Mortgage Terms E - J:

 
  • earnest money deposit

    A good faith deposit to show seriousness of purchase.

  • easement

    A right of way giving persons other than the owner access to or over a property.

  • eminent domain

    The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.

  • encroachment

    An improvement that intrudes illegally on another's property.

  • encumbrance

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

  • Equal Credit Opportunity Act (ECOA)

    A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

  • equity

    The value of your home after any mortgage loans are subtracted.

  • escrow

    An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition.

  • escrow account

    An account set up by a lender to which the borrower makes monthly payments for such obligations as real estate taxes, homeowners insurance, and private mortgage insurance. The lender disburses these funds on behalf of the borrower as the bills become due.

  • escrow analysis

    The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

  • escrow collections

    Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.

  • escrow disbursements

    The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

  • escrow payment

    The portion of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.

  • estate

    The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

  • eviction

    The lawful expulsion of an occupant from real property.

  • examination of title

    The report on the title of a property from the public records or an abstract of the title.

  • exclusive listing

    A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner's right to sell the property alone without the payment of a commission.

  • Fair Credit Reporting Act

    A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

  • fair market value

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

  • Fannie Mae (FNMA)

    A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

  • Federal Home Loan Mortgage Corporation (FHLMC)

    A corporation established to purchase primarily conventional mortgage loans in the secondary market. Also known as Freddie Mac.

  • Federal Housing Administration (FHA)

    An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

  • fee simple

    The greatest possible interest a person 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 coinsured mortgage

    A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default.

  • FHA mortgage

    A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

  • finder's fee

    A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

  • firm commitment

    A lender's agreement to make a loan to a specific borrower on a specific property.

  • first mortgage

    A mortgage that is the primary lien against a property.

  • fixed installment

    The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

  • fixed-rate mortgage (FRM)

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

  • fixture

    Personal property that becomes real property when attached in a permanent manner to real estate.

  • flood insurance

    Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

  • foreclosure

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

  • forfeiture

    The loss of money, property, rights, or privileges due to a breach of legal obligation.

  • Government National Mortgage Association

    A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. Popularly known as Ginnie Mae.

  • grantee

    The person to whom an interest in real property is conveyed.

  • grantor

    The person conveying an interest in real property.

  • gross income multiplier

    A figure used as a mutiplier of an income producing property's gross annual income to estimate its value.

  • ground rent

    The amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate.

  • group home

    A single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature.

  • growing-equity mortgage (GEM)

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

  • hazard insurance

    Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.

  • home equity line of credit

    A mortgage loan, which is usually in a subordinate position, that allows the borrower 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 a property.

  • home inspection

    A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

  • homeowner's insurance

    An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

  • homeowner's warranty (HOW)

    A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.

  • 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.

  • housing expense ratio

    The percentage of gross monthly income that goes toward paying housing expenses.

  • HUD-1 statement

    A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.

  • in-file credit report

    An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

  • income property

    Real estate developed or improved to produce income.

  • 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 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 that are associated with the mortgage.

  • initial interest rate(Start Rate

    The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM).

  • installment

    The regular periodic payment that a borrower agrees to make to a lender.

  • installment loan

    Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.

  • insurable title

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

  • insurance

    A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

  • insurance binder

    A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

  • insured mortgage

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

  • interest

    The sum paid to a lender for money borrowed.

  • interest rate

    The rate of interest in effect for the monthly payment due.

  • interest rate buydown plan

    An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specified period, the mortgagor's effective interest rate is "bought down" below the actual interest rate.

  • interest rate 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 that is not occupied by the owner.

  • IRA (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.

  • joint tenancy

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

  • judgment

    A decision 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 the decree of a court.

  • jumbo loan

    A loan that exceeds conforming loan limits.

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