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Glossary of terms and acronyms used on this site

There are 93 entries in this glossary.
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Term Definition
203(b)

FHA's single family program which provides mortgage insurance to lenders to protect against the borrower defaulting; 203(b) is used to finance the purchase of new or existing one to four family housing; 203(b) insured loans are known for requiring a low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount. Source: www.hud.gov

203(k)

This FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan. Source: www.hud.gov

Abstract of Title

Documents recording the ownership of property throughout time. Source: www.hud.gov

Acceleration

The right of the lender to demand payment on the outstanding balance of a loan. Source: www.hud.gov

Affidavit

A signed, sworn statement made by the buyer or seller regarding the truth of information provided. Source: www.hud.gov

Amenity

A feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, woods, water) or man-made (like a swimming pool or garden). Source: www.hud.gov

Amortization

A payment plan that enables you to reduce your debt gradually through monthly payments. The payments may be principal and interest, or interest-only. The monthly amount is based on the schedule for the entire term or length of the loan. Source: www.hud.gov

ARM

Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly payment amount, however, is usually subject to a cap. Source: www.hud.gov

As-is Condition

The purchase or sale of a property in its existing condition without repairs. Source: www.hud.gov

Assessed Value

The value that a public official has placed on any asset (used to determine taxes). Source: www.hud.gov

Assessor

A government official who is responsible for determining the value of a property for the purpose of taxation. Source: www.hud.gov

Assumable Mortgage

When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. An assumable mortgage can help you attract buyers if you sell your home. Source: www.hud.gov

Balloon Loan or Mortgage

A mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower. Source: www/hud.gov

Bankruptcy

A federal law whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay. Source: www.hud.gov

Biweekly Payment Mortgage

A mortgage paid twice a month instead of once a month, reducing the amount of interest to be paid on the loan. Source: www.hud.gov

Borrower

A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms. Source: www.hud.gov

Building Code

Based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building. Source: www.hud.gov

Buy Down

The seller pays an amount to the lender so the lender provides a lower rate and lower payments many times for an ARM. The seller may increase the sales price to cover the cost of the buy down. Source: www.hud.gov

Cap

A limit, such as one placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease, either at each adjustment period or during the life of the mortgage. Payment caps do not limit the amount of interest the lender is earning, so they may cause negative amortization. Source: www.hud.gov

Capital Gain

The profit received based on the difference of the original purchase price and the total sale price. Source: www.hud.gov

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