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| GLOSSARY |
Adjustable-Rate Mortgage (ARM)
A mortgage whose interest rate changes periodically based on the changes in a specified index.
Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
Amortization
The repayment of a mortgage loan by installments with regular payments to cover the principle and interest.
Amortization Term
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example,
for a 30-year fixed-rate mortgage, the amortization term is 360 months.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).
Application
A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.
Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.
Appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.
Appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Asset
Anything of monetary value that is owned by a person. Assets include real property, personal property,
and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
Assignment
The transfer of a mortgage from one person to another.
Assumable Mortgage
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.
Assumption
The transfer of the seller's existing
mortgage to the buyer.
Assumption
Clause
A provision in an
assumable mortgage that allows a buyer to assume
responsibility for the mortgage from the seller. The
loan does not need to be paid in full by the original
borrower upon sale or transfer of the property.
Assumption
Fee
The fee paid to a lender
(usually by the purchaser of real property) resulting
from the assumption of an existing mortgage.
Balance Sheet
A financial
statement that shows assets, liabilities, and net worth
as of a specific date.
Balloon
Mortgage
A mortgage that has
level monthly payments that will amortize it over a
stated term but that provides for a lump sum payment to
be due at the end of an earlier specified term.
Balloon
Payment
The final lump sum
payment that is made at the maturity date of a balloon
mortgage.
Bankrupt
A person, firm, or corporation that, through a
court proceeding, is relieved from the payment of all
debts after the surrender of all assets to a
court-appointed trustee.
Bankruptcy
A
proceeding in a federal court in which a debtor who owes
more than his or her assets can relieve the debts by
transferring his or her assets to a trustee.
Basis Point
A basis point is 1/100th of a percentage
point. For example, a fee calculated as 50 basis points
of a loan amount of $100,000 would be 0.50% or
$500.
Before-Tax
Income
Income before taxes are
deducted.
Beneficiary
The person designated to receive the income
from a trust, estate, or a deed of trust.
Binder
A preliminary
agreement, secured by the payment of an earnest money
deposit, under which a buyer offers to purchase real
estate.
Biweekly Payment
Mortgage
A mortgage that
requires payments to reduce the debt every two weeks
(instead of the standard monthly payment schedule). The
26 (or possibly 27) biweekly payments are each equal to
one-half of the monthly payment that would be required
if the loan were a standard 30-year fixed-rate mortgage,
and they are usually drafted from the borrower's bank
account. The result for the borrower is a substantial
savings in interest.
Blanket
Mortgage
The mortgage that is
secured by a cooperative project, as opposed to the
share loans on individual units within the project.
Bond
An interest-bearing certificate of debt with a
maturity date. An obligation of a government or business
corporation. A real estate bond is a written obligation
usually secured by a mortgage or a deed of trust.
Breach
A violation of any legal obligation.
Bridge Loan
A form of second trust that is collateralized
by the borrower's present home (which is usually for
sale) in a manner that allows the proceeds to be used
for closing on a new house before the present home is
sold. Also known as "swing loan."
Broker
A person who, for a commission or a fee,
brings parties together and assists in negotiating
contracts between them.
Buydown Mortgage
A temporary
buydown is a mortgage on which an initial lump sum
payment is made by any party to reduce a borrower's
monthly payments during the first few years of a
mortgage. A permanent buydown reduces the interest rate
over the entire life of a mortgage.
Call Option
A provision in
the mortgage that gives the mortgagee the right to call
the mortgage due and payable at the end of a specified
period for whatever reason.
Cap
A
provision of an adjustable-rate mortgage (ARM) that
limits how much the interest rate or mortgage payments
may increase or decrease.
Capital
Improvement
Any structure or
component erected as a permanent improvement to real
property that adds to its value and useful life.
Cash-Out
Refinance
A refinance
transaction in which the amount of money received from
the new loan exceeds the total of the money needed to
repay the existing first mortgage, closing costs,
points, and the amount required to satisfy any
outstanding subordinate mortgage liens. In other words,
a refinance transaction in which the borrower receives
additional cash that can be used for any purpose.
