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Real Estate Terms

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AThere are 942 entries in the glossary.Pages: «1 2 3 4 5 6 7 8 9 10 » Credit ReportA report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Credit Report FeeThe credit report fee covers the lender's cost for ordering your credit report from a credit bureau. This report will verify some of the information you provided on your loan application as well as additional information from the credit agency's files and from public records. When a credit report is received, your lender will check it against your application and look for any discrepancies. You may be asked to explain information in your credit report. Credit Reporting Agency (or bureau)An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources. The three main credit reporting agencies, or credit bureaus, are Equifax, Experian, and Trans Union. You can order a copy of your credit report (a nominal fee may apply) via telephone at:

Equifax: (800) 685-1111

Trans Union: (800) 916-8800

Experian: (800) 682-7654

 Credit RepositoryAn 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 ScoreYour credit score is based on all the information in your credit report. This information is converted into a number--a credit score--that the lender uses to determine whether you are likely to repay your loan in a timely manner. The scores used in mortgage lending are typically in the 300 to 900 range. A general guide is that the higher your score the better. But you should keep in mind that your credit score is just one of several factors that will be used to evaluate your mortgage loan application. Credit unionA financial institution that is a cooperative, or co-op. It offers savings and checking accounts and other financial services for members. Credit UnionsA credit union is a financial institution that is owned and run by its members. It is a nonprofit, cooperative institution that offers members a place to save and borrow. A credit union often works by having its members pool their funds so additional loans can be made to other members. CreditorA person to whom money is owed. CreditworthyA person with good credit, whom a lender judges will repay a loan, is credit worthy. Cross-default clauseA provision in a junior mortgage making the mortgagor in default on all mortgages if a default occurs on just one mortgage. The cross-default clause allows a lender to foreclose if the borrower is in default on just one mortgage. Daily interestThe amount of interest the borrower pays the lender calculated on a daily basis. It equals the annual interest rate divided by 360 or 365 and multiplied by the amount of the loan. Also called per diem interest. De factoLatin for in fact. DebentureA broad term for any unsecured, long-term debt instrument. Corporations use debenture bonds to raise capital. Municipal bonds are debenture bonds. DebtAn amount owed to another. See installment loan and revolving liability. Debt Coverage Ratio (DCR)Ratio of net operating income(NOI) to annual debt service (ADS). DCR = NOI / ADS. Debt management planA bill payment plan for a borrower in a credit emergency. The plan is agreed to by the borrower and creditors. Debt serviceMortgage Payment. Debt service coverageAmount of money left over after other expenses such as taxes, insurance, maintenance and utilities, including an assumption of a reasonable vacancy factor, which can be utilized to service mortgage debt. Lenders usuall y require that the resulting earnings be a certain percentage above the proposed mortgage payments. (Applicable to Apartments and Commercial Properties.) Debt-to-income ratioPercentages lenders use to decide whether a loan applicant can afford to make payments on a certain mortgage loan. Lenders may allow first-time home-buyers to use 33\% of monthly income for housing costs, and a total of 38\% for housing costs and all other debt. Declaration of trustAn instrument that identifies property held by a master for another individual. DecreeAn order or judgment of a court. DeductTo subtract an amount from income that is being taxed. Homeowners can deduct interest they pay on their mortgage loans; points they pay at settlement; home improve-ments; and related items. DeedThe legal document conveying title to a property. The deed is the document that transfers ownership from the seller to you. Only the seller signs the deed at closing, and you'll receive a copy of it. The closing agent will record the deed with you listed as the new property owner. Your name and the names of any other buyers appear on the deed, and it will be sent to you after it is recorded. Deed of TrustThe document used in some states instead of a mortgage; title is conveyed to a trustee. In some states, a "deed of trust" is used instead of a mortgage. When homeowners sign a deed of trust, they receive title to the property but convey title to a neutral third party -- called a trustee -- until the loan balance is paid in full. Deed restrictionsRestrictions or limitations to the use of property as noted in a deed. Deed-in-lieuA deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance." DefaultFailure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage. Defective titleTitle that is not clear. DefendantParty who is defending or denying in a legal action. Deferred interestInterest due but unpaid. Mortgages that permit negative amortization (GPMs, and ARMs without a rate cap) will allow deferred interest. Deferred maintenanceDepreciation caused by failure to maintain properly; sometimes called curable physical depreciation. DeficiencyIn the event of a foreclosure, there is a deficiency when the highest bid in a foreclosure sale is less than the outstanding balance plus foreclosure-related costs. DelinquencyFailure to make mortgage payments when mortgage payments are due. Demand noteA debt instrument that allows the lender to call the balance due at any time without prior notice. DemographicsStatistical information regarding population growth and trends. DensityA measure of the number of dwelling units per component size of land, such as an acre. Department of Veterans AffairsAn agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs. The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans. If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office. DepositA sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit. DepreciationA decline in the value of property; the opposite of appreciation. Detached