Glossary of Terms

A - B - C - D - E - F - G - H - I - J - K - L - M - N -
O -P - Q - R - S - T - U - V - W - X - Y - Z

A

ACCELERATION - A provision in a mortgage that gives the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed.

ADJUSTABLE-RATE MORTGAGE (ARM) - A mortgage whose interest rate changes over time based on an index.

AMORTIZATION - The gradual repayment of a mortgage by installments.

AMORTIZATION SCHEDULE - A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.

ANNUAL PERCENTAGE RATE (APR) - The total yearly cost of a mortgage stated as a percentage of the loan amount; includes the base interest rate, primary mortgage insurance, and loan origination fee (points).

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

APPRAISAL - A professional opinion of the market value of a property.

APPRECIATION - An increase in the value of a house due to changes in market conditions or other causes.

ASSESSED VALUE - The valuation placed upon property by a public tax assessor for purposes of taxation.

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).

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.

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.

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B

BALANCE SHEET - A financial statement that shows assets, liabilities, and net worth as of a specific date.
balloon mortgage
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term. More

BALLOON PAYMENT - The final lump sum payment that is made at the maturity date of a balloon mortgage.

BANKRUPT - A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of 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 relieve the debts by transferring his or her assets to a trustee.

BEFORE-TAX INCOME - Income before taxes are deducted.

BENEFICIARY - The person designated to receive the income from a trust, estate, or a deed of trust.

BEQUEATH - To transfer personal property through a will.

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 earnest money, under which a buyer offers to purchase real estate.

BIWEEKLY MORTGAGE PAYMENT - 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. More

BLANKET INSURANCE POLICY - A single policy that covers more than one piece of property (or more than one person).

BLANKET MORTGAGE - The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

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 form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."

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.

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C

CALL OPTION - A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason

CAP - A provision of an ARM limiting how much the interest rate or mortgage payments may increase.

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. More

CAPITAL EXPENDITURE - The cost of an improvement made to extend the useful life of a property or to add to its value.

CAPITAL IMPROVEMENT - Any structure or component erected as a permanent improvement to real property that adds to 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 RESERVE - A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two mortgage payments.

CLEAR TITLE - A title that is free of liens and legal questions as to ownership of the property.

CLOSING - The occasion where a sale is finalized; the buyer signs the mortgage, and closing costs are paid. Also called "settlement".

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 realtors® often provide estimates of closing costs to prospective homebuyers. Also called ‘settlement costs".

CLOUD ON TITLE - Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.

COMMITMENT LETTER - A formal offer by a lender stating the terms under which it agrees to loan money to a home buyer.

COMMUNITY HOME BUYER’S PROGRAM - An alternative financing option that allows households of modest means to qualify for mortgages using nontraditional credit histories, 33 percent housing-to-income and 38 percent debt-to-income ratios, and the waiver of the usual two payment cash reserve at closing.

COMMUNITY HOME IMPROVEMENT MORTGAGE - loan - An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs.

COMMUNITY LAND TRUST MORTGAGE LOAN - An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community I-and Trust, and to lease the land on which the property stands.

CONDOMINIUM - A form of property ownership in which the homeowner holds title to an individual dwelling unit plus an interest in common areas of a multi-unit project.

construction loan - A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

CONTINGENCY - A condition that must be met before a contract is legally binding.

CONVENTIONAL MORTGAGE - Any mortgage that is not insured or guaranteed by the federal government.

CONVERTIBLE ARM - An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.

COOPERATIVE - A form of common property ownership in which the residents of an apartment building do not own their own units, but rather own shares in the corporation that owns the property.

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 which, if violated, can result in foreclosure.

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.

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D

DEED - The legal document conveying title to a property.

deed-in-lieu - A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."

DEED OF TRUST - The document used in some states instead of a mortgage; title is conveyed to a trustee rather than to the borrower.

DEFAULT - Failure to make mortgage payments on a timely basis or to comply with other conditions of a mortgage.

DELINQUENCY - A loan in which a payment is overdue but not yet in default.

DEPOSIT - Cash paid to the seller when a formal sales contract is signed.

DEPRECIATION - A decline in the value of property; the opposite of appreciation.

DISCOUNT POINTS - See Points

DOWN PAYMENT - The part of the purchase price which the buyer pays in cash and does not finance with a mortgage.

DUE-ON-SALE CLAUSE - A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage.