Certificate of
Eligibility
A document issued
by the federal government certifying a veteran's
eligibility for a Department of Veterans Affairs (VA)
mortgage.
Certificate of Reasonable Value
(CRV)
A document issued by the
Department of Veterans Affairs (VA) that establishes the
maximum value and loan amount for a VA mortgage.
Certificate of
Title
A statement provided by
an abstract company, title company, or attorney stating
that the title to real estate is legally held by the
current owner.
Chain of
Title
The history of all of
the documents that transfer title to a parcel of real
property, starting with the earliest existing document
and ending with the most recent.
Change
Frequency
The frequency (in
months) of payment and/or interest rate changes in an
adjustable-rate mortgage (ARM).
Clear
Title
A title that is free of
liens or legal questions as to ownership of the
property.
Closing
A meeting at which a sale of a property is
finalized by the buyer signing the mortgage documents
and paying closing costs. Also called
"settlement."
Closing Cost Item
A fee or
amount that a home buyer must pay at closing for a
single service, tax, or product. Closing costs are made
up of individual closing cost items such as origination
fees and attorney's fees. Many closing cost items are
included as numbered items on the HUD-1 statement. Expenses
(over and above the price of the property) incurred by
buyers and sellers in transferring ownership of a
property. Closing costs normally include an origination
fee, an attorney's fee, taxes, an amount placed in
escrow, and charges for obtaining title insurance and a
survey. Closing costs percentage will vary according to
the area of the country.
Closing
Statement
Also referred to as
the HUD-1. The final statement of costs incurred to
close on a loan or to purchase a home.
Cloud on Title
Any conditions revealed by a title search that
adversely affect the title to real estate. Usually
clouds on title cannot be removed except by a quitclaim
deed, release, or court action.
Collateral
An
Asset (such as a car or a home) that guarantees the
repayment of a loan. The borrower risks losing the asset
if the loan is not repaid according to the terms of the
loan contract.
Collection
The
efforts used to bring a delinquent mortgage current and
to file the necessary notices to proceed with
foreclosure when necessary.
Combination
Loan
With this type of loan,
you receive a first mortgage for 80 percent of the loan
amount, and a second mortgage at the same time for the
remainder of the balance. If avoiding PMI (mortgage
insurance) is important to you, consider combination
loans--known as 80/10/10 loans or 80/20's.
Combined Loan-to-Value
(CLTV)
The unpaid principle
balances of all the mortgages on a property (first and
second usually) divided by the property's appraised
value.
Co-Maker
A person who signs a promissory note along
with the borrower. A co-maker's signature guarantees
that the loan will be repaid, because the borrower and
the co-maker are equally responsible for the repayment.
See endorser.
Commission
The
fee charged by a broker or agent for negotiating a real
estate or loan transaction. A commission is generally a
percentage of the price of the property or loan.
Commitment
Letter
A formal offer by a
lender stating the terms under which it agrees to lend
money to a home buyer. Also known as a "loan
commitment."
Common Areas
Those portions of a building, land, and
amenities owned (or managed) by a planned unit
development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative
corporation) that are used by all of the unit owners,
who share in the common expenses of their operation and
maintenance. Common areas include swimming pools, tennis
courts, and other recreational facilities, as well as
common corridors of buildings, parking areas, means of
ingress and egress, etc.
An
alternative financing option that allows low- and
moderate-income home buyers to obtain 95 percent
financing for the purchase and improvement of a home in
need of modest repairs. The repair work can account for
as much as 30 percent of the appraised value.
In some
western and southwestern states, a form of ownership
under which property acquired during a marriage is
presumed to be owned jointly unless acquired as separate
property of either spouse.
Comparables
An abbreviation for "comparable properties";
used for comparative purposes in the appraisal process.
Comparables are properties like the property under
consideration; they have reasonably the same size,
location, and amenities and have recently been sold.
