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Glossary of Terms |
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Glossary of Terms
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General Contractor
A person who oversees a home improvement or construction
project and handles various aspects such as scheduling
workers and ordering supplies.
Good Faith Estimate (GFE)
A form required by the Real Estate Settlement and
Procedures Act (RESPA) that discloses an estimate of the
amount or range of charges, for specific settlement
services the borrower is likely to incur in connection
with the mortgage transaction.
Government National Mortgage Association (Ginnie Mae)
A government-owned corporation within the U.S.
Department of Housing and Urban Development (HUD) that
guarantees securities backed by mortgages that are
insured or guaranteed by other government agencies.
Popularly known as Ginnie Mae.
Hazard Insurance
Insurance coverage that compensates for physical damage
to a property from fire, wind, vandalism, or other
covered hazards or natural disasters.
Home Equity Line of Credit
A type of revolving loan, that enables a home owner to
obtain multiple advances of the loan proceeds at his or
her own discretion, up to an amount that represents a
specified percentage of the borrower's equity in the
property.
Home Inspection
An examination of the construction, condition and
internal systems of a home prior to purchase;
satisfactory home inspection may be a condition of
purchase.
Homeowner's Insurance
A broad form of insurance coverage that combines hazard
insurance with personal liability protection and other
coverage.
Homeowner's Warranty (HOW)
Insurance offered by a seller that covers certain home
repairs and fixtures for a specified period of time.
Homeowners' Association
An organization of homeowners residing within a
particular area whose principal purpose is to ensure the
provision and maintenance of community facilities and
services for the common benefit of the residents.
Housing Expense Ratio
The percentage of a borrower's gross monthly income that
is devoted to housing costs.
HUD-1 Settlement Statement
A document that lists all closing costs on a real estate
purchase or refinance transaction. Also known as the
"closing statement" or "settlement sheet."
Index
A number used to compute the interest rate for an
adjustable-rate mortgage (ARM). The index is generally a
published number or percentage, such as the average
interest rate or yield on U.S. Treasury bills. A margin
is added to the index to determine the interest rate
that will be charged on the ARM. This interest rate is
subject to any caps on the maximum or minimum interest
rate that may be charged on the mortgage, stated in the
note.
Initial Interest Rate
The original interest rate for an adjustable-rate
mortgage (ARM). Sometimes known as the "start rate."
Interest
The fee charged for borrowing money, usually expressed
as an annual percentage of the principal.
Interest Accrual Rate
The percentage rate at which interest accumulates or
increases on a mortgage loan.
Interest Rate Cap
For an adjustable-rate mortgage, a limitation on the
amount the interest rate can change per adjustment or
over the lifetime of the loan, as stated in the note.
Interest Rate Ceiling
For an adjustable-rate mortgage (ARM), the maximum
interest rate, as specified in the mortgage note.
Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum
interest rate, as specified in the mortgage note.
Investment Property
A property purchased to generate rental income, tax
benefits, or profitable resale rather than to serve as
the borrower's primary residence. Contrast with "second
home." |
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