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E

EARNEST MONEY - A deposit given to the seller to show that a prospective buyer 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 shorter or longer 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.

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 - Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

EQUAL CREDIT OPPORTUNITY ACT (ECOA) - A federal law that prohibits lenders from denying mortgages on the basis of the borrower’s race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

EQUITY - The difference between the market value of a property and the homeowner’s outstanding mortgage balance.

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.

ESCROW ACCOUNT - The account in which a mortgage servicer holds the borrower’s escrow payments prior to paying property expenses

ESCROW ANALYSIS - The 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 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 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.

ESTATE - The 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.

EVICTION - The lawful expulsion of an occupant from real property.

EXAMINATIONOF TITLE - The report on the title of a property 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 for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.

EXECUTOR - A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.

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F

FAIR CREDIT REPORTING ACT - A consumer protection law that sets up a procedure for correcting mistakes on one’s credit record.

FAIR MARKET VALUE - The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

FANNIE MAE - A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Over the past 31 years, Fannie Mae has provided nearly $2.8 trillion of mortgage financing for over 34 million families.

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.

FHA LOAN - A mortgage that is insured by the Federal Housing Administration. 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.

FIRM COMMITMENT - A lender’s agreement to make a loan to a specific borrower on a specific property.

FIRST MORTGAGE- The mortgage that has first claim in the event of default.

FIXED-RATE MORTGAGE - A mortgage in which the interest rate does not change during the entire term of the loan.

FLOOD INSURANCE - Insurance required for properties in federally designated flood areas.

FORBEARANCE - The lender’s postponement of foreclosure to give the borrower time to catch up on overdue payments.

FORECLOSURE - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

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G

GRADUATED PAYMENT MORTGAGE - A mortgage that starts with low monthly payments that increase at a predetermined rate.

GROWING-EQUITY MORTGAGE (GEM) - A fixed-rate mortgage that provides scheduled payment increases over an established period of time, with the increased amount of the monthly payment applied directly toward reducing the remaining balance of the mortgage.

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H

HAZARD INSURANCE - Insurance to protect the homeowner and the lender against 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 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.

HOMEOWNER’S INSURANCE - An insurance policy that combines liability coverage and hazard insurance.

HOMEOWNER’S WARRANTY - A type of insurance that covers repairs to specified parts of a house for a specific period of time.

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INTEREST - The fee charged for borrowing money.

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 CAP - A provision of an ARM limiting how much interest rates may increase per adjustment period. See also Lifetime cap.

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.

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J

JOINT TENANCY - A form of co-ownership giving each tenant equal interest and equal rights in the property, including the right of survivorship.

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L

LATE CHARGE - The penalty a borrower must pay when a payment is made after the due date.

LEASE-PURCHASE MORTGAGE LOAN - An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy, and with each month’s rent payments consisting of PITI payments on the first mortgage, plus an extra amount that is earmarked for a savings account in which money for a down payment accumulates.

LIEN - A legal claim against a property that must be paid when the property is sold.

LIFETIME CAP - A provision of an ARM that limits the total increase in interest rates over the life of the loan.

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. See home equity line of credit.

LIQUID ASSET - A cash asset or an asset that is easily converted into cash.

LOAN COMMITMENT - See Commitment letter.

LOAN SERVICING - The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

LOAN-TO-VALUE RATIO (LTV) - The relationship between the amount of a mortgage and the total value of the property.

LOCK-IN - A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

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M

MARGIN - The set percentage the lender adds to the index rate to determine the interest rate of an ARM.

MORTGAGE - A legal document that pledges a property to the lender as security for payment of a debt.

MORTGAGE BANKER - A company that originates mortgages exclusively for resale in the secondary market.

MORTGAGE BROKER - A company that for a fee matches borrowers with lenders.

MORTGAGE INSURANCE - See Private mortgage insurance.

MORTGAGE INSURANCE PREMIUM (MIP) - The fee paid by a borrower to FHA or a private insurer for mortgage insurance.

MORTGAGE NOTE - A legal document obligating a borrower to repay a loan at a stated interested rate during a specified period of time; the agreement is secured by a mortgage.

MORTGAGEE - The lender in a mortgage agreement.

MORTGAGOR - The borrower in a mortgage agreement.

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N

NEGATIVE AMORTIZATION - Payment terms under which the borrower’s monthly payments do not cover the interest due; as a result, the loan balance increases.

