Glossary of Mortgage Related Words and Terms



When a property, whether owned or leased, is willingly surrendered without a newly appointed owner or tenant.

Ability to Repay (ATR)

An individual's financial capacity to make good on a debt.

Absentee Owner

An owner whose property is occupied and managed by someone else.

Absolute Auction

An auction that sells property to the highest bidder regardless of the winning bid amount.

Absorption Rate

The estimated rate at which homes are sold in a specific real estate market.

Abstract Exam

A test carried out by the individual or business buying a piece of land. The exam reveals historical insights about the property.

Acceleration Clause

When a mortgage stipulates that the lender can request that the borrower pay the whole balance if they miss a monthly payment.


The signing party's required approval of a contract offer's terms.

Accepted Contract

A legal agreement signed by both seller and buyer that establishes a sale's terms.

Additional Principal Payment

When an individual makes a large payment that is more than the scheduled amount due, so as to lessen the outstanding amount of the loan.

Adjustable Rate Mortgage (ARM)

Also known as an ARM, an adjustable rate mortgage gives the lender a chance to change the interest rate throughout the course of the loan. These rates generally have a 'rate change cap' and a 'lifetime cap.' A margin and index determine the interest rate changes, which mean the adjustment will reflect current market conditions. These terms are explained in an ARM Program Disclosure, which every lender is required to provide those who apply for an adjustment rate mortgage.

Adjusted Basis

A sum reached by adding the initial price of the property and any improvement expenses, minus any property devaluation.

Adjustment Date

When the interest rate shifts in regards to an ARM.

Adjustment Period

The time that passes within the adjustment dates for an ARM.

Administrative Fee

The cost of preparing a loan request that a lender charges prospective buyers, often called a lender fee.


A probate court-appointed individual who determines what happens to the estate of a person who died without leaving a will.

Affordability Analysis

A comprehensive examination of your ability to pay for a home. An affordability analysis looks at the money in your bank, any debts you owe, your current income, the mortgage you want, the location of the home you're looking to purchase, as well as the closing costs you may need to pay.


Any add-on to a property that makes it more charming and attractive to the occupant. These could be natural (scenic views, water access) or man-made (tennis courts, swimming pools, red centers.)

American Land Title Association (ALTA)

Is a trade association representing the title insurance industry. Founded in 1907, ALTA also focuses on a property's abstract of title, which ties the history of the title to a particular piece of real estate.


A monthly loan repayment method that affords the borrower an opportunity to lessen their debt.

Amortization Schedule

A mortgage loan payment schedule. An amortization schedule details all payments made and any remaining balances.

Amortization Term

The time it takes (in months) to amortize the loan. For example, the amortization term for a 25-year fixed rate mortgage is 300 months.


To pay back a mortgage with installments that comprise of the principal amount plus interest.

Annual Fee

The annual fee that is charged for a line of credit until the loan is paid off.

Annual Mortgagor Statement

A report detailing all amounts paid in taxes and interest over the course of a year, along with the year-end mortgage loan balance.

Annual Percentage Yield (APY)

Is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow for a reasonable, single-point comparison of different offerings with varying compounding schedules.

Annual Percentage Rate (APR)

Developed by the federal government to simplify the process of comparing mortgage loan interest rates for potential buyers.


A fixed income amount, either paid yearly or at agreed upon intervals.


The financial form a lender requires a borrower to fill out when applying for a mortgage.


An examination conducted by an expert to decide how much a home is worth.

Appraisal Fee

Usually charged to the borrower by the lender, in exchange for a diligent interior and exterior inspection to confirm the value of the house is in line with the loan amount requested. The appraisal is normally conducted by an expert who understands the area's home values.

Appraisal Management Company (AMC)

An independent entity through which mortgage lenders order residential real estate valuation services for properties on which they are considering extending loans to homebuyers.

Appraised Value

The property's market value based on the appraiser's analysis.


The inspector who has experience, education and training in the analysis of property value.


When a property goes up in value.

Area Median Income (AMI)

Is the household income for the median — or middle — household in a region.

Assessed Value

For tax purposes - the value of a property determined by a public tax assessor.


For tax purposes – the process of valuing a property determined by a public tax assessor. An assessment can also mean a specific tax against the property (for example, a sewer assessment.)

Assessment Rolls

The open record of assessed property.


The individual who values a property for tax purposes, usually a public official.


A person's financial value that can come from real property, personal property or claims (bank accounts, mutual funds, trust funds, stocks, etc.)


A mortgage transfer between two people.

Assumable Mortgage

A loan that can be transferred from the home seller to the home buyer. An assumable mortgage does not need to be paid off when the home is sold. Instead, the new owner can take over the loan and is then only required to pay the seller the difference between the sales price and loan balance.


When the home seller transfers their mortgage to the home buyer. See assumable mortgage.

Assumption Clause

A clause in an assumable mortgage that permits the home buyer to take over the mortgage from the seller. Once the property has been sold, the original buyer no longer needs to pay the full loan.

Assumption Fee

Paid to the lender by the property buyer when an existing mortgage is transferred.

Attorney Opinion

Also known as a "title opinion," this is a charge associated with the title insurance that the lender requires. It is an attorney issued, public record document that lays out any charges or hindrances that may affect the property.

Attorney Witness

The closing attorney's fee when witnessing the signing of closing documents. This is a standard fee in certain states.


Someone authorized to stand in for the Power of Attorney.



The filling in of dirt on a property that has been excavated.

Backup Contract

A property purchasing contract only valid when neither party agrees to the original contract.

Balance Due at End of Loan Term

When the monthly payments on a loan do not cover the entire balance due at the end of the loan term. Any remaining balance will be due in full, also known as a "balloon" payment.

Balance Sheet

A financial account of assets, liabilities and net worth.

Balloon Mortgage

A short-term fixed-rate loan that requires smaller monthly payments and one large balloon payment at the end of the loan's term.

Balloon Payment

The amount due at the end of a loan term which covers the remaining balance of a balloon mortgage.


When an owner (person or company) surrenders part or all of their assets to a court-appointed custodian through a formal court proceeding.


When a debtor is relieved of his assets by a court-appointed trustee, in order to pay off their debt.

Basis Points (BPS)

One hundredth of one percent, used chiefly in expressing differences of interest rates.

Before-Tax Income

Money earned prior to deducting one's taxes.

Beige Book

A review conducted by the 12 regional banks of the Federal Reserve for upcoming Federal Open Market Committee meetings. This survey is carried out twice per quarter.


A person assigned to benefit from certain things.


To assign personal property to someone else through a will.


Increasing rather than simply maintaining a property's value through improvements.

Bi-weekly Payment Mortgage

A mortgage that stipulates a series of payments required by the buyer every two weeks as opposed to every month. Biweekly payments are to the amount of half a month's payment. The result is a quickly lowered loan balance and hefty interest savings.

Bill of Sale

The written account that shows a title transfer from owner to buyer.

Billing Error

Recorded monthly statement errors as set out by the Fair Credit Billing Act.


A real estate contract that confirms the right to buy property for a specified amount of time. All money used during the purchase is forfeited (unless there's a clause about a refund) if the buyer changes his or her mind, or cannot pay.

Binder Deposit

To ensure the buyer is taking the purchasing agreement seriously, this amount is paid up front when buying a house. The deposit is later deducted from the closing purchase price of the house. The binder deposit should never be an additional cost.

Blanket Insurance Policy

A protective policy that covers more than one piece of property, or more than one person.

Blanket Mortgage

A single mortgage that is secured by more than one parcel of real estate.

Bona fide

Genuine and lawful.


An interest bearing debt investment that shows a business or government's obligation through a mortgage.

Borrower (BWR)

A person or organization that takes out a loan from a bank under an agreement to pay it back later, typically with interest

Breach of Contract

The illegal violation of a contract.

Bridge Loan

Also known as a "swing loan," a bridge loan is acquired from a borrower's current property to cover the new home's cost, in the case that the current property won't be sold before the new home is purchased.


A state-trained and licensed representative who represents property owners throughout the selling and buying of real estate.


An organized outline of predicted income and expenses over a certain amount of time. These detailed plans offer useful guidelines when handling costs and profits.

Budget Category

Used when organizing a budget, these categories denote specific types of income and expenses.

Building Code

A local government's way of managing construction design and materials. These codes are reflective of regulated health and safety guidelines.

Business Days

Legal working days according to the Truth in Lending and Electronic Fund Transfer Acts. Business days always exclude federal holidays but may include Saturdays.

Buy-down Account

An account that holds money that has been specifically set aside for mortgage payments.


When a borrower pays discount points to a lender in order to achieve a lower interest rate on a mortgage. Buydowns can be temporary (lessening the interest rate for a couple of years) or permanent, which would secure a lower interest rate over a loan's entire life.


Call Option

A home loan clause that allows the mortgagee the right to charge the mortgage due at the end of a certain time period.

Cancellation Clause

A legal clause in a contract that voids all obligations following certain events.


A clause in an ARM that prevents a sizable increase or decrease in the interest rate or payment.


  1. A business's net worth determined by the difference of its assets and liabilities.
  2. Money used to create revenue.
  3. A business or individual's total wealth.
  4. Money or assets that make up the wealth to be sold by a business or individual.

Capital Expenditures

The price of value-added property enhancements.

Capital Improvement

Any part of a permanent value-added addition to actual property.

Cash Out Refinance

A loan that has been refinanced to give the borrower additional funds that surpass the amount necessary to pay off existing mortgages on the home. This money can be used for any purpose by the borrower.