Comparables help the appraiser determine the approximate
fair market value of the subject property.
Condominium
A real estate project in which each unit owner
has title to a unit in a building, an undivided interest
in the common areas of the project, and sometimes the
exclusive use of certain limited common areas.
Condominium
Conversion
Changing the
ownership of an existing building (usually a rental
project) to the condominium form of ownership.
Conforming
Loan
The current conforming
loan limit is $300,700 and below. Conforming loan limits
change annually.
Construction
Loan
A short-term, interim
loan for financing the cost of construction. The lender
makes payments to the builder at periodic intervals as
the work progresses.
Consumer Reporting Agency
(or Bureau)
An organization
that prepares reports that are used by lenders to
determine a potential borrower's credit history. The
agency obtains data for these reports from a credit
repository as well as from other sources.
Contingency
A
Condition that must be met before a contract is legally
binding. For example, home purchasers often include a
contingency that specifies that the contract is not
binding until the purchaser obtains a satisfactory home
inspection report from a qualified home inspector.
Contract
An oral or written agreement to do or not to
do a certain thing.
Conventional
Mortgage
A mortgage that is
not insured or guaranteed by the federal
government.
Convertibility
Clause
A provision in some
adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at
specified timeframes after loan origination.
Convertible
ARM
An adjustable-rate
mortgage (ARM) that can be converted to a fixed-rate
mortgage under specified conditions.
Cooperative
(co-op)
A type of multiple
ownership in which the residents of a multiunit housing
complex own shares in the cooperative corporation that
owns the property, giving each resident the right to
occupy a specific apartment or unit.
Corporate
Relocation
Arrangements under
which an employer moves an employee to another area as
part of the employer's normal course of business or
under which it transfers a substantial part or all of
its operations and employees to another area because it
is relocating its headquarters or expanding its office
capacity.
Cost of Funds Index
(COFI)
An index that is used
to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the
weighted-average cost of savings, borrowings, and
advances of the 11th District members of the Federal
Home Loan Bank of San Francisco.
Covenant
A clause in a mortgage that obligates or
restricts the borrower and that, if violated, can result
in foreclosure.
Credit
An agreement in which a borrower receives
something of value in exchange for a promise to repay
the lender at a later date.
Credit
History
A record of an
individual's open and fully repaid debts. A credit
history helps a lender to determine whether a potential
borrower has a history of repaying debts in a timely
manner.
Credit
Report
A report of an
individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's
creditworthiness.
Credit Repository
An
organization that gathers, records, updates, and stores
financial and public records information about the
payment records of individuals who are being considered
for credit.
Debt
An amount owed
to another.
Deed
The legal document conveying title to a
property.
Deed-In-Lieu
A
deed given by a mortgagor to the mortgagee to satisfy a
debt and avoid foreclosure.
Deed of
Trust
The document used in
some states instead of a mortgage; title is conveyed to
a trustee.
Default
Failure to make mortgage payments on a timely
basis or to comply with other requirements of a
mortgage.
Delinquency
Failure to make mortgage payments when
mortgage payments are due.
Deposit
A sum of money given to bind the sale of real
estate, or a sum of money given to ensure payment or an
advance of funds in the processing of a loan.
Depreciation
A decline in the value of property; the
opposite of appreciation.
Down
Payment
The part of the
purchase price of a property that the buyer pays in cash
and does not finance with a mortgage.
Due-on-Sale Provision
A provision in
a mortgage that allows the lender to demand repayment in
full if the borrower sells the property that serves as
security for the mortgage.
Earnest Money Deposit
A deposit made
by the potential home buyer to show that he or she is
serious about buying the house.
Easement
A right of way giving persons other than the
owner access to or over a property.
Effective
Age
An appraiser's estimate of
the physical condition of a building. The actual age of
a building may be shorter or longer than its effective
age.
Effective Gross
Income
Normal annual income
including overtime that is regular or guaranteed. The
income may be from more than one source. Salary is
generally the principle source, but other income may
qualify if it is significant and stable.