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 (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments.

NET WORTH - The value of all of a person's assets, including cash, minus all liabilities.

NO CASH-OUT REFINANCE - A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage).

NONLIQUID ASSET - An asset that cannot easily be converted into cash.

NOTE - A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time. More

NOTE RATE - The interest rate stated on a mortgage note.

NOTICE OF DEFAULT - A formal written notice to a borrower that a default has occurred and that legal action may be taken.

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O

ORIGINAL PRINCIPAL BALANCE - The total amount of principal owed on a mortgage before any payments are made.

ORIGINATION FEE - A fee paid to a lender for processing a loan application; it is stated as a percentage of the mortgage amount, or points.

OWNER FINANCING - A purchase in which the seller provides all or part of the financing.

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P

PAYMENT CAP- A provision of some ARMs limiting how much a borrower’s payments may increase regardless of how much the interest rate increases; may result in negative amortization.

PITI - Stands for principal, interest, taxes, and insurance. The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.

PITI RESERVES - A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

POINTS - A one-time charge by the lender to increase the yield of the loan; a point is 1 percent of the amount of the mortgage.

POWER OF ATTORNEY - A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

PREARRANGED REFINANCING AGREEMENT - A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.

PREFORECLOSURE SALE - A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.

PREPAYMENT - Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

PREPAYMENT PENALTY - A fee charged to a borrower who pays off a loan before it is due.

PREQUALIFICATION - The process of determining how much money a prospective home buyer will be eligible to borrow before a loan is applied for.

PRINCIPAL The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.

PRIVATE MORTGAGE INSURANCE (PMI) - Insurance provided by non-govenment insurers that protects lenders against loss if a borrower defaults.

PROMISSORY NOTE - A written promise to repay a specified amount over a specified period of time.

PUBLIC AUCTION - A meeting in an announced public location to sell property to repay a mortgage that is in default.

PURCHASE AND SALE AGREEMENT - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

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Q

QUALIFYING RATIOS - Guidelines applied by lenders to determine how large a loan to grant a home buyer.

QUITCLAIM DEED - A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

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R

RADON - A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

RATE-IMPROVEMENT MORTGAGE - A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

RATE LOCK - See Lock-in.

REAL ESTATE AGENT - A person licensed to negotiate and transact the sale of real estate on behalf of the owner.

REAL ESTATE SETTLEMENT PROCEDURES ACT - A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

REFINANCING - The process of paying off one loan with the proceeds from a new loan secured by the same property.

REHABILITATION MORTGAGE - A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

RENT WITH OPTION TO BUY - See Lease-Purchase Mortgage Loan

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S

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.

SELLER TAKE-BACK - An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.

SETTLEMENT - See Closing.

SETTLEMENT SHEET - The computation of costs payable at closing which determines the seller’s net proceeds and the buyer’s net payment.

SUBSIDIZED SECOND MORTGAGE - An alternative financing option for low-and moderate-income households that also includes a down payment and a first mortgage, with funds for the second mortgage provided by city, county, or state housing agencies, foundations, or nonprofit corporations. Payment on the second mortgage is often deferred, carries no or low interest rates, and part of the debt may be forgiven for each year the family remains in the home.

SURVEY - A drawing showing the legal boundaries of a property.

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T

TENANCY BY ENTIRETY - A type of joint ownership of property available only to a husband and wife.

TENANCY IN COMMON - A type of joint ownership in a property without right of survivorship.

THREE/TWO (3/2) OPTION - An alternative financing plan that enables households whose earnings are no more than 115 percent of the median income in their regional area to make a 3 percent down payment with their own funds, coupled with a 2 percent gift from a relative or a 2 percent grant or unsecured loan from a nonprofit or state or local government program.

TITLE - A legal document establishing the right of ownership.

TITLE COMPANY - A company that specializes in insuring title to property.

TITLE INSURANCE - Insurance to protect the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property.

TITLE SEARCH - A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

TRANSFER TAX - State or local tax payable when title passes from one owner to another.

TRUTH-IN-LENDING - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.

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U

UNDERWRITING - The process of evaluating a loan application to determine the risk involved for the lender.

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V

VA LOAN - A loan that is guaranteed by the Veterans Administration.

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W

WHAT-IF ANALYSIS - An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.

WHAT-IF SCENARIO - A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.

WRAPAROUND MORTGAGE - A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

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