Single-Family HomeThe most traditional type of single-family home is one that is "detached." This type of home stands separate from any other housing structure and serves as a place of residence for the occupants. Direct depositA method of having an organization that issues you checks-such as your employer-send the checks straight into your bank account. Direct Leveraging Loan Program (DLLP)The Direct Leveraging Loan Program makes it easier and more economical for rural residents to own a home through lower interest rates and no down payment.Under this program, the lender offers up to 50 percent of the mortgage amount as a conventional 30-year, fixed-rate first mortgage and the Rural Housing Service (RHS) offers the balance as a second mortgage at an interest rate that is generally below market. The RHS is part of the U.S. Department of Agriculture. Direct sales comparisonProperty value estimation using the sales prices of similar properties (comparables) and making value adjustments according to such things as square footage, room count, lot size, condition and amenities in order to obtain a realistic fair market value of the property being appraised. DisbursementsPayments made using cash, checks, or electronic transfers. Disbursements include advances to others as well as payments for goods and services received and other types of payments made. (JFMIP Core, Pg. 48; Common Term) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97 Discount PointsDiscount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. A point equals 1 percent of the loan amount. So, if you and your lender agree to a mortgage of $100,000, one point would equal $1,000. Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point. If the current interest rate on a 30-year mortgage is 7.75 percent, paying one point would lower the interest rate to 7.625. Ask your lender if you have the option of paying 1, 2, or 3 discount points -- or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time. DiscountingThe process of reducing the value of money received in the future to reflect the opportunity cost of waiting to receive the money. Discretionary spendingSpending you choose to do, that you do not have to do to live. DowerThe rights of a widow in the property of her husband at his death. Down PaymentThe part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.Saving for a down payment is usually one of the most difficult parts of preparing to buy a home. If you believe you have the needed funds, you are in a better position to seek pre-qualification from a lender to get the mortgage that is right for you.Most homeowners rely on a mortgage from a financial institution, and most mortgage products require buyers to include a portion of their own funds towards the purchase of the home. This is called the down payment. Lenders feel more secure when buyers include a down payment, indicating they are less likely to walk away from their investment if their finances take a downturn.Historically, buyers usually made a down payment that totaled 20 percent of the home's purchase price. Under this scenario, a down payment for a $100,000 home is $20,000. But today, new mortgage products allow buyers to put down as little as 3 percent to 5 percent, provided private mortgage insurance is obtained. The down payment for a $100,000 home with 5 percent down payment is just $5,000.Sources for down payments may come from buyers' savings accounts, checking accounts, stocks and bonds, life insurance policies, and gifts. Due-on-sale clauseA provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage. Due-on-sale ProvisionA 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 ProvisionThis terminology is usually used for second mortgages. See due-on-sale provision. Earnest moneyA deposit made by the potential home buyer to show that he or she is serious about buying the house. Earnest money (Good Faith Deposit)The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earne st money is applied against the down payment. If the sale does not go through, the earnest money may be forfeited or lost unless the offer to purchase expressly provides that it is refundable. Most purchase contracts require that certain contingencies (such as the availability of financing and acceptance of property condition) be removed prior to the deposit being forfeited Earnest Money DepositA deposit made by the potential home buyer to show that he or she is serious about buying the house. The earnest money deposit is a "good-faith" payment you submit with your offer on a home to show the seller you are serious about proceeding. The earnest money is deposited in an escrow account and will be applied to your closing costs. Sometimes, your lender will want you to bring a receipt for the earnest money deposit along with your sales contract to the initial loan application meeting. EasementA right of way giving persons other than the owner access to or over a property. Easement appurtenantAn easement that burdens one parcel of land (the servient estate) for the benefit of another parcel ( the dominant estate). Easement by necessityAn easement that is created by operation of law when a grantor conveys a portion of a larger parcel of land and in doing so landlocks either the portion that is transferred or the part that is retained. Easement rightsA right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example. Economic Development Administration (EDAOrganization within the U.S. Department of Commerce responsible for a number of grant and loan programs designed to help alleviate conditions in economically depressed areas of the country. Economic lifeLength of time that improvements (buildings) will produce a competitive return or will be properly habitable. Land usually has an infinite economic life. Economic obsolenceoss in property value caused by conditions external to the property. Economic rentThe rent that a property could generate if it were available today; market rent. Effective AgeAn appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age. Effective Gross IncomeNormal 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. EgressA means of exit from a parcel of land. Emergency Shelter Grant (ESG)A Federal grant program designed to help improve the quality of existing emergency shelters for the homeless, to make available additional shelters, to meet the costs of operating shelters, to provide essential social services to homeless individuals, and to help prevent homelessness. HUDWEB, Continuum