Certificate of Deposit (CD)

A bank-certified document that acts as a savings deposit. The certificate stipulates that the bank or financial institution must return the deposit along with any earnings acquired at a specified interest rate during a specified period.

Certificate of Deposit Index

A seldom used index that reveals changes to an interest rate for specific ARM plans.

Certificate of Eligibility (COE)

A federal government-issued certificate verifying the eligibility of a veteran for a loan from the Department of Veterans Affairs (VA).

Certificate of Reasonable Value (CRV)

A document issued by the Department of Veterans Affairs that confirms the highest value and amount for a VA loan.

Certificate of Title

A current owner’s legal right to his/her real property recorded in a statement by an attorney or title company.

Chain of Title

A record that includes all communications and difficulties related to a title of real property, from its earliest history to most recent happenings.

Change Frequency

Representing the frequency of payment or interest rate changes in an ARM.


Also known as personal property, chattel are any assets that are not considered real estate.

City/County Tax Stamp

A municipality-dependent local tax insisted upon when a property is sold or a new mortgage is secured.

Civilian Employment

The Labor Department’s most popular economic indicators that reveal (on a monthly basis) the number of new jobs created for individuals and the percentage of unemployed individuals.

Clear Title

A deed that has no misconceptions regarding the ownership of a property.

Clear to Close (CTC)

CTC means that the underwriter has reviewed and approved all necessary documents. Now it is time to schedule your closing, which can generally be as soon as three business days after you receive the CTC.

Close of Escrow

Also known as the settlement or property closing, the close of escrow is the meeting that finalizes the selling/buying of a piece of property.

A purchase close of escrow would include the buyer, seller, broker and lender. If it's a refinance close of escrow, the lender and borrower would be present.


See: Close of Escrow.

Closing Cost Item

The sum of numbered closing cost items (escrow, origination, underwriting and processing fees, etc.) to be paid once by the home buyer at closing.

Closing Costs

The fee to be paid at closing totaling all items linked to the buyer's new mortgage.

Closing Disclosure (CD)

The Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

Closing Statement

Also known as the "settlement statement" or "HUD-1", the closing statement details all fees related to the purchase of a piece of property.

Cloud on Title

Any property faults recorded during a title search. These could include, charges, claims or encumbrances and are impossible to remove from a title without a "quitclaim deed release."

Co-borrower (CBWR)

Any additional borrower(s) whose name(s) appear on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan.


Also known as a co-signer, this person signs a loan contract with the borrower making them equally liable for the loan's repayment.


When an insurer and another party share the hazard insurance risk.


Risked property that is put forward to secure a debt. If the borrower is unable to repay a loan according to its contract, collateral will be lost.


When neglected debt is brought forward and the collector is in his or her rights to repossess or foreclose.

Combined Loan To Value (CLTV)

Lenders use the CLTV ratio to determine the risk of default by prospective homebuyers when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and above to borrowers with a high credit rating.


A broker's percentage fee for finalizing a real estate deal or loan.

Commitment Letter

Also known as a "loan commitment," the commitment letter is a lender proposal that suggests a loan offer to the borrower and includes specified terms.

Common Area Assessments

When owners of individual units in a condominium complex or a PUD receive charges for maintenance and repairs, or to upgrade the public sections of a project.

Common Areas

The public sections of a property utilized by all tenants/owners. These might include pools, rec. centers, tennis courts, play areas and parking facilities.

Common Law

The universal laws regarding general practices in England. Some common laws are applied in the US as well.

Community Home Buyer's Program

A type of community lending, this program provides adjustable guidelines that help low and moderate-income families buy property. The model lessens the amount of cash required to buy a home. To take part in this lending scheme, borrowers are required to participate in educational sessions regarding pre-purchase home buying.

Community Land Trust Mortgage Loan

A leasing opportunity for low and moderate-income home buyers to rent the land on which the property they are buying stands. Community Land Trust is a nonprofit that improves this type of housing so that these homebuyers have an alternative financing option.

Community Property

The equal ownership of shared real estate in some western and southwestern states between husband and wife, unless the property was bought separately.


Also known as "comparable properties" or "comps," these are properties that have been recently sold and are very similar to the one being appraised (with comparable size, location and features.) They are used to assess the "approximate fair market value" of a piece of real estate.

Compound Interest

The interest paid on the starting balance and the accumulated and unpaid interest.


  1. A government-issued order to seize private property for public use.
  2. When a building is a hazard and needs to be destroyed.

Condominium (CONDO)

When a large property is split into single units, and each unit is owned by an individual, but the common space is under joint ownership by everyone.

Condominium Conversion

Converting a rental building into a condominium complex.

Condominium Hotel

A condominium complex that provides the same services a hotel would to its tenants or owners. These services might include cleaning and room services, short-term rentals and assistance desks. While the units are often individually owned, a condominium hotel often operates like a commercial hotel.

Conforming Loan

As opposed to a "jumbo mortgage," conforming loans don't go over the highest loan amount for ordinary mortgage investors. Conforming loans are generally cheaper than jumbo mortgages which go above the general loan amount.

Constant maturity Treasury (CMT)

CMT yields are often used by lenders to determine mortgage rates. The one-year constant maturity Treasury index is one of the most widely used, and is mainly used as a reference point for adjustable-rate mortgages whose rates are adjusted annually.

Construction Loan

Short-term loans applied as a way to pay for construction of a new house. The lender pays the builder as the project advances, and the borrower only pays interest on the money that has been spent on the builder. Once the home is completed, the construction loan is usually refinanced into a permanent loan.

Construction Spending

The Commerce Department's economic indicator that assesses the amount of all construction spending in the US on a monthly basis. This helps predict national numbers for new home sales and mortgages.

Consumer Confidence

A monthly survey conducted by the Conference Board of 5,000 households to measure optimism among Americans regarding their current and future situation.

Consumer Price Index (CPI)

This Federal Reserve index conducts monthly measures of living costs for most American families and is often considered a telling sign of retail purchase inflation.

Consumer Reporting Agency (CRA)

Also known as the "credit bureaus," the CRA gathers data from many credit sources and prepares reports that lenders use to assess a borrower's creditworthiness.

Consumer Sentiment

Designed to assess consumer optimism, this University of Michigan index offers a mid-month review and a month-end review.


A provision that needs to be satisfied in order for a contract to be made legal.


Verbal or written consent regarding a specific thing.

Conventional Mortgage

An uninsured, non-guaranteed mortgage.

Convertibility Clause

A clause in some ARMS that offers the borrower an opportunity to amend the ARM to a fixed-rate mortgage at a certain time during the loan's term.

Convertible ARM

An ARM that offers the borrower an opportunity to change his/her mortgage to a fixed-rate loan for the rest of the loan term provided specified conditions are met.

Cooperative (CO-OP)

A shared-type property ownership, whereby residents are given the right to live in individual units of the building.

Cooperative Corporation

A business that owns a cooperative project and awards shareholders rights to occupy the building through individual lease agreements.

Cooperative Project

A building owned by a corporation that sells shares of the value of a single unit to individuals who are held to a similar or identical lease agreement as the title suggests.


See: Co-maker.

Cost of Deposits Index (CODI)

CODI is the twelve month moving average of the monthly values of the 3-month certificate of deposit (CDs secondary market) rates. Due to lack of data, the 3-month CD rates are no longer published by Federal Reserve and as a result the CODI index is no longer available.

Cost of Funds Index (COFI)

COFI It looks at the average interest rates that Federal Home Loan banks have recently paid their customers. Generally, the value of the COFI is declared on the last business day of the month that follows the month listed. The Federal Home Loan Banks' 11th District COFI is most commonly used and includes banks in Arizona, California and Nevada.

Cost of Savings Index (COSI)

The COSI index is specific to Wells Fargo. It is based on the interest rates the depository subsidiaries of Wells Fargo & Company pay to individuals on certificates of deposit (CDs), also known as personal time deposits. The index is calculated using the weighted average of all the interest rates paid on CDs held by individual depositors as of the last business day of each month.

Courier/Mailing Fee

When a lender sends legal documents to a lawyer or title company, there is a courier/mailing fee.


A commitment entered into a mortgage, deed or other financial document that binds the borrower and is punishable by foreclosure if violated.


A way for a lender to help a buyer finance a property.

Credit Bureau

Also known as a "consumer reporting agency" or “credit repository,” a credit bureau aggregates individual credit information and sells it to creditors who then decide whether or not to grant loans.

Credit Grade

A grade that signifies an individual's past and current debt patterns.

Credit History

Used by lenders to determine a potential borrower's ability to repay a loan, the credit history shows an individual's entire record of debt and repayments.

Credit Life Insurance

A life insurance policy bought by borrowers who want to ensure their debt will be paid even if they pass away.

Credit Report (CR)

A history of an individual's debt repayment patterns that shows lenders if a potential borrower is likely to make loan repayments promptly.

Credit Repository

See: Credit Bureau

Credit Scoring System

A credit rating system used for credit applicants.

Credit-Related Insurance

Used to cover the repayment of debt associated with health, accident or life insurance.


The person or business to whom a debt is paid.

Customer Credit

The Federal Reserve's monthly measure of "outstanding consumer installment debt."



The amount that can be claimed by an individual not at fault for his/her own injury.


Issued by a company, a debenture is a type of unsecured loan.


An amount charged to the buyer or seller during a settlement.

Debit Card (EFT)

Also known as a "checking card," a debit card is used by individuals to make electronic fund transfers (withdrawals and purchases.)


An outstanding payment.


A publicly recorded document detailing the property ownership transfer from seller to buyer.

Deed of Trust

Also known as a "mortgage" in some states, the deed of trust offers legal security to the lender for the repayment of debt by the borrower.