Eighty-Ten-Ten
loan
See "combination
loan".
Encumbrance
Anything that affects or limits the fee simple
title to a property, such as mortgages, leases,
easements, or restrictions.
Endorser
A person who signs ownership interest over to
another party. Contrast with co-maker.
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
A homeowner's
financial interest in a property. Equity is the
difference between the fair market value of the property
and the amount still owed on its mortgage.
Escrow
An item of value, money, or documents
deposited with a third party to be delivered upon the
fulfillment of a condition. For example, the deposit by
a borrower with the lender of funds to pay taxes and
insurance premiums when they become due, or the deposit
of funds or documents with an attorney or escrow agent
to be disbursed upon the closing of a sale of real
estate.
Escrow
Account
The account in which a
mortgage servicer holds the borrower's escrow payments
prior to paying property expenses.
Escrow
Analysis
The periodic
examination of escrow accounts to determine if current
monthly deposits will provide sufficient funds to pay
taxes, insurance, and other bills when due.
Escrow
Collections
Funds collected by the servicer and set aside
in an escrow account to pay the borrower's property
taxes, mortgage insurance, and hazard insurance.
Escrow
Disbursements
The use of
escrow funds to pay real estate taxes, hazard insurance,
mortgage insurance, and other property expenses as they
become due.
Escrow
Payment
The portion of a
mortgagor's monthly payment that is held by the servicer
to pay for taxes, hazard insurance, mortgage insurance,
lease payments, and other items as they become due.
Known as "impounds" or "reserves" in some states.
Estate
The ownership interest of an individual in
real property. The sum total of all the real property
and personal property owned by an individual at time of
death.
Eviction
The lawful expulsion of an occupant from real
property.
Examination of
Title
The report on the title
of a property from the public records or an abstract of
the title.
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
A congressionally chartered, shareholder-owned
company that is the nation's largest supplier of home
mortgage funds.
Fannie Mae's Community
Home Buyer's Program
An
income-based community lending model, under which
mortgage insurers and Fannie Mae offer flexible
underwriting guidelines to increase a low- or
moderate-income family's buying power and to decrease
the total amount of cash needed to purchase a home.
Borrowers who participate in this model are required to
attend pre-purchase home-buyer education sessions.
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.
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.
First
Adjustment
When you can expect
the first rate adjustment in your ARM loan.
First
Mortgage
A mortgage that is
the primary lien against a property.
Fixed-Rate Mortgage
(FRM)
A mortgage in which the
interest rate does not change during the entire term of
the loan.
Fixed Second
Mortgage
See home equity
loan.
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
mortgage debt.
Fully Amortized
ARM
An
adjustable-rate mortgage (ARM) with a monthly payment
that is sufficient to amortize the remaining balance, at
the interest accrual rate, over the amortization term.
Good Faith Estimate
An estimate of
charges which a borrower is likely to incur in
connection with a settlement.
Government National Mortgage Assoc (Ginnie Mae)
A federal corporation that insures mortgage-backed securities,
and offers financing options to home buyers.
Hazard Insurance
Insurance
protecting against loss to real estate caused by fire,
some natural causes, vandalism, etc., depending upon the
terms of the policy.
Home Equity Line of
Credit
a credit line that is
secured by a second deed of trust on a house. Equity
lines of credit are revolving accounts that work like a
credit card, which can be paid down or charged up for
the term of the loan. The minimum payment due each month
is interest only.
Home Equity
Loan
a loan secured by a
second deed of trust on a house, typically used as a
home improvement loan.
Homeowners Association Dues
Payments made to an association responsible for the maintenance of the
common areas in a condominium or subdivision development.
Housing Ratio
The ratio of the monthly housing payment in
total (PITI - principle, Interest, Taxes, and Insurance)
divided by the gross monthly income. This ratio is
sometimes referred to as the top ratio or front end
ratio.
HUD
The U.S. Department of Housing and
Urban Development.
