Loan Terminology
| Term | Main definition |
|---|---|
| Fixed-Rate Loan | A mortgage loan with an interest rate that remains the same for the entire term of the loan. The principle and interest are fixed (such as 30 year fixed). |
| For Sale by Owner | A property that is for sale by the owner, without the assistance of a real estate agent or broker. |
| Foreclosure | The legal process that allows the lender to take possession of and sell a home, because the borrower did not meet the mortgage terms. |
| Gross Income | Income before taxes or deductions are taken out. |
| Home Equity Line of Credit | A type of home equity loan that allows you to access money as a line of credit. |
| Home Equity Loan | A loan based on the mount of equity in your home. |
| Homeowners Association (HOA) | A group of homeowners within a defined community, or complex who make decisions about maintenance and repair of the land and common areas and enforce agreed-upon covenants, conditions, and restrictions (CC&Rs). |
| Homeowners Insurance | A form of insurance that protects your property against loss from theft, liability, and most common disasters. |
| Homestead | A property-tax classification for owner-