of
ownership or taking title to property which means each party owns
the whole property and that ownership is not separate. In the event
of the death of one party, the survivor owns the property in its
entirety. (Top
* A-G * O-Z)
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. (Top
* A-G * O-Z)
judicial foreclosure
A type of foreclosure proceeding used in some states that
is handled as a civil lawsuit and conducted entirely under the
auspices of a court. Other states use non-judicial
foreclosure. (Top
* A-G * O-Z)
jumbo
loan
A loan that exceeds
Fannie Mae’s and Freddie Mac’s loan limits, currently at $227,150.
Also called a nonconforming loan. Freddie Mac and Fannie Mae loans
are referred to as conforming loans. (Top
* A-G * O-Z)
K-
No item listed (Top
* A-G * O-Z)
late
charge
The penalty a borrower
must pay when a payment is made a stated number of days. On a first
trust deed or mortgage, this is usually fifteen days.
(Top * A-G
* O-Z)
lease
A written agreement
between the property owner and a tenant that stipulates the payment
and conditions under which the tenant may possess the real estate
for a specified period of time. (Top
* A-G * O-Z)
leasehold estate
A way of holding title to a property wherein the
mortgagor does not actually own the property but rather has a
recorded long-term lease on it. (Top
* A-G * O-Z)
lease
option
An alternative financing option that
allows home buyers to lease a home with an option to buy. Each
month's rent payment may consist of not only the rent, but an
additional amount which can be applied toward the down payment on an
already specified price. (Top
* A-G * O-Z)
legal
description
A property description,
recognized by law, that is sufficient to locate and identify the
property without oral testimony. (Top
* A-G * O-Z)
lender
A term which can refer to
the institution making the loan or to the individual representing
the firm. For example, loan officers are often referred to as
"lenders." (Top
* A-G * O-Z)
liabilities
A person's financial
obligations. Liabilities include long-term and short-term debt, as well as any other amounts that
are owed to others. (Top
* A-G * O-Z)
liability insurance
Insurance coverage that offers protection against claims
alleging that a property owner's negligence or inappropriate action
resulted in bodily injury or property damage to another party. It is
usually part of a homeowner’s insurance
policy. (Top
* A-G * O-Z)
lien
A legal claim against a
property that must be paid off when the property is sold. A mortgage
or first trust deed is considered a lien. (Top
* A-G * O-Z)
life
cap
For an adjustable-rate
mortgage (ARM), a limit on the amount that the interest rate can
increase or decrease over the life of the
mortgage. (Top
* A-G * O-Z)
line of
credit
An agreement by a
commercial bank or other financial institution to extend credit up
to a certain amount for a certain time to a specified
borrower. (Top
* A-G * O-Z)
liquid
asset
A cash asset or an asset
that is easily converted into cash. (Top
* A-G * O-Z)
loan
A sum of borrowed money
(principal) that is generally repaid with interest. (Top
* A-G * O-Z)
loan officer
Also
referred to by a variety of other terms, such as lender, loan
representative, loan "rep," account executive, and others. The loan
officer serves several functions and has various responsibilities:
they solicit loans, they are the representative of the lending
institution, and they represent the borrower to the lending
institution. (Top
* A-G * O-Z)
loan
origination
How a lender refers to
the process of obtaining new loans. (Top
* A-G * O-Z)
loan servicing
After
you obtain a loan, the company you make the payments to is
"servicing" your loan. They process payments, send statements,
manage the escrow/impound account, provide collection efforts on
delinquent loans, ensure that insurance and property taxes are made
on the property, handle pay-offs and assumptions, and provide a
variety of other services. (Top
* A-G * O-Z)
loan-to-value (LTV)
The percentage relationship between the amount of the
loan and the appraised value or sales price (whichever is
lower). (Top
* A-G * O-Z)
lock-in
An agreement in which the
lender guarantees a specified interest rate for a certain amount of
time at a certain cost. (Top
* A-G * O-Z)
lock-in
period
The time period during
which the lender has guaranteed an interest rate to a
borrower. (Top
* A-G * O-Z)
margin
The difference between
the interest rate and the index on an adjustable rate mortgage. The
margin remains stable over the life of the loan. It is the index
which moves up and down. (Top
* A-G * O-Z)
maturity
The date on which the
principal balance of a loan, bond, or other financial instrument
becomes due and payable. (Top
* A-G * O-Z)
merged credit report
A credit report which reports the raw data pulled from
two or more of the major credit repositories. Contrast with a
Residential Mortgage Credit Report (RMCR) or a standard factual
credit report. (Top
* A-G * O-Z)
modification
Occasionally, a lender will agree to modify the terms of
your mortgage without requiring you t refinance. If any changes are
made, it is called a modification. (Top
* A-G * O-Z)
mortgage
A legal document that
pledges a property to the lender as security for payment of a debt.