Deed Stamp

A tax that is administered during a property transfer, the amount of which is dependent on each state’s municipality laws.


A process that allows a borrower to transfer the ownership of a property to the lender in order to avoid loss of the property through foreclosure.


A violation of the lender contract.


Neglecting a payment.

Delivery Fee

The delivery charge for documents sent to your lender by the title company or attorney.

Department of Veterans Affairs (VA)

A federal government agency that protects the rights of eligible veterans of the military by providing guaranteed housing mortgages.


An advance requested by the lender prior to processing a loan application. This money may or may not be refunded at a later stage.


As opposed to "appreciation," depreciation is when the value of a property declines.

Desk Top Originator (DO)

A web-based application that gives originators access to DU through a sponsoring lender.

Desk Top Underwriter (DU)

An automated program used by loan originators and underwriters to qualify a borrower through Fannie Mae guidelines for a conventional loan.


When a property is gifted via the last testament or will.


To spend money from a fund, often referred to when paying out a loan.


The mandatory revealing of information.

Discount Points

Sometimes referred to as a "lender fee," a discount point is a percentage of the loan and is secured by the lender in exchange for a lower interest rate.

Discount Rate

The Federal Reserve's interest rates charged to member banks for loans. Banks use the discount rate as a benchmark when setting their own loan rates.

Document Preparation

During the closing of a sale, there are a number of documents that need signing. The lender will prepare these documents and charge the borrower a fee.

Documentary Stamp

Some states and local governments may levy this tax when mortgages are entered into public record.


Property rights of a widow upon the death of her husband.

Down Payment

An agreed upon portion of the property price paid up front by the borrower to secure the property. This amount is paid in cash and excluded from the mortgage amount.

Draw Period

This is a specific time period when a borrower can obtain funds from a home equity line of credit. A repayment period normally follows.

Due-on-sale Clause

A stipulation in a mortgage that requires the borrower to make a full repayment if he or she sells the property that serves as collateral for the loan.

Durable Goods Orders

The Commerce Department's monthly measure of the rate of change in domestic manufacturing orders. The resulting percentage of "Durable Goods Orders" indicates the momentum in the factory sector and is often referenced.


Earnest Money

Also known as a "binder deposit," earnest money is that which the buyer pays to the seller up front in cash before the sale is finalized as a show of good faith that they are serious about buying the property. This cash is then deducted from the purchase price.

Earnest Money Agreement (EMA)

A legal contract that includes an earnest money component that generally obligates a buyer to buy and a seller to sell.


When someone besides the owner is given full access to the property.

Easement by Prescription

When a person is given permission to use a piece of property they don't own, and that arrangement turns permanent provided they adhere to stipulated demands.

Economic Base

Vital to any community's sustainability, an economic base is a geographically identified industry that provides individuals with employment opportunities.

Effective Age

The age an appraiser gives a property structure based on its physical condition and not necessarily its actual age.

Effective Gross Income

Any significant source of steady annual income, for example, a salary.

Elderly Applicant

Per the Equal Credit Opportunity Act, any individuals 62 and older.

Electronic Funds Transfer (EFT)

The electronic transfer of funds. A wire transfer is the most typical example.

Eminent Domain

A government’s legal right and practice of seizing a private property in exchange for its "fair market value," and making it usable for the public.

Employment Report

A widely-regarded indicator of ongoing "wage inflation," the employment report includes statistics on the unemployment rate, non-farm payroll, average work week and overtime.


Changes to a property that physically interfere with someone else's property.


Any change to a property title such as an easement, judgment or mortgage.


Elective coverage added to a title insurance policy that wouldn't otherwise be included.


An individual who turns ownership power over to another individual or group.

Equal Opportunity Act (ECOA)

Put in place to prevent credit discrimination against minorities, the ECOA is a set of federal regulations that demands lenders provide equal credit opportunities to people of any race, gender, color, religion, marital status, nationality, etc.


The financial stake an owner has over a piece of property, equaling the difference between the property's worth and what is owed on the mortgage.


  1. Funds held by a third party during a transaction between owner and buyer.
  2. There is also an escrow company that acts as a trusted, neutral stakeholder. They generally hold the seller's deed to the property, which they then deliver to the buyer upon payment of the sales price and fulfillment of other sale conditions.

Escrow Account

The third-party holding where a borrower’s mortgage, principle and interest payment amounts are held by a lender for a specified period until they need to be paid.

Escrow Analysis

A regular analysis of escrow accounts to verify that the deposits being made provide sufficient funds to pay taxes, insurances and other bills as they are due.

Escrow Payment

A set amount of a borrower's monthly mortgage payment that a loan servicing company holds to pay for bills that become due.


The combination of all the property an individual owns at the time of his or her death. Estate can also mean the type of interest an individual has in any "real" property.


When an individual (usually a lessee) is legally forced (usually by a lessor) to leave a property that the owner can then reclaim.

Exam Fee

An inspection fee paid to a title company to discover a property’s ownership history.

Examination of Title

A property report found in public records that isn't as complete as a full title search.

Exclusive Listing

A legal document that provides exclusive selling rights to a specified licensed real estate agent for a certain amount of time, as well as rights to the owner to sell the property without needing to pay a commission.


The administrator of an estate, either named in a will or court-appointed.

Existing Home Sales

The National Association of Realtors' monthly report on the yearly number of existing homes sold. Often linked to New Home Sales to figure out the total number of home sales, this measure reveals insights regarding future national mortgage origination volume.



The face of a building.

Face Interest Rate

The interest rate percentage that appears on the loan certificate.

Factory Orders

The Commerce Department's monthly measure of total U.S. factory orders. Provides useful information on the manufacturing sector's overall inflation and growth.

Fair Access to Insurance Requirement (FAIR)

A state-mandated program that provides fair access to insurance for individuals who are having trouble insuring their property due to the fact that insurers consider them high risk.

Fair Credit Reporting Act (FCRA)

This federal act regulates the exposure of individual credit information and installs proper processes for changing credit file errors.

Fair Market Rent

The established market value of a property if it was open to lease or rent.

Fair Market Value

The most a buyer will willingly pay, and the least a seller will willingly accept.

Fannie Mae

FNMA (Federal National Mortgage Association) is one of the biggest suppliers of home mortgage funds that is publicly owned and congressionally chartered.

Federal Deposit Insurance Corporation (FDIC)

Is the U.S. corporation insuring deposits in the United States against bank failure. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.

Federal Emergency Management Agency (FEMA)

An agency of the United States Department of Homeland Security, initially created by Presidential Reorganization Plan No. 3 of 1978. The agency's primary purpose is to coordinate the response to a disaster that has occurred in the United States and that overwhelms the resources of local and state authorities.

Federal Funds Rate

This is the interest rate that banks impose on other banks that require an overnight loan to satisfy reserve requirements. The federal funds rate is the most accurate measure of interest rate direction because the market updates it daily.

Federal Home Loan Mortgage Corporation (Freddie Mac) (FHLMC)

FHLMC is a stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans.

Federal Housing Finance Agency (FHFA)

A U.S. government agency created by the Housing and Economic Recovery Act of 2008 that regulates the secondary mortgage market by overseeing the activities of Fannie Mae, Freddie Mac and the 12 federal home loan banks.

Federal Open Market Committee (FOMC)

The Federal Reserve System's policy committee that establishes financial policy objectives intended for immediate use. The FOMC committee includes seven Federal Reserve Board governors and five Federal Reserve Bank presidents.

Fee Simple

Complete property ownership. This is the most interest one can have in real estate.

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 (Federal Housing Administration)

An area of the U.S. Department of Housing and Urban Development (HUD) that provides mortgage insurance on loans granted by FHA-approved lenders.

FHA Co-insured Mortgage

When the FHA and the lender share the risk of loss if a homeowner defaults.

FHA Mortgage

Also known as "government mortgages," an FHA mortgage is one that is insured by the FHA.

Finance Charge

The complete dollar cost of credit.

Finder's Fee

The fee a mortgage broker charges an interested borrower when finding them a mortgage.

Firm Commitment

When a bank or other lending institution commits to a loan agreement with a borrower regarding a specific property.

First Mortgage

Usually considered the primary loan against a property, the first mortgage is the initial loan entered into the public record.

First Time Home Buyer (FTHB)

First Time Home Buyer.

Fixed Installment

A set monthly repayment towards a mortgage loan that covers principal and interest.

Fixed Rate Mortgage

A mortgage that guarantees a set rate on the monthly principal and interest payments for the loan's life (either 15 or 30 years).


Permanent additions or improvements made to a property.


An interest rate that hasn't been "locked down" or guaranteed yet by the lender. The time during which the rate can still change is referred to as "floating."

Flood Certification

A relied-upon measure of assessing if a property is situated in a "flood plain" (i.e. an area likely to experience flooding). Flood plains are determined by the federal government. Lenders are then able to deduce whether a mortgage will require flood insurance.

Flood Insurance

Required by law for properties determined to be flood plains by the federal government, flood insurance protects homeowners from flooding or high water damage costs.


When a borrower must default on a property they can no longer afford, the legal process of them dissolving ownership is called "foreclosure." The property is then sold at a public auction, and the money made is used to pay back the remainder of the loan.


When a contract is breached, and money or other valuables are forfeited.

Freddie Mac

FHLMC (Federal Home Loan Mortgage Corporation) is one of the biggest suppliers of home mortgage funds that is publicly owned and congressionally chartered.

Fully Amortized ARM

An ARM with enough monthly payments to cover the remaining principal balance during the amortization term.



When the financial or property value goes up.

