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Mortgage Glossary
Rate Protection - Protection of the borrowers rate just in case rates rise during the time a borrower applies for the loan and the time the loan closes.
The Real Estate Settlement Procedures Act ( or RESPA) -RESPA is a federal law that gives consumers the right to review information about loan settlement costs after you apply for a loan and again at loan settlement. The law obliges lenders to provide these settlement costs only after application.
Real Financing Cost - The real financing cost is a consumer-oriented rate that takes into account specific costs, fees, potential rate changes and the projected amount of time you will have the loan. The fees and costs are distributed over the time you plan to be in the house, allowing you to do an apples-to-apples comparison of a variety of loan types. The real financing cost is not the APR. The APR assumes that you keep your loan for the entire term (e.g. 30 years for a 30-year fixed loan) and includes only some of your loan fees. The total financing cost takes into account all of your closing costs associated with your loan and also how long you plan to be in your house.
Real Property - Land and any improvements permanently affixed to it, such as buildings.
Refinance - The process of paying off one loan with the proceeds from a new loan secured by the same property. Refinancing is usually done to secure better loan terms like a lower interest rate than your current loan or a lower monthly payment. Refinancing can also be used as an alternative to a home equity loan to access cash.
Right to Recession - Under the provisions of the Truth-in-Lending Act, the borrower's right, on certain kinds of loans, to cancel the loan within three days of signing a mortgage.
back to topSecurity - This refers to the address of the property being pledged as security for your loan.
Self Employed Borrower - The self employed borrower causes a more difficult mortgage process. This kind of borrower documents their income in alternative ways rather using information form an employer.
Settlement - (see closing)
Simple Interest - The interest calculated on a principal sum, not compounded on earned interest.
Single Family - A single-family home is a residence that houses one family.
Site Condominium - A detached single-family dwelling characterized as a site condominium by the way it is platted by the builder, however it is still considered a condominium.
Structural Improvements - A "Structural Improvement" is any permanent improvement made to your property that is not strictly for decorating purposes. Examples include: additions, new flooring, kitchen or bathroom upgrades, new windows and central air. Swimming pools are considered structural improvements only if they are in ground and your property is in a year round warm weather climate.
Survey - A mortgage survey is a bird's eye sketch of your property that shows the boundary lines of your lot, and details any encroachments between you and your neighbors.
Sweat Equity - Value added to a property in the form of labor or services by the owner rather than by cash.
back to topTax Lien - Claim against a property for unpaid taxes.
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 - Document that gives evidence of ownership of a property. Also indicates the rights of ownership and possession of the property. Individuals who will have legal ownership in the property are considered "on title" and will sign the mortgage and other documentation. A title may be obtained through a purchase, personal inheritance, or through the foreclosure of a mortgage.
Title Company - A company that insures title to property.
Title Company Closing Fee - This fee is paid to the title insurance company that conducts your closing and handles the transfer of funds among the parties.
Title Insurance - Title insurance protects a lender against any title dispute that may arise over a particular property. It is required to close on your home. You may also purchase owner's title insurance which protects you as the homeowners. Varies - generally between $175 - $875
Title Search - Examination of local real estate records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property
Total Payment - This is the total amount you will have paid over the life of the loan for principal, interest and prepaid finance charges, assuming you keep the loan to maturity and made only the required monthly payments.
Transfer Tax - Tax paid when title passes from one owner to another.
Truth-In-Lending Act - Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by a lender to a borrower after application. Also requires the right of rescission period.
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Quicken Loans
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