Instead of mortgages, some states use First Trust Deeds. (Top
* A-G * O-Z)
mortgage
banker
For a more complete
discussion of mortgage banker, see "Types of Lenders." A mortgage
banker is generally assumed to originate and fund their own loans,
which are then sold on the secondary market, usually to Fannie Mae,
Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this
term to themselves, whether they are true mortgage bankers or simply
mortgage brokers or correspondents. (Top
* A-G * O-Z)
mortgage
broker
A mortgage company that
originates loans, then places those loans with a variety of other
lending institutions with whom they usually have pre-established
relationships. (Top
* A-G * O-Z)
mortgagee
The lender in a mortgage
agreement. (Top
* A-G * O-Z)
mortgage insurance (MI)
Insurance that covers the lender against some of the
losses incurred as a result of a default on a home loan. Often
mistakenly referred to as PMI, which is actually the name of one of
the larger mortgage insurers. Mortgage insurance is usually required
in one form or another on all loans that have a loan-to-value higher
than eighty percent. Mortgages above 80% LTV that call themselves
"No MI" are usually a made at a higher interest rate. Instead of the
borrower paying the mortgage insurance premiums directly, they pay a
higher interest rate to the lender, which then pays the mortgage
insurance themselves. Also, FHA loans and certain first-time
homebuyer programs require mortgage insurance regardless of the
loan-to-value. (Top
* A-G * O-Z)
mortgage insurance premium (MIP)
The amount paid by a
mortgagor for mortgage insurance, either to a government agency such
as the Federal Housing Administration (FHA) or to a private mortgage
insurance (MI) company. (Top
* A-G * O-Z)
mortgage life and disability
insurance
A type of term life
insurance often bought by borrowers. The amount of coverage
decreases as the principal balance declines. Some policies also
cover the borrower in the event of disability. In the event that the
borrower dies while the policy is in force, the debt is
automatically satisfied by insurance proceeds. In the case of
disability insurance, the insurance will make the mortgage payment
for a specified amount of time during the disability. Be careful to
read the terms of coverage, however, because often the coverage does
not start immediately upon the disability, but after a specified
period, sometime forty-five days. (Top
* A-G * O-Z)
mortgagor
The borrower in a
mortgage agreement. (Top
* A-G * O-Z)
multi-dwelling units
Properties that provide separate housing units for more
than one family, although they secure only a single
mortgage. (Top
* A-G * O-Z)
negative amortization
Some adjustable rate mortgages allow the interest rate to
fluctuate independently of a required minimum payment. If a borrower
makes the minimum payment it may not cover all of the interest that
would normally be due at the current interest rate. In essence, the
borrower is deferring the interest payment, which is why this is
called "deferred interest." The deferred interest is added to the
balance of the loan and the loan balance grows larger instead of
smaller, which is called negative
amortization. (Top
* A-G * O-Z)
no
cash-out refinance
A refinance transaction which is not intended to put cash
in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs
associated with obtaining the new mortgage. Often referred to as a
"rate and term refinance." (Top
* A-G * O-Z)
no-cost loan
Many
lenders offer loans that you can obtain at "no cost." You should
inquire whether this means there are no "lender" costs associated
with the loan, or if it also covers the other costs you would
normally have in a purchase or refinance transactions, such as title
insurance, escrow fees, settlement fees, appraisal, recording fees,
notary fees, and others. These are fees and costs which may be
associated with buying a home or obtaining a loan, but not charged
directly by the lender. Keep in mind that, like a "no-point" loan,
the interest rate will be higher than if you obtain a loan that has
costs associated with it. (Top
* A-G * O-Z)
note
A legal document that
obligates a borrower to repay a mortgage loan at a stated interest
rate during a specified period of time. (Top
* A-G * O-Z)
note
rate
The interest rate stated
on a mortgage note. (Top
* A-G * O-Z)
no-cost loan
Almost all
lenders offer loans at "no points." You will find the interest rate
on a "no points" loan is approximately a quarter percent higher than
on a loan where you pay one point. (Top
* A-G * O-Z)
notice of default
A
formal written notice to a borrower that a default has occurred and
that legal action may be taken. (Top
* A-G * O-Z)
