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| Glossary |
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Q
| qualifying ratios |
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: housing expense as a percent of income ratio and total debt obligations as a percent of income ratio. | 
R
| radon |
An invisible, odorless gas found in some homes that in sufficient concentrations might cause health problems. |
| radon detector |
A mechanical, electrical, or chemical device designed to find radon, which is completely invisible to sight, smell or taste, in homes. Radon seeps into your home from the surrounding soil and is a leading cause of lung cancer.
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| real estate agent |
A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction.
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| real estate broker |
A broker licensed by the state to assist in the sale, purchase or rental of real estate.
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| Real Estate Settlement Procedure Act (RESPA) |
A law that requires the lender to disclose information to the borrower, including a Good Faith Estimate (GFE) of the borrower’s closing costs.
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| reamortize |
To take the remaining balance of a mortgage loan and establish a new period of amortization after which the principal balance will be zero. Typically used after the end of the term of an interest-only loan.
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| recording fee |
Charge for recording deed, mortgage or deed of trust.
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| reduced documentation |
A method used to determine income when qualifying a borrower(s) for a loan. Borrower(s) provide their income, however no verification documentation is typically required.
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| refinancing |
The process of paying off one loan with the proceeds from a new loan using the same property as security.
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| registered mail |
Mail that is recorded in a register to enable its location to be tracked and delivery verified.
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| rehabilitation loan |
FHA- insured Section 203(k) rehabilitation first mortgages that enable borrowers to purchase and rehabilitate homes. With this mortgage product, borrowers can qualify for loan amounts based on the “as-completed” value of the property, up to the maximum FHA loan limits.
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| rent-to-own stores |
Stores that have new and used household items that can be rented by the week or month, or can be purchased by making a set number of payments. If the borrower misses a payment, the store takes the item back and the borrower loses any money paid toward owning it.
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| renter’s insurance |
Insurance that covers a renter from loss due to fire, smoke, vandalism, theft and some water-related damage. A comprehensive form also includes wind damage.
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| repayment plan |
A written agreement between a borrower and a lender outlining how to handle missed payments.
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replacement cost
coverage
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A policy that covers the full cost of replacing damaged property without taking depreciation into consideration.
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| reserve fund |
A reserve of money to take care of major items like replacing a roof, a furnace, or a major appliance.
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| reverse mortgage |
A mortgage product available to homeowners who are at least 62 years of age that enables you to remain in your home and provides you with an additional source of funds. Rather than paying a monthly mortgage payment to the lender, you receive funds from the lender.
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| revolving credit |
An agreement that provides a line of credit up to a set limit, with the choice of paying in full at the end of each billing period or paying over several billing periods with a finance charge added to the unpaid balance each period.
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| rural housing (RHS) loan |
A loan product offered by an agency within the Department of Agriculture. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere.
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S
| savings account |
A highly flexible type of bank account that allows you to deposit and withdraw money whenever you choose. Savings accounts usually are interest bearing, which means the bank pays you a certain rate for keeping your money there. |
| savings and loans: (S&Ls, mutual savings banks) |
Financial institutions that accept deposits primarily from individuals; and offer primarily residential mortgage loans.
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| secondary mortgage market |
The buying and selling of existing mortgages. See “Fannie Mae” and “Freddie Mac.”
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| second lien (second mortgage) |
A mortgage that has a lien position subordinate to the first mortgage.
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| secured |
Backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
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| secured credit card |
A credit card whose payments are made from a savings account that has been established in advance by the borrower. The amount in the account typically determines the limit of credit available on the credit card.
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| secured loan |
A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
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| servicer |
An organization that collects principal and interest payments from borrowers and manages borrowers' tax and insurance escrow accounts.
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| servicing |
The collection of mortgage payments from borrowers and related responsibilities of a loan server.
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| settlement |
A meeting at which all documents are signed and all expenses are paid to transfer ownership of property. Also called "closing."
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| settlement agent |
A person who conducts the settlement to transfer title of the property and to close on the mortgage loan. May be an attorney or a title and escrow agent.
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| Sherman Anti-Trust Act |
Legislation that prohibits price-fixing. In real estate, it prohibits brokers from setting an “average” or “standard” commission rate.
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| short sale |
When the lender agrees to allow a property to be sold for less than the remaining balance due on the loan, typically to prevent foreclosure.
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| spending plan |
Commonly referred to as a budget, a detailed plan of income and expenses that provides a guideline for managing future savings and expenses.
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| stated assets loan |
A type of home loan where little or no formal documentation is required; the lender accepts the borrower’s word regarding assets.
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| stated income loan |
A type of home loan where little or no formal income documentation is required; the lender accepts the borrower’s word regarding income.
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| statutory duty |
A specific duty that a real estate agent has to both clients and customers. Examples include: to seek a property at a price and terms acceptable; to present all offers in a timely fashion; to disclose all material facts about the property; to account for all monies received; to maintain all personal and financial information confidentially; and to comply with all applicable laws and fair housing regulations.
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| subagent |
A real estate agent who represents the seller under the direction of a listing broker.
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| subprime |
Home loans available for borrowers with credit problems or lack of documentation, usually offered at higher interest rates. Also called “specialty loans” or “non-prime.”
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| survey |
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, right of way, encroachments, and other physical features.
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T
| tax lien |
A lien against a property for unpaid taxes. |
| term |
The period of time over which a loan is paid.
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| title |
A legal document evidencing a person’s right to ownership of a property.
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| title company |
A company that specializes in examining and insuring titles to real estate.
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| title insurance |
Insurance to protect the lender (lender’s policy) or the buyer (owner’s policy) against the loss arising from disputes over ownership of property.
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| title search |
An examination of the public records to ensure that the seller is the legal owner of the property and that there are no liens or others claims outstanding.
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| transfer fee |
A charge for conveyance of property.
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Truth-in-Lending Act
(TILA) |
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.
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U
| underwriter |
In the loan approval process, the person who evaluates a loan application to determine the risk involved for the lender. |
| underwriting |
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.
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| Uniform Residential Loan Application |
The standard loan application form used by most lenders.
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| universal default clause |
A clause that allows a credit card company to raise your interest rate from the normal or introductory rate you agreed to when you accepted the card to the default rate (i.e. the rate paid by those who have missed payments or made late payments) when the credit card company is informed that you have defaulted (or made late payments) to another creditor.
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| unsecured |
Not backed by collateral.
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| unsecured loan |
A loan that is not backed by collateral.
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V
| VA loan |
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a “government loan.” |
| Vantage score |
A credit scoring model, developed by the nation's three credit-reporting companies, which scores consumers consistently across all three companies.
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W
| walk-through |
A final inspection a day or two before settlement to see that the property is in the same condition that it was at the time the offer contract was written. |
| wire transfer |
A transfer of money from your checking account to another person’s bank account either domestically or internationally.
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| wood-boring insect inspection |
A type of home inspection that checks for all forms of insects that cause damage to wood. Also called a “termite inspection.”
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