Gap Loan

Also known as a "bridge" or "swing loan," a gap loan is a temporary financing application that takes care of the period between when a buyer purchases a new home and sells their previous property (or gains funds from another receipt).

Garden Apartment

An apartment unit that includes access to a garden or lawn at no extra charge.

Gated Community

A private housing development that usually includes security guards and fences or gates.

Good Faith Estimate (GFE)

Within three days of receiving a loan application, lenders are required by law (under RESPA) to disclose an estimate of the closing costs to the buyer.

Government Mortgage

Mortgages that are backed by the VA or insured by the FHA.

Government National Mortgage Association (GNMA)

Also known as "Ginnie Mae," the GNMA is a HUD owned corporation established in 1968 to oversee the special assistance loan program.

Government Sponsored Enterprise (GSE)

A government-sponsored enterprise (GSE) is a quasi-governmental entity established to enhance the flow of credit to specific sectors of the U.S. economy.


A grant is a non-repayable fund that is used to secure a real property transfer.


The receiver of property.


The provider of property.

Gross Domestic Product (GDP)

The Commerce Department's quarterly measure of all economic activity. The GDP percentage changes at an annualized rate to indicate the total growth rate of economic output.

Gross Margin

Is the difference between revenue and cost of goods sold divided by revenue, expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold.

Gross Monthly Income (GMI)

  1. An individual's total personal income, before accounting for taxes or deductions.
  2. A company’s revenue minus cost of goods sold. Also called gross profit and, when it is expressed as a percentage of revenue, gross margin.

Gross Profit

Is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit = revenue minus the cost of goods sold. Also called "gross margin," "sales profit" and "gross income".

Ground Rent

The price of land when it's purchased as a "lease-hold" estate as opposed to a "fee simple" estate.

Group Home

A free or low-cost residential home for people who require long-term shelter and support.

Growing Equity Mortgage (GEM)

A fixed-rate mortgage that has payment increases over a certain period that are immediately applied to the outstanding principal balance.

Guarantee Mortgage

A third-party guaranteed home loan.


Habendum Clause

The part of a deed that specifies the granted amount of a property.

Half Bath

A home bathroom that doesn't include a shower or bathtub – just a sink and toilet.


The remaining loan balance when the loan term goes beyond that of the lease.

Hazard Insurance

Also known as "homeowner's insurance," hazard insurance guarantees a buyer against hazardous damages (e.g. wind or fire).

Home Equity Combined Loan-to-Value (HCLTV)

A ratio that is used when a mortgage financing package includes home equity lines that are potential liens. HCLTV is developed by dividing the sum of the original loan amount of the first mortgage, the amount of the HELOC (whether or not there have been any draws), and the unpaid principal balance of all other subordinate financing by the lower of the property’s sales price or appraised value.

Home Equity Conversion Mortgage (HECM)

Usually referred to as a reverse annuity mortgage, what makes this type of mortgage unique is that instead of making payments to a lender, the lender makes payments to you. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. 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.

Home Equity Line of Credit (HELOC)

A type of property loan, that is sent to the borrower through multiple advances until a limit is eventually reached that is based on the borrower’s max percentage of property equity.

Home Equity Loan

A type lump-sum loan for a homeowner to use for non-housing costs.

Home Inspection

Usually requested by the homebuyer, a home inspection includes a full examination and evaluation of the property's physical condition.

Home Ownership and Equity Act (HOEPA)

The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

Homeowner's Insurance

See “Hazard Insurance”.

Homeowner's Warranty

An insurance policy provided by the contractor or seller for home repairs that take place during an agreed-upon amount of time.

Homeowners Association

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

Fees associated with the continued work of a development's homeowners’ association.

Housing Finance Agency (HFA)

Government agency created by the Housing and Economic Recovery Act of 2008 that regulates the secondary mortgage market by overseeing the activities of Fannie Mae, Freddie Mac and the 12 federal home loan banks.

Housing Ratio

Also known as a "front-end" or "top" ratio, the housing ratio is a common calculation used by mortgage providers to decide what type of loan a borrower can obtain and the worth of that loan. It is determined by dividing the monthly housing expense by the individual's monthly gross income.

Housing Starts

The Commerce Department's widely used indicator of residential construction activity.


HUD, also known as the U.S. Department of Housing and Urban Development, guarantees certain standards are met on home mortgage loans created by lenders.

HUD Median Income

The HUD's estimate of the average family’s income in a specific statistical area (county or metropolitan).

HUD-1 Statement

Also known as the "closing statement" or "settlement statement," this statement details the financial intricacies associated with a specific property transfer.



Having inadequate cash to meet current obligations. Real property is considered an illiquid investment because of the time and effort required to convert it to cash.

Implied Agency

Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship.

Implied Contract

A contract created by actions but not necessarily written or spoken.

Impound Account

A fund set aside for future needs, such as an escrow or reserve account.


An impound refers to the funds a mortgagor pays to the lender along with their monthly principal and interest payments for the payment of real estate taxes and hazard insurance. This is also referred to as an escrow account. The money is held by the lender to make payments when they are due.

In-file Credit Report

A computer-generated report containing credit and legal information obtained from one of the main credit bureaus.

Income Property

Real estate developed and improved to produce steady income.

Independent Dispute Resolution (IDR)

In 2016 Fannie Mae and Freddie Mac implemented an independent dispute resolution process for resolving repurchase disputes. The program enables lenders to submit unresolved loan level disputes to a neutral third party arbitrator after the appeal and escalation processes have been exhausted.


A published interest rate used to establish the interest rate offered on an Adjustable Rate Mortgage (ARM). Some of the most common indices are treasury bills, treasury securities, London Inter-Bank Offering Rates (LIBOR) and the Cost of Funds Index (COFI).

Index of Leading Indicators

An index of eleven indicators designed to forecast the strength of the economy six to nine months in the future. Frequency: monthly. Source: Commerce Department.

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.

Industrial Production

A fixed-weight measure of physical output of the nation's factories, mines and utilities. Monthly percent changes in the index reflect the rate of change in output. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. Frequency: monthly. Source: Federal Reserve.


An increase in the amount of money or credit available relative to the amount of goods or services available. Inflation causes an increase in the general price level of goods and services. Over prolonged periods, inflation can reduce the purchasing power of a dollar, making it worth less.

Initial Interest Rate

The original, starting interest rate of a loan at the time of closing. This rate changes for an adjustable rate mortgage (ARM). Sometimes called a teaser rate.


A regularly scheduled periodic payment that a borrower agrees to make to a lender.

Installment Loan

Borrowed money that is repaid in equal periodic payments. Cars and furniture are often paid for with installment loans.

Insurable Title

A property title that a title insurance company agrees to insure against defects and claims.


A form of contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy. The periodic payments are known as insurance premiums.

Insurance Binder

A document stating that insurance is only temporarily in effect. Because the coverage will expire by a certain date, a permanent policy must be obtained prior to the expiration date.

Insured Mortgage

A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.


The cost of the use of money.

Interest Accrual Rate

The rate at which interest accrues on a mortgage. Usually, it is also the rate used to calculate the monthly payments.

Interest Only (IO)

Is a type of mortgage in which the mortgagor is only required to pay off the interest that arises from the principal that is borrowed. Because only the interest is required to be paid, the interest payments usually remain fairly constant throughout the term of the mortgage. If the borrower never pays more than the minimum payment, the principal never goes down.

Interest Rate

The cost of borrowing a lender's money. Interest takes into account the risk and cost to the lender for a loan. The interest rate on a fixed rate mortgage depends on the going market rate and how many discount points you pay up front. An adjustable rate mortgage’s interest is a variable rate made up of the index and the lender's margin.

Interest Rate Buy-down Plan

An arrangement where the property seller, borrower or other party deposits money to an account so that it can be released each month to reduce the borrower's interest rate or monthly payments during a specified period of a loan.

Interest Rate Ceiling

The maximum interest rate for an adjustable rate mortgage (ARM), as specified in the mortgage loan note.

Interest Rate Floor

The minimum interest rate for an adjustable rate mortgage (ARM), as specified in the mortgage loan note.

Internal Revenue Service (IRS)

Is a bureau of the Department of Treasury that is tasked with the enforcement of income tax laws and oversees the collection of federal income taxes in the United States.

Investment Property

A property that is not occupied by the owner.



An element of risk or danger.

Joint Account

A credit account held by two or more people so that all can use the account and all assume legal responsibility to repay.

Joint and Several Liability

A situation whereby a creditor can demand full repayment from any and all borrowers. Each borrower is liable for the full debt, not just the prorated share.

Joint Tenancy

A form of co-ownership that gives each tenant equal, undivided interest and equal rights in the property, including the right of survivorship.

Joint Venture

An agreement between two or more parties who invest in a property or business.


A decree made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.

Judgment Lien

A lien on the property of a debtor resulting from a judgment.

Judgment Search Fee

A fee charged by a title company to search the public record for judgments filed against a property owner or borrower that could ultimately encumber the title of the property.

Judicial Foreclosure

Type of foreclosure proceeding used in some mortgage states that is handled like a civil lawsuit and conducted entirely under the direction of a court.

Jumbo Mortgage

A loan that exceeds the maximum loan amount allowed by the most common mortgage investors. The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage. Also known as a non-conforming loan.


Keogh Plan

A tax-deferred pension account designated for employees of unincorporated businesses or for persons who are self-employed.


A payment sometimes required by a mortgage loan in addition to normal principal and interest.


An independent stand from which merchandise is sold.



Undue delay or negligence in asserting one's legal rights.


Any part of the surface of the earth.

Land Banking

The business of buying land that is not currently needed for use.