Index
A published
interest rate to which the interest rate on an
Adjustable Rate Mortgage (ARM) is tied. Some commonly
used indices include the 1 Year Treasury Bill, 6 Month
LIBOR, and the 11th District Cost of Funds (COFI).
Impound
Account
An impound account is
an account established by the lender to pay a borrower's
tax and insurance costs. The borrower's monthly mortgage
payment is then increased to cover these costs, with the
additional amount being held in the impound account and
disbursed by the lender when the payments are due.
Lenders typically prefer this arrangement because it
reduces the possibility of a lapse in tax or insurance
payments that could diminish the value of the lender's
investment (your house). Therefore, while it is often
possible to opt out of an impound account it will result
in additional charges.
Jumbo Mortgage
The current
loan limit for a conforming loan is $300,700. Loan
amounts of $300,701 and above are considered
non-conforming or jumbo mortgages and are usually
subject to higher pricing.
Lien
An encumbrance
against property for money due, either voluntary or
involuntary.
Lender
The bank, mortgage company, or mortgage broker
offering the loan.
LIBOR
LIBOR stands for London Inter-Bank Offered
Rate. This is a favorable interest rate offered for U.S.
dollar deposits between a group of London banks. There
are several different LIBOR rates, defined by the
maturity of their deposit. The LIBOR is an international
index that follows world economic conditions.
LIBOR-indexed ARMs offer borrowers aggressive initial
rates and have proven to be competitive with popular ARM
indexes like the Treasury bill.
Lifetime Cap
A provision of an ARM that limits the highest
rate that can occur over the life of the loan.
Liquid Asset
A deposit of funds that can easily be made available as cash.
Loan to Value Ratio
(LTV)
The unpaid principle
balance of the mortgage on a property divided by the
property's appraised value. The LTV will affect programs
available to the borrower and generally, the lower the
LTV the more favorable the terms of the programs offered
by lenders.
Lock Period
The amount of time that a lender will
guarantee a loan's interest rate. Once you've locked in
the interest rate on a loan, the lender will guarantee
that rate for a certain period of time, usually for 30,
45 or 60 days.
Lock-In
A written agreement guaranteeing the home
buyer a specified interest rate provided the loan is
closed within a set period of time. The lock-in also
usually specifies the number of points to be paid at
closing.
Margin
The number of
percentage points a lender adds to the index value to
calculate the ARM interest rate at each adjustment
period.
Mortgage
A legal document that pledges a property to
the lender as security for payment of a debt
Mortgage Disability
Insurance
A disability
insurance policy which will pay the monthly mortgage
payment in the event of a covered disability of an
insured borrower for a specified period of time.
Mortgage Insurance
(MI)
Insurance written by an
independent mortgage insurance company protecting the
mortgage lender against loss incurred by a mortgage
default. Usually required for loans with an LTV of
80.01% or higher.
Mortgagee
The person or company who receives the
mortgage as a pledge for repayment of the loan. The
mortgage lender.
Mortgagor
The mortgage borrower who gives the mortgage
as a pledge to repay.
No-Income Verification
Some loan products only require that applicants state the source of their income without providing
supporting documentation such as tax returns or pay stubs.
These programs carry a higher rate due to increased risk to the investor.
Non-Conforming Loan
Also called a jumbo loan.
Conventional home mortgages not eligible for sale and
delivery to either Fannie Mae (FNMA) or Freddie Mac
(FHLMC) because of various reasons, including loan
amount, loan characteristics or underwriting guidelines.
Non-conforming loans usually incur a rate and
origination fee premium. The current non-conforming loan
limit is $300,701 and above.
Note
A written agreement containing a promise of
the signer to pay to a named person, or order, or
bearer, a definite sum of money at a specified date or
on demand.
Origination Fee
A fee imposed
by a lender to cover certain processing expenses in
connection with making a real estate loan. Usually a
percentage of the amount loaned, such as one
percent.
Owner
Financing
A property purchase
transaction in which the property seller provides all or
part of the financing.
