MORTGAGE GLOSSARY
the seller is a serious offer. These funds are considered a portion of the down payment. (aka - Earnest Money)
EQUAL CREDIT OPPORTUNITY ACT This is the federal law that requires lenders to grant credit without any discrimination based on race, color, religion, national origin, age, sex, marital status or source of income. (aka - ECOA)
EQUITY The amount between the estimated value of the property and any liens, mortgages or encumbrances on the property.
ESCROW ACCOUNT These are the funds collected in an account to be held for future payment of taxes and insurance. Escrow accounts are typically held by the lender on behalf of the borrower. (aka - Impound Account)
FAIR CREDIT REPORTING ACT This is a law that regulates how consumer credit is reported. It is a consumer protection law. It also allows for procedures for correcting errors on your credit report.
FHA MORTGAGE This mortgage product is a loan that is insured by the Federal Housing Administration, which is an agency of the government.
FIXED RATE MORTGAGE This mortgage product is a loan that has set interest rate that does not change during the life of the loan.
FORECLOSURE A process where the lender takes ownership of the property because the borrower has defaulted on the loan or stopped making payments.
HAZARD INSURANCE Home insurance. It insures the homeowner against damages to the property.
HOUSING-TO-INCOME RATIO This is the percentage of total housing or mortgage payment against the gross monthly income. This is a percentage used to determine if a borrower can afford the proposed mortgage. (aka - Housing Ratio)
INDEX An important aspect of an adjustable rate mortgage. The index is the number used to determine where the interest rate will be. It is normally a published number that is determined by market conditions. The most commonly used index is the Treasury bills yield.
JUMBO LOAN This is a large mortgage. Mortgages are categorized by dollar amount. If the amount of the mortgage is higher than the "conforming loan amount", it is considered a jumbo loan. (aka - non-conforming)
LIABILITIES These are your monthly debts outside of normal living expenses (i.e., car loans, credit cards, personal loans, etc.). (aka - monthly debts)
LIEN This is a legal claim against your personal property. A mortgage is a lien.
LOAN TO VALUE The percentage of the loan amount verses the sales price or appraised value of the property. If your home is worth $100,000 and your mortgage is for $80,000, the loan to value is 80%. (aka - LTV)
LOCK - IN A term used to describe the agreement
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