Land Contract

A property installment selling agreement whereby the purchaser may occupy and use the land, but no deed is given by the seller until a specified part of the sales price has been paid.

Last Paid Installment (LPI)

The due date of the last paid installment that had been collected for the mortgage/debt.

Late Charge

The penalty a borrower must pay when a payment is made after the stated due date.

Late Payment

A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.


A written contract between a property owner and a tenant that expresses the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Lease-purchase Mortgage Loan

A creative financing option that allows homebuyers to lease a home with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance, plus an extra amount that is deposited into a savings account created for a down payment.

Leasehold Estate

A way of holding title to a property wherein the mortgagor does not actually own the property, but instead has a long-term recorded lease on it.

Legal Description

A legal property description that is sufficient to locate and identify the property without verbal testimony.


The bank, mortgage broker, or financial institution providing the loan funds to a borrower.

Lender Fees

Fees that are kept by the lender to cover some of their expenses and to meet their profitability goals. Typically fees such as origination fees, discount points, processing/administration fees, underwriting fees and document preparation fees are lender fees. This is the area of fees that you should compare very closely from lender to lender before making a decision.

Lender Paid Mortgage Insurance (LPMI)

A variety of mortgage insurance in which your mortgage lender pays your mortgage insurance premium upfront in a lump sum and passes on the cost to you in the form of a higher interest rate. With LPMI, the interest rate is often one-quarter to half a percentage point higher than it would be in a comparable borrower paid mortgage insurance loan, although this is not always the case.


A person or company who signs a lease to get temporary use of property.


A person or company who provides temporary use of property, usually in return for periodic payment.


A person's financial obligations including both long-term and short-term debt, as well as any other amounts that are owed to others.

Liability Insurance

An insurance policy that offers protection against claims that a property owner's negligence resulted in bodily injury or property damage to another party.

Liability on an Account

Legal responsibility to repay debt.


See London Inter-bank Offered Rate.


A loan secured by real estate. An encumbrance against a property for money due. The lien can be voluntary, such as a mortgage, or involuntary, such as a judgment.

Lien Certificate

A certificate to verify there are no claims by one person on the property of another as security for money owed.

Lifetime Interest Rate Cap

On an adjustable rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the term of the loan.

Lifetime Payment Cap

On an adjustable rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the term of the loan.

Limited Liability Company (LLC)

Is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.

Line of Credit (LOC)

An agreement by a financial institution to extend credit up to a certain amount for a certain time to a specified borrower.

Liquid Asset

An asset that is easily converted into cash.


Borrowed money that is usually repaid with interest.

Loan Commitment

A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a commitment letter.

Loan Level Price Adjustment (LLPA)

Is a risk-based fee assessed to mortgage borrowers using a conventional mortgage. Loan-level pricing adjustments vary by borrower, based on loan traits such as loan-to-value (LTV), credit score, occupancy type, and number of units in a home.

Loan Origination Software (LOS)

See “loan origination system”

Loan Origination System (LOS)

The system or software through which a borrower’s loan is processed.

Loan Originator (LO)

A mortgage originator is an institution or individual that works with a borrower to complete a mortgage transaction. It can be either a mortgage broker or a mortgage banker, and is the original mortgage lender. Mortgage originators.

Loan Prospector (LP)

A computer underwriting system supported by Freddie Mac that evaluates characteristics of loan applications such as the borrower’s financial and credit history as well as information about the property to assist in determining if the application should be approved.

Loan Term

The number of months that you will make monthly payments. If the loan term is the same as the payment calculation term, you will pay the loan in full during the loan term and no balance will be due. If the payment calculation term is greater than the loan term, a balance or "balloon payment" may be due at the end of the loan term.

Loan to Value Ratio (LTV)

A ratio used by lenders to calculate the loan amount requested as a percentage of the value of a home. To determine the loan to value ratio, divide the loan amount by the home's value. The LTV ratio is used to determine what loan types the borrower qualifies for as well as the cost and fees associated with obtaining the loan.


Written agreement in which a lender guarantees a specific interest rate if a loan closes within a set period of time. The lock-in may also specify the number of discount points to be paid at closing.

Lock Period

The number of days that the lender will guarantee the interest rate offered for a loan. In order to hold the guaranteed interest rate for a loan, the loan closing must occur during the lock period.


Written agreement in which a lender guarantees a specific interest rate if a loan closes within a set period of time. The lock-in may also specify the number of discount points to be paid at closing.

London Inter-Bank Offered Rates (LIBOR)

An index used to establish the interest rate of some adjustable rate mortgages (ARM). LIBOR is the London Inter-Bank Offered Rates. This is the interest rate at which the highest rated banks offer to lend to one another in Eurodollars. LIBOR offers various maturities, including 1-month, 3-month, 6-month and 1-year; however, the 6-month index is most common for mortgages. LIBOR is quoted daily in the Wall Street Journal's "Money Rates".

Lot Drawing

A fee, usually associated with a survey or title policy to obtain a plat of the property to verify that there are not encroachments or easements that would affect a lender's desire to provide financing.



Activities required to compensate for wear and tear on a property.

Management Fee

The fee charged for professional property management. Usually set at a fixed percentage of total rental income generated by the managed property.

Mansion Tax

A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another, particularly for high valued properties.


The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period.

Master Association

A homeowners' association sometimes formed in a large condominium project or planned unit development (PUD) that is made up of representatives from associations covering specific areas within the project.


The date on which the principal balance of a financial instrument becomes due and payable.

Maximum Financing

Usually, a loan amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product.

Merged Credit Report (MCR)

A credit report that contains information from at least three credit repositories. Any duplicate entries are combined to provide a concise summary of your credit.

MERS Identification Number (MIN)

Is the number assigned to a mortgage that is registered with the Mortgage Electronic Registration System (MERS). The mortgagee designates an MIN, that will act as the permanent reference number with respect to the mortgage in the MERS system.

Metropolitan Statistical Area (MSA)

In the United States, a metropolitan statistical area (MSA) is a geographical region with a relatively high population density at its core and close economic ties throughout the area.

Military Classification

Military Classification refers to whether the veteran served and qualifies for VA home loan benefits as Active Duty, Reserve Service or National Guard Member.

Modified Accelerated Cost Recovery System (MACRS)

The Modified Accelerated Cost Recovery System is the current tax depreciation system in the United States. Under this system, the capitalized cost (basis) of tangible property is recovered over a specified life by annual deductions for depreciation.

Monetary Policy

Actions by the Federal Reserve System to influence the cost and availability of credit, with the goals of promoting economic growth, full employment, price stability and balanced trade with other countries.

Money Market Account

A type of savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions may apply to the withdrawal of funds.

Money Market Fund

A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and United States Treasury bills.

Monthly Treasury Average (MTA)

A financial index that is calculated by adding the 12 most recent monthly CMT values and dividing by 12. Since the MTA index is a moving average it has a lag effect.


The legal document used by a borrower to pledge their property as security in order to obtain a loan. In some areas of the country, the mortgage is called a "deed of trust".

Mortgaged Backed Security (MBS)

Is a type of asset-backed security that is secured by a mortgage-related revenue. The mortgages are sold to a group of individuals (a government agency or investment bank) that securitises, and/or packages the loans together into a security that investors can buy

Mortgage Banker

A company that originates mortgages for resale in the secondary mortgage market.

Mortgage Electronic Registration System (MERS)

A process created by the mortgage banking industry that is intended to simplify the mortgage process by using electronic commerce. MERS tracks ownership and servicing rights that are originated in the United States.

Mortgage Insurance (MI)

Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The borrower usually pays the cost of the insurance and is most often required if the loan amount is more than 80% of the home's value. Sometimes referred to as private mortgage insurance.

Mortgage Insurance Certificate (MIC)

Upon successful completion of a pre-endorsement review for mortgage insurance, an electronic Mortgage Insurance Certificate (MIC) is issued. The MIC is considered proof of one’s insurability at a given rate.

Mortgage Insurance Premium (MIP)

Amount paid by a borrower for mortgage insurance, either to a government agency, such as the Federal Housing Administration (FHA), or to a private mortgage insurance (PMI) company.

Mortgage Life Insurance

A type of term life insurance often bought by mortgagors. In the event that the borrower dies while the policy is in force, the debt is automatically repaid by insurance proceeds. Not to be confused with mortgage insurance.

Mortgage Registration Fee

A fee or tax charged by some state and local governments when a mortgage is obtained.

Mortgage Selling and Servicing Contract (MSSC)

The contract that establishes the basic legal relationship between a lender and Fannie Mae.

Mortgage Tax

A tax charged by some state or local governments that is paid to the state when a mortgage is obtained.


The person or company who provides the loan funds to the borrower.


The person who receives funds from a lender in exchange for a security interest in the property. Commonly known as the borrower.

Multifamily Mortgage

A residential mortgage on a dwelling that is designed to house more than four families, such as an apartment complex.


Name Search

A fee charged by title companies in some states to cover the cost of searching the public record for court orders against the current owner or proposed purchaser that could affect the title of the property.

National Association of Mortgage Brokers (NAMB)

An organization of mortgage brokers that describes itself as the "only national trade association representing the mortgage broker industry in the United States." It has a membership of about 27,000 and was founded in 1973.

National Association of Purchasing Management (NAPM) Survey

This prices-paid index gives insight into inflation in the manufacturing sector. A reading above 50% generally indicates that the manufacturing sector is expanding, and below 50% signifies contraction. Frequency: monthly. Source: National Association of Purchasing Management.

National Association of Realtors®(NAR)

An organization of Realtors®, devoted to encouraging professionalism in real estate activities.

