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Hazard insurance
This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.
Home equity conversion mortgage
Loans made to older owners who want to convert equity into money. Because borrowers are qualified on the basis of the value of their home, e, the loan is not the same as a home equity loan. Also known as reverse mortgages.
Home equity loan
A loan that allows owners to borrow against the equity in their homes.
Home inspection
An examination of a home’s construction, condition and internal systems by an inspector or contractor prior to purchase.
Homeowners’ association
A group that governs a modern subdivision or planned community. An association collects monthly fees from all owners to pay for maintenance of common areas, handle legal and safety issues, and enforce the covenants, conditions and restrictions set by the developer.
Homeowners’ insurance
This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.
Home warranty
A type of insurance that covers repairs to certain parts of a house and some fixtures.
Impact fees
Fees collected from developers of new homes to pay for schools, parks and other facilities.
Impounds
A portion of the monthly mortgage payment that is placed in an account and used to pay for hazard insurance, property taxes and private mortgage insurance.
Income property
Property that is not occupied by the owner but is used to generate income.
Index
Financial tables used by lenders to calculate interest rates on adjustable mortgages and on Treasury bills.
Initial interest rate
The original interest rate on an adjustable mortgage.
Interest
The fee borrowers pay to obtain a loan. It is calculated based on a percentage of the total loan.
Interest accrual rate
The rate at which interest accrues on a mortgage.
Interest-only loan
The pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.
Interest Rate
The sum, expressed as a percentage, charged for a loan. Interest payments on most home loans are tax- deductible.
Interest rate buy-down plans
For cash-short buyers, some sellers are willing to advance funds from the sale of the home to buy down the interest rate and reduce the buyer’s monthly obligation.
Interest rate caps
A limit on the amount that can be charged to the monthly payment of an adjustable-rate mortgage during an adjustment period.
Interest rate ceiling
The highest interest a lender can charge for an adjustable-rate mortgage.
Investment property
Real estate that generates income, such as an apartment building or a rental house.
Jumbo mortgage
Loans that exceed limits set by Fannie Mae and Freddie Mac. The current limit is $417,000.
Late charge
A fee a lender imposes on a borrower when the borrower does not make a payment on time.
Lender
A bank, savings institution or mortgage company that offers home loans.
Liability insurance
A policy that protects owners against any claims of negligence, personal injury or property damage.
Lien
A claim laid by one person or company on the property of another as security for money owed.
Life cap
A limit on the amount that a loan rate can move during the term of the mortgage. For example, the rate on an adjustable-rate mortgage that begins at 5 percent and has a lifetime cap of 6 percentage points cannot rise above 11 percent, even if rates on fixed-rate mortgages soar to 20 percent.
Loan application
The first step toward submitting a home loan requires the borrower to itemize basic financial information.
Loan application fee
A fee charged by lenders to for making a loan application.
Loan commitment
A promise by a lender or other financial institution to make or insure a loan for a specified amount and on specific terms.
Loan officer
An official representative of a lending institution who is empowered to act on behalf of the lender within certain limits.
Loan origination fee
Most lenders charge borrowers an origination fee–or points–for processing a loan. A point is 1 percent of the total loan amount.
Loan processing fee
A fee charged by some lenders for gathering information to enable the lender to process the loan.
Loan term
The amount of a time set by the lender for a buyer to pay a mortgage. Most conventional loans have 30-year or 15-year terms.
Loan -to-value ratio
A technical measure used by lenders to assess the relationship of the loan amount to the value of the property
Low-documentation loan
A mortgage that requires only minimal verification of income and assets.
Low-down-payment loan
A home loan that requires the borrower to make only a small down payment before obtaining the financing needed to purchase a house.