Periodic Cap
The maximum
rate increase for a specific period for a specific loan
(ARM) only.
PITI
principle, interest, taxes and insurance--the
components of a monthly mortgage payment.
Planned Unit Developments
(PUD)
A subdivision of five or
more individually owned lots with one or more other
parcels owned in common or with reciprocal rights in one
or more other parcels.
Points
Charges levied by the mortgage lender and
usually payable at closing. One point represents 1% of
the face value of the mortgage loan.
Prepaids
Those expenses of property which are paid in
advance of their due date and will usually be prorated
upon sale, such as taxes, insurance, rent, etc.
Prepayment
Penalty
A charge imposed by a
mortgage lender on a borrower who wants to pay off part
or all of a mortgage loan in advance of schedule.
Principle
Amount of debt, not including interest. The
face value of a note or mortgage.
Private Mortgage Insurance (PMI)
Insurance provided by
nongovernment insurers that protects lenders against
loss if a borrower defaults. Fannie Mae generally
requires private mortgage insurance for loans with
loan-to-value (LTV) percentages greater than 80%.
Qualifying Ratios
The ratio of
your fixed monthly expenses to your gross monthly
income, used to determine how much you can afford to
borrow. The fixed monthly expenses would include PITI
along with other obligations such as student loans, car
loans, or credit card payments.
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.
Rate
The annual
rate of interest on a loan, expressed as a percentage of
100.
Rate Cap
A limit on how much the interest rate can
change, either at each adjustment period or over the
life of the loan.
Rate
Lock-In
A written agreement in
which the lender guarantees the borrower a specified
interest rate, provided the loan closes within a set
period of time.
Rebate
Compensation received from a wholesale lender
which can be used to cover closing costs or as a refund
to the borrower. Loans with rebates often carry higher
interest rates than loans with "points" (see
above).
Refinancing
The process of paying off one loan with the
proceeds from a new loan using the same property as
security.
Residential Mortgage Credit
Report (RMCR)
A report
requested by your lender that utilizes information from
at least two of the three national credit bureaus and
information provided on your loan application.
Seller Carry-Back
An agreement
in which the owner of a property provides financing,
often in combination with an assumed mortgage.
Settlement Statement
A document that gives a breakdown of the costs that the buyer and
seller are responsible for on the closing date.
Stated/Documented
Income
Some loan products
require only that applicants "state" the source of their
income without providing supporting documentation such
as tax returns.
Survey
A print showing the measurements of the
boundaries of a parcel of land, together with the
location of all improvements on the land and sometimes
its area and topography.
Tenants-In-Common
An undivided
interest in property taken by two or more persons. The
interest need not be equal. Upon death of one or more
persons, there is no right of survivorship.
Term
The period of time which covers the life of
the loan. For example, a 30 year fixed loan has a term
of 30 years.
Title
The evidence one has of right to possession of
land.
Title
Insurance
Insurance against
loss resulting from defects of title to a specifically
described parcel of real property.
Title
Search
An investigation into
the history of ownership of a property to check for
liens, unpaid claims, restrictions or problems, to prove
that the seller can transfer free and clear
ownership.
Total Debt
Ratio
Monthly debt and housing
payments divided by gross monthly income. Also known as
Obligations-to-Income Ratio or Back-End Ratio.
Truth-In-Lending Act
A federal law
requiring a disclosure of credit terms using a standard
format. This is intended to facilitate comparisons
between the lending terms of different financial
institutions.
Verification of Deposit (VOD)
A form completed by a bank or other depository to verify available funds.
Normally bank statements are used in lieu of this form.
Verification of Employment (VOE)
A form completed by the employer to confirm income and dates of employment.
Veterans Administration
(VA)
A government agency
guaranteeing mortgage loans with no down payment to
qualified veterans.
Zone
A geographic area reserved and defined by local ordinance for
specific limited use. Zones are almost always subject to certain
restrictions or conditions.
Zoning
The local government's specifications for the use of
property in certain areas.
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