National Community Land Trust Network (NCLTN)

The NCLTN is a national nonprofit membership organization of community land trusts and other organizations that promote strategic community development and permanently affordable housing to benefit lower income families throughout the United States.

National Tenant

A lessee with a presence and established reputation in most of the United States. These tenants are typically well known and usually have better credit than local tenants.

Negative Amortization (NEG AM)

A gradual increase in mortgage debt that occurs when the periodic monthly payment is not sufficient to cover the monthly principal and interest due. The amount of the deficit is added to the remaining principal balance to create negative amortization.

Net Cash Flow

The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance.

Net Closing Costs

The total closing costs quoted by a lender, less any credit or rebate that is offered.

Net Worth

The total value of all of a person's or company's assets, minus all liabilities.

New Home Sales

Reports the number of new single-family homes sold, expressed on an annual basis. Can be combined with Existing Home Sales to determine the total volume of home sales, a strong predictor of future national mortgage origination volume. Frequency: monthly. Source: Commerce Department.

No Cash Out Refinance

A refinance loan is an amount that pays off the existing mortgage balance on the property and does not provide the borrower with any cash at closing.

No Income No Asset (NINA)

A loan type that does not require the borrower to disclose his/her income or the amount of assets he/she possesses.

No Income Verification (NIV)

A loan type that requires a borrower to disclose his/her income, but does not require the borrower to document or verify his/her income.

Non-Conforming Loan

A mortgage that exceeds the maximum loan amount for the most common mortgage investors. The cost of obtaining a non-conforming mortgage is generally higher than the cost of obtaining a conforming mortgage. Also known as a jumbo loan.

Non-liquid Assets

Any assets that cannot easily be converted into cash.

Non- Owner Occupied (NOO)

A designation given to a property in which the owner does not or will not reside.

Nonpublic Personal Information (NPI)

Any "personally identifiable financial information" that a financial institution collects about an individual in connection with providing a financial product or service, unless that information is otherwise "publicly available."

Non-Profit Organization (NPO)

Is an organization with the purpose of which is something other than making a profit. A nonprofit organization is often dedicated to furthering a particular social cause or advocating for a particular point of view.

Non-refundable Internet Application Deposit

Funds required by a lender in advance of processing a loan request. Generally a deposit is collected to cover the costs of an appraisal and credit report and may or may not be refundable.

Notary Fee

A fee for a licensed notary public to certify your signature on the loan documents.


The written agreement signed by the borrower at closing that contains the promise to repay the loan. The note also contains the terms of the loan, such as interest rate, payment, and term.

Note Rate

The interest rate stated on a mortgage note. Also called nominal rate or face interest rate.

Notice of Default (NOD)

Formal written notice to a borrower that a default on a loan has occurred and that legal action may be taken.

NY Tax & Title Search

A fee charged by New York title companies or attorneys to cover the cost of searching the public record for court orders against the current owner or proposed purchaser that could affect the title of the property. The tax records are searched as well.



A person or company to whom another is bound by contract or other legal procedure.


A person or company who has engaged to perform some contract or legal procedure.

Occupancy Rate

Percentage of currently rented units in a building, neighborhood, complex, or city.


When one party expresses interest to buy or sell an asset from another party.

Offer to Purchase

An agreement between a buyer and seller to purchase real estate. An offer to purchase, also known as a binder or a sales contract, secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money that was paid is forfeited unless the binder expressly provides that it is to be refunded.

Office of Foreign Assets Control (OFAC)

A financial intelligence and enforcement agency of the U.S. Treasury Department charged with planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives.

Online Rate Locks

The ability to lock in an interest rate directly from the website of a lender. The online rate lock capability means you don't have to make telephone contact during business hours when you are ready to lock in your interest rate.

Online Status

The ability to obtain status details about the progress of your mortgage request at the website of the lender. This convenience allows you to learn about the status of your request anytime you'd like.

Open-end Lease

A lease that may involve a balloon payment based on the value of the property when it is returned.

Original Principal Balance

Total amount of principal owed on a loan before any payments are made.

Origination Fee

A fee charged by a lender as a way to cover processing expenses or to increase their profitability for originating a mortgage loan. Most commonly, the origination fee is expressed as a percent of the loan amount.

Other Fees

Fees listed as other fees cannot easily be compared to any standard fee type and should be evaluated and compared separately from the standard fees.

Owner Financing

A real property purchase transaction in which the seller provides the financing.

Owner Occupied (O/O)

A designation given to a property in which the owner does or will reside.



The monthly principal and interest payment required when repaying a mortgage in accordance with its terms.

Package Mortgage

A mortgage agreement in which the principal amount loaned is increased because personal property as well as real property serves as security.

Pad Site

A single freestanding retail site, often adjacent to a mall or larger shopping center.


Credit given, evidenced by a written obligation with property as collateral.

Partial Payment

A loan payment that is not great enough to cover the scheduled monthly payment on a mortgage.

Payment Change Date

The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). The payment change date usually occurs in the month immediately after the adjustment date.

Periodic Payment Cap

On an adjustable rate mortgage (ARM), a limit on the amount that payments can increase during a single adjustment period.

Personal Income

Economic indicator that measures the total income of all Americans from all sources, and is reported both before and after taxes. Also reports personal spending and personal savings. The level of spending can be used as an indicator of consumer optimism. Frequency: monthly. Source: Commerce Department.

Personal Property

Any and all property that is not real property.

Planned Unit Development (PUD)

A housing project that includes common property that is owned and maintained by a homeowners association for the benefit and use of the individual unit owners.

Plat Drawing & Conservation Fee

A fee charged by title companies in some states for obtaining a map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements. This drawing is required to obtain title insurance.

Plat Registration

A fee charged by title companies in some states to review the registration of a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.


Fees that are collected by the lender in exchange for a lower interest rate. Commonly called discount points, each point is equal to 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up-front cost of the points to the monthly savings that result from obtaining the lower rate.

Power of Attorney

A written legal instrument that authorizes another person to act on one's behalf. A power of attorney can grant either complete or limited authority.

Pre-foreclosure Sale

A process in which the lender allows a borrower to avoid foreclosure by selling the property for less than the amount that may be owed to the lender.


Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.


Expenses of property ownership or expenses incurred while obtaining a mortgage that must be paid in advance. Prepaids typically include real estate taxes and hazard insurance.


Any amount that is paid to reduce the principal balance, not interest, of a loan before the due date.

Prepayment Penalty (PPP)

A monetary penalty charged by a lender if all or part of a loan is paid off before it is due.

Price Adjusted Loan (PAL)

See “Price Level Adjusted Mortgage”

Price Level Adjusted Mortgage (PLAM)

A special type of graduated-payment mortgage that adjusts for inflation. The interest rate of a price level adjusted mortgage (PLAM) does not change, but the outstanding principal is changed periodically based on the inflation rate.

Primary Residence (PR)

Designation given to a property in which the owner does or will reside as his/her primary residence.

Prime Rate

The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.


The actual balance, excluding interest, of a mortgage loan. Also refers to the amount of the monthly mortgage payment that will be applied to the actual balance.

Principal, Interest Taxes and Insurance (PITI)

(P)rincipal, (I)nterest, (T)axes, and (I)nsurance is a reference to the total monthly payment required to repay a mortgage in accordance with its term as well as monthly escrow payments for taxes and insurance.

Principal & Interest (P & I)

The payment required to repay a mortgage in accordance with its terms. Sometimes referred to as "P&I".

Principal Balance

The outstanding balance of principal on a loan. Principal does not include interest or fees.

Private Mortgage Insurance (PMI)

Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The cost of the insurance is usually paid by the borrower and is most often required if the loan amount is more than 80% of the home's value. Sometimes referred to as mortgage insurance.

Processing/Administration Fee

A fee charged by a lender to cover the administrative costs of processing a loan request.

Producer Price Index (PPI)

Measures the average level of prices of a fixed basket of goods received in primary markets by producers. Monthly percent changes reflect the rate of change in such prices. Changes in the PPI are widely followed as an indicator of commodity inflation. Frequency: monthly. Source: Labor Department.


An economic measure of output per unit of input. Inputs generally include labor and capital, among others while output is typically measured in revenues. Productivity is typically an important indicator of future inflation.

Project Eligibility Review Service (PERS)

A review method available to lenders to submit project information to Fannie Mae for eligibility review. The use of PERS is required for the review of certain projects.

Promissory Note

A written promise to pay a specified sum to a specified person over a specified period of time.

Property Inspection Waiver (PIW)

Offered through Desktop Underwriter and powered by Collateral Underwriter, PIW is a fieldwork recommendation that results in an offer to waive the appraisal for eligible mortgage transactions.

Property Taxes

Taxes based on the assessed value of the home, paid by the homeowner for community services, such as schools, public works, and other costs of local government. Sometimes paid as a part of the monthly mortgage payment.

Public and Indian Housing (PIH)

Under the HUD umbrella, This office is charged with ensuring safe, decent, and affordable housing while creating opportunities for participants' self-sufficiency and economic independence.

Public Auction

A gathering at a pre-announced public location to sell property to satisfy a mortgage that is in default.

Public Record

A collection of legal documents that are filed with the local government registry so that the public will know what liens, encumbrances or judgments may affect any piece of real estate.

Purchase Agreement

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

Purchasing Managers Association of Chicago (PMAC) Survey

The PMAC Survey is a composite diffusion index of manufacturing conditions in the Chicago area. Readings above 50% indicate an expanding factory sector.



A square-shaped land area, 24 miles on each side. Frequently used in the government rectangular survey method of land description.