of Care and Veterans Programs Glossary Eminent DomainThe 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. Employer-Assisted HousingA special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes. Empowerment Zones and Enterprise CommuniDesignated low-income areas targeted to receive tax incentives, performance grants, and loans in order to create jobs, expand business opportunities, and support people looking for work. Initially authorized by Title XIII of the Omnibus Budget Reconciliation Act of 1993 (the Statute), additional EZ/ECs were authorized by the Taxpayer Relief Act of 1997. HUD web site at www.hud.gov:80/progdesc/ezec.html EncroachmentAn improvement that intrudes illegally on another's property. EncumbranceAnything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions. EndorserA person who signs ownership interest over to another party. Contrast with co-maker. Environmental Assessment (EA)A preliminary, written, environmental analysis required by EPA to determine whether a federal activity such as building airports or highways would significantly affect the environment; an EA may require preparation of more detailed Environmental Impact Statement. EPA Web site for Environmental/Biological-Related Technical Terms, www.epa.gov/grtlakes/seahome/grants/src/glosbis.htm Environmental Impact Statement (EIS)A document prepared by or for EPA which identifies and analyzes, in detail, environmental impacts of a proposed action. As a tool for decision-making, the EIS describes positive and negative effects and lists alternatives for an undertaking, such as development of a wilderness area. EPA Web site for Environmental/Biological-Related Technical Terms, www.epa.gov/grtlakes/seahome/grants/src/glosbis.htm EOYEnd of Year. Equal Credit Opportunity ActA 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. Equal Employment Opportunity (EEO)Term which refers to a variety of activities to ensure non-discrimination in hiring, promoting, and managing employees. Equal Housing Opportunity Plan (EHOP)Plan developed by Public Housing Agencies for use in Section 8 and Moderate Rehabilitation programs. EquityA homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage. A lender determines how much equity you have in your home by taking the appraised value of the home and subtracting any mortgage debt. For example, if your house is valued at $150,000 and your mortgage balance is $80,000, you have $70,000 equity in the house. Equity financingUse of buyer's or owner's funds to finance property. Equity loanA loan based on the borrower's equity in his or her home. Equity participation mortgageA mortgage whereby the lender obtains an equity in the pledged property in addition to the interest. ErosionThe loss of land by wearing action of water or wind. Errors in Credit ReportYour credit report may contain inaccuracies. The best way to ensure there are no errors in your credit report is to request copies and review the information. Since each of the main credit bureaus keeps its own records, you may want to request copies from all three: Trans Union, Equifax, and Experian. If you have been turned down for credit because of the information in your credit report, you are entitled to receive a free copy of your report within 60 days of the denial. If you haven't been denied credit, you can still request a copy of your credit report, usually for a nominal fee. If you find errors in your report, follow the directions in the credit report and contact the agencies to have the errors corrected. They will investigate the targeted items and remove incorrect information. You don't have to delay applying for a mortgage while errors in your report are being corrected. Explain the discrepancies in the report to your lender and state that the credit agency is correcting them. Escalator clauseA contract clause that provides for an upward or downward adjustment in interest, rent, or other factors to cover specified contingencies. EscrowAn 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. Escrow AccountThe account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses. An escrow account is money that is deposited with a third party -- outside the buyer and the seller -- to be used to pay various fees. A borrower typically provides funds that will pay taxes, mortgage insurance, lease payments, hazard insurance premiums, and other payments when they are due.An escrow payment by the holder of a mortgage is also known as "impounds" or "reserves" in some states. When escrow funds are used to pay taxes, hazard insurance, and other fees, it is called an escrow disbursement. Periodically, an escrow analysis will be performed to determine if current monthly deposits provide sufficient funds to pay bills when they are due. Escrow agent (escrowee)A person or corporation employed by parties to a real estate transaction to receive documents and money and deliver them in accordance with their instructions. Escrow agreement (escrow instructions)A contract between the parties to a real estate transaction to effect a settlement of the transaction in escrow. Escrow AnalysisThe periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due. Escrow CollectionsFunds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance. Escrow DisbursementsThe use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due. Escrow PaymentThe portion of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states. Establishing a Credit RecordIt is possible to establish a credit history even if you do not have a traditional credit record that shows credit card payments or payments on a student or car loan. You can build a nontraditional credit history, for example, by documenting your monthly payments to previous and current landlords; to utility companies for your gas, water and telephone services; and to insurance companies for medical, life, and automobile coverage. Your lender can provide further details on how you can effectively establish a credit record. EstateThe ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death. Estate saleA sale held to sell the property of someone who has died. Sometimes houses are sold at estate sales. Estopped certificateDocument in which the borrower verifies the remaining balance and interest rate of a loan. EstoppelA doctrine of law that prevents a person from asserting rights inconsistent with his prior words or conduct. EvictionThe lawful expulsion of an occupant from real property. 

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