Qualified Veteran

To officially determine if you are a qualified veteran, you or Consolidated Federal Credit Union must request a Certificate of Eligibility (COE) from the VA. This certificate indicates that the VA has determined you are eligible for a VA home loan and shows the amount of available entitlement or guaranty. To obtain a certificate of eligibility, complete the "Request for a Certificate of Eligibility for VA Home Loan Benefits Form" (VA Form 26-1880) and submit it to the VA. This form, as well as additional information about VA home loan eligibility requirements, is available on the VA website (

Qualifying Ratios (QR)

Calculations performed by lenders to determine your ability to repay a loan. The first qualifying ratio is calculated by dividing the monthly PITI by the gross monthly income. The second ratio is calculated by dividing the monthly PITI and all other monthly debts by the gross monthly income.

Qualifying Thrift Lender

A lender who specializes in home mortgage finance under the rules established by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

Quantity Survey

A method used by appraisers to estimate how much it would cost to reproduce an improvement.

Quitclaim Deed

A deed that transfers, without warranty, whatever interest or rights a grantor may have at the time the transfer is made. Often used to remove a possible cloud on the title.



A naturally appearing radioactive gas found in some buildings that, in sufficient concentrations, may cause health problems.

Ranch House

Once described as a low, one-story house typical of the western United States. The term is now used to describe just about any one-story home.

Rapid Payment Method (RPM)

A payment cycle used for scheduled/scheduled remittance types for MBS pools that has an early remittance date (usually the tenth of the month, although earlier or later dates can be negotiated) for both scheduled and unscheduled payments.


The annual rate of interest for a loan. Also called the interest rate.

Rate Change Cap

The maximum amount that an interest rate can change, either at an adjustment period or over the entire life of the loan. Commonly associated with an adjustable rate mortgage (ARM).

Rate Improvement Mortgage

A fixed rate mortgage (FRM) that includes a clause allowing the borrower the option to reduce the interest rate one time (without refinancing) during the first few years of the loan term.

Rate Lock

An agreement by a lender to guarantee the interest rate offered for a mortgage provided that the loan closes within the specified period of time.

Rate of Interest

Same as interest rate.

Real Estate Agent

A person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers.

Real Estate Investment Conduit (REMIC)

A REMIC is a special purpose vehicle that is used to pool mortgage loans and issue mortgage-backed securities (MBS) as well as offering investors significant tax savings. REMICs divide mortgages into pools based on risk, and issue bonds or other securities to investors. These securities then trade on the secondary market offer significant tax advantages.

Real Estate Investment Trust (REIT)

Is a closed-end investment company that owns assets related to real estate such as buildings, land and real estate securities. REITs sell on the major stock market exchanges just like common stock.

Real Estate Owned (REO)

Is a term used in the United States to describe a class of property owned by a lender - typically a bank, government agency, or government loan insurer. These properties are often acquired after an unsuccessful sale at a foreclosure auction.

Real Estate Settlement Procedures Act (RESPA)

A consumer protection law that requires mortgage lenders and brokers to give borrowers advance notice of closing costs in the form of a Good Faith Estimate.

Real Property

Land and anything permanently affixed to the land, including structures, trees, minerals, and the interest, benefits and rights thereof.


A real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors.

Reconveyance Fee

This fee is charged by title companies or attorneys in some states and covers the cost of removing your current lender's lien from your property title when you refinance.

Recordation Exam

A fee charged by the title company in some states to review documents to assure they meet the state standards prior to being recorded.


The public official who keeps records of transactions that affect real property in a specific geographic area (usually a county). Often known as a County Recorder or County Clerk.


The entering in a book of public record the details of a properly executed legal instrument that affects title to real property, thereby making it a part of the public record.

Recording Fees

A fee charged by the local government to record mortgage documents into the public record so that any interested party is aware that a lender has an interest in the property.


The process of paying off any existing mortgages on a home with a new mortgage loan.

Rehabilitation Mortgage

A loan granted to cover the costs of repairing or improving an existing property. Sometimes also used to acquire property with the intent to improve it.

Release Fee

The fee charged to release a lien to free real estate from a mortgage.

Remaining Balance

The amount of principal owed on a loan that has not yet been fully repaid.

Remaining Term

The number of payments left to be made on a loan before it is fully amortized (paid in full).

Rent Loss Insurance

An insurance policy that protects a landlord against loss of rent or value due to natural casualties that renders the premises unsuitable for use, and therefore excuses the tenant from paying rent.

Repayment Plan

An agreement between a lender and a borrower, made to help the borrower repay delinquent installments.

Replacement Reserve

An amount set aside from net operating income for replacement of short-lived common property in cooperative housing projects, such as condominiums.


The cancellation of a contract by the operation of a law or by mutual consent. In some circumstances, borrowers have the right to cancel a transaction within three business days after closing.


See Real Estate Settlement Procedures Act.

Retail Sales

Measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Frequency: monthly. Source: Commerce Department.

Retirement Plan 401(k) & 403(b)

Employer-sponsored investment plans that allow individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by private corporations. 403(b) plans are provided by non-profit organizations.

Retirement Plan 401(k) & 403(b) Loans

Some administrators of 401(k) and 403(b) plans allow for loans against the funds you have accumulated in these plans.

Reverse Annuity Mortgage (RAM)

A type of home mortgage under which an elderly homeowner is allowed a long-term loan in the form of monthly payments against his or her paid-off equity as collateral, repayable when the home is eventually sold. Also called an equity conversion, reverse mortgage.

Reverse Mortgage

See Home Equity Conversion Mortgage (HECM).

Revolving Credit

A credit agreement (typically a credit card) that allows a customer to borrow against a pre-approved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.


See Rural Housing Service.

Right of First Refusal

A contract provision that requires a property owner to give another party the first opportunity to purchase or lease the property before it is offered to others.

Right of Ingress or Regress

The right to enter or leave specific property or premises.

Right of Survivorship

In joint tenancy, the right of surviving joint tenants to acquire the interest of a deceased joint tenant.

Rural Development (RD)

A no-down-payment home loan under the USDA umbrella, also known as the USDA Guaranteed Housing Loan Program. This mortgage loan offered to rural property owners by the United States Department of Agriculture. There are income and geographical limitations.

Rural Housing Service (RHS)

An agency within the United States Department of Agriculture that provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere.



Savings and Loan Association.

Safe Harbor

A set of rules and regulations that will guarantee compliance with the law, if followed.

Safe Rate

An interest rate provided by low-risk investments, such as high grade bonds or secured first mortgages.


A technique in which a seller deeds property to a buyer, who simultaneously leases the property back to the seller.

Sales Contract

An agreement between a buyer and seller to purchase real estate. A sales contract, also known as an offer to purchase or a binder, secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money that was paid is forfeited unless the binder expressly provides that it is to be refunded.

Sales Disclosure

A state specific form that may need to be filed, disclosing everything about the sale of the home.


A person who is licensed to make real estate transactions while under the supervision of a broker licensed by the state.

Search and Exam Fee

A fee charged by a title company or attorney in some states to perform a check of the title records that verifies the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title.

Search and Survey

A fee charged by a title company in some states to perform a check of the public record to verify that the buyer is purchasing a home from the legal owner and there are no liens, overdue assessments, or other claims that would adversely affect the transfer of title. In addition, a search is performed to ensure that there are no issues that a survey would show that could affect the property.

Search Fee

A fee charged by a title company or attorney in some states to cover the cost of searching the public record to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title.

Second Mortgage

A loan that has a lien position subordinate to the first mortgage.

Secondary Mortgage Market

The buying and selling of existing mortgages, primarily residential first mortgages.

Secured Loan

A loan that is backed by collateral.

Securities and Exchange Commission (SEC)

A U.S. government agency that oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception. The SEC consists of five commissioners who serve staggered five-year terms.


The collateral offered to a lender in exchange for a loan. When a lender provides a mortgage, you provide your home as the security. This means that if payments are in default, the lender has the right to take title to the property.

Security Interest

The lender's right to take property that has been offered as security.

Seller Take-Back

An arrangement in which the owner of a property provides financing.

Service Release Premium (SRP)

The payment received by a lending institution, such as a bank or retail mortgage lender, on the sale of a closed mortgage loan to the secondary mortgage market.


A company that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer may or may not be the original lender.


A meeting of parties involved in a real estate transaction to finalize the process. In the case of a purchase, the settlement usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the settlement involves the borrower and the lender. Sometimes referred to as the closing or the close of escrow.

Settlement or Closing Fee

A fee charged by a title company, closing agent or attorney to act as a representative and agent for the lender to perform the closing of a real estate transaction.

Settlement Statement

Also referred to as the HUD-1 or the closing statement, this is the document that provides line-by-line detail of the financial details related to a specific real estate transaction, such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.

Special Feature Code (SFC)

Codes that Fannie Mae uses to identify certain characteristics related to individual mortgage loans, mortgage products, or negotiated transactions. Lenders must specify these codes when they apply to mortgages delivered to Fannie Mae.

Special Flood Hazard Area (SFHA)

Land areas that are at high risk for flooding are called special flood hazard areas (SFHAs), or floodplains.

Special Industry and Financial Markets Association (SIFMA)

A United States industry trade group representing securities firms, banks, and asset management companies. SIFMA was formed on November 1, 2006, from the merger of the Bond Market Association and the Securities Industry Association.

Standard Payment Calculation

The process used to determine the monthly payment required to repay the remaining principal balance of a loan in fairly equal installments over the remaining term of the loan at the current interest rate.

State Tax Stamps

A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another.

State/Local Tax Fees

A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another.

Stated Income Asset (SISA)

A loan type that requires the borrower to disclose his/her income and the amount of assets he/she possesses, but does not require the borrower to document those items.

Stated Income Verified Asset (SIVA)

A loan type that requires the borrower to disclose his/her income and the amount of assets he/she possesses, but the lender only verifies the income documentation and not the assets.

Step Mortgage

A type of adjustable rate mortgage (ARM) that allows for the interest rate to increase according to a specified schedule. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan. Sometimes called a step-rate mortgage.

Stripped Mortgage Backed Security (SMBS)

A mortgage-backed security with a cash flow that derives exclusively from interest payments or principal payments on the underlying mortgages. That is, the underlying asset of a stripped MBS is interest or principal paid on debt securities, rather than both together.


A housing development that is created by dividing a large parcel of land into many individual lots for sale.

Subordinate Financing

Any mortgage or other lien that has a lower priority than that of the first mortgage.


A fee associated with obtaining a precise measurement of a piece of property by a licensed surveyor. The survey is typically a written map of the property showing locations of buildings and boundaries. In some states a survey is required by a title company to issue a title insurance policy.

Survey Affidavit

A fee charged by a title company to issue an insurance policy without requiring that a full survey is completed.

Sweat Equity

Contribution to the construction of a property in the form of labor or services instead of cash.

Swing Loan

Sometimes called a bridge loan, a swing loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.



Adding to.

Takeout Financing

A long-term loan commitment for when a building project is finished.


To take over a real estate, often following a property's condemnation.

Tangible Property

Valuable land that is physically accessible to an individual.

Tax Base

The entire value of all taxable assets.

Tax Certificate

When a property changes hands, this tax is charged depending on the specified local government laws.

Tax Service Fee

What the borrower must pay the lender to have a third party verify all taxes on the property and loan.

Taxes and Insurance (T&I)

A T&I Payment means an unreimbursed advance or payment by Borrower to cover tax- and insurance-escrow payments not paid when required by a mortgagor under a Mortgage Loan in accordance with Borrower's obligations under the applicable Servicing Contract.

Taxes and Other Unavoidable Fees

Tax and other inevitable fees that will be required regardless of the buyer's chosen lender. Always assume these fees will be required even if a lender doesn't list them in a comparison table.

Tenancy by the Entirety

A joint tenancy with the right of survivorship only for husband and wife.

Tenancy in Common

A joint tenancy that doesn't allow survivorship.


The amount of time a borrower has to make their monthly mortgage payments. If that equals the payment calculation term, the loan will be paid in full during the loan term with no balance at the end. However, if the payment calculation term is longer than the loan term, the borrower will need to pay the balance in what's called a "balloon payment".

Third Party Fees

Collected by the lender to pay a third party for his or her services. When a credit report, an appraisal and a title insurance policy are all issued, the borrower pays those fees to the lender who then pays the appropriate third parties.

TRID (TILA - RESPA Integrated Disclosure)

TRID is the new rule in the mortgage industry. TRID’s Loan Estimate replaces the initial Truth-in-Lending disclosure & Good Faith Estimate for most closed-end mortgage loans. TRID’s Closing Disclosure replaces the final Truth-in-Lending disclosure & HUD-1 Settlement Statement.


The legal proof of an individual or group's possession of a piece of property in writing.

Title Company

Professional examiners of real estate titles, title companies also provide title insurance.

Title Examination

The charge made by a third party or lawyer who reviews the public record of a property and its owner to make sure the transfer goes through smoothly.

Title Insurance

Obtained to protect the rights of the lender or property owner against property ownership disputes and mysterious defects that did not come up in the public record search.

Title Opinion

Also known as an "attorney opinion," this statement assesses the quality of a title upon general review.

Title Search

The review of public title records to eliminate any concerns about the property's legal ownership and reveal any other hiccups.

To Be Announced (TBA)

Not yet announced

To Be Determined (TBD)

Not yet determined.

Total Closing Costs

All mortgage-related costs required to be paid by the borrower at the closing date. The amount provided up front by the lender will be a rough estimate.

Total Debt Ratio

The calculation mortgage lenders use to decide if a borrower qualifies for a specific loan.

Total Loan-to-Value (TLTV)

This ratio, provided by Loan Prospector, is obtained by dividing the sum of the First Lien Mortgage amount and the disbursed amount of the Home Equity Line of Credit and any other secondary financing by the lesser of property's purchase price or appraised value.

Trade Equity

Acquired through a property transfer from buyer to lender to cover a down payment on the property.

Transfer of Ownership

The legal transfer of property ownership from one person to another.

Transfer Tax

Dependent on local laws, this charge may be applied to a real estate transfer.

Treasury Bills

Also known as T-bills, Treasury Bills provide a national index that sets the adjustable rate mortgage interest rates. This is based on the interest rate US Government pays private investors for its national debt.

Treasury Bond

A US-issued bond.

Treasury Index

Set by the US Treasury's auction results, this index determines mortgage rates for ARM programs.

Treasury Note

US Treasury-issued currency.

Treasury Securities

This index, calculated by the US Treasury, provides ARM interest rates.


A guardian who controls the property in a trust until an obligation is fulfilled.

Truth in Lending Act (TILA)

This "Regulation Z," is a federal statute that assists borrowers by demanding lenders provide an estimate of the loan costs and the APR within three working days of the loan application. In a mortgage context, this regulation’s impact has been superseded by TRID guidelines.

Two-step Mortgage

An ARM with two different interest rates separated by 5 or 7 years.


Uniform Commercial Code (UCC)

The body of laws governing commercial transactions in the US.

Underlying Mortgage

The first listed mortgage when referring to a wraparound mortgage.


The in-depth risk assessment (including credit checks on the borrower and property value) through the evaluation of his or her loan application.

Underwriting Fee

Lenders may charge borrowers a fee to cover the cost of this assessment.

Undivided Interest

The equal right to property that is shared among two or more owners.

Uniform Commercial Code (UCC)

Laws that apply to commercial transactions, with just a few being relevant to property transactions.

Uniform Electronics Transactions Act (UETA)

One of the several United States Uniform Acts proposed by the National Conference of Commissioners on Uniform State Laws. Its purpose is to harmonize state laws concerning retention of paper records (especially checks) and the validity of electronic signatures.

Uniform Standards of Professional Appraisal Practice (USPAP)

(USPAP) can be considered the quality control standards applicable for real property, personal property, intangible assets, and business valuation appraisal analysis. They report in the United States and its territories.

United States Department of Agriculture/Rural Housing Services (USDA)

USDA’s Rural Housing Service offers a variety of programs to build or improve housing and essential community facilities in rural areas. They offer loans, grants and loan guarantees for single- and multi-family housing, child care centers, fire and police stations, hospitals, libraries, nursing home s, schools, first responder vehicles and equipment and housing for farm laborers.

Unpaid Principal Balance (UPB)

The portion of a loan balance (e.g. a mortgage loan) at a certain point in time that has not yet been remitted to the lender.

Unsecured Loan

An insurance-free loan.

Up-Front Mortgage Insurance Premium

The Up-Front MIP principal loan percentage cost is due at closing by the borrower. It can be financed and is charged by the FHA to support its program.

U.S. Department of Veterans Affairs (VA)

Is a government-run military veteran benefit system with Cabinet-level status. The VA coordinates the distribution of benefits for veterans of the American armed forces and their dependents. The benefits include compensation for disabilities, the management of veterans' hospitals, and various insurance programs.


VA Funding Fee

The fee most veterans must pay to access their VA mortgage loans, charged by the Department of Veterans Affairs (VA) to fund the VA home loan program.

VA Loan

A VA mortgage loan specifically for veterans and those who have served that doesn't require a typical down payment.

Vacancy Rate

The vacancy rate is the percentage of all available units in a rental property, such as a hotel or apartment complex, that are vacant or unoccupied at a particular time. It is the opposite of the occupancy rate, which is the percentage of units in a rental property that are occupied.

Vacant Land

Unoccupied land.


To leave completely.

Vacation home

A seasonal or occasional home that an owner generally uses for fun.

Verification of Deposit (VOD)

A verification of deposit, used by mortgage underwriters to cross reference depositary information, typically includes information such as current balance, average balance for the previous two months and the date the account was opened.

Verification of Employment (VOE)

Is a process used by banks and mortgage lenders in the United States to review the employment history of a borrower, to determine the borrower's job stability and cross-reference income history with that stated on the loan application.

Verification of Mortgage (VOM)

Documentation of your mortgage payment history. The VOM, which is often required when applying for a loan, is used to verify your existing balance and monthly payments, and to check for any late payments on the account.

Verification of Rent (VOR)

Documentation of your rental history. The VOR, which is often required when applying for a loan, is used to verify your rental payment history.


The legal power to handle one's own funds, like an IRA.



To voluntarily relinquish one's power.


Combining mortgages to resell in the "secondary market."


A written guarantee.

Water Table

The highest point at which underground water is found.

Wire Transfer Fee

A lender's fee for sending mortgage funds immediately to make closing.

Wraparound Loan

A loan that includes whatever is left of the first or "underlying" loan. A wraparound loan combines a first and second mortgage.



A percentage measure of earnings through an investment.

Yield Spread Premium (YSP)

The money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up-front costs, generally paid in origination fees, broker fees or discount points.

Yield To Maturity (YTM)

The interest earned by an investor.



A geographical area designated for a particular use, established by the local government.


The way each area government separates property and declares its use.

Zoning Map

A local geographical map that shows all zoning restrictions.

Zoning Ordinances

Each local government's legal authority to manage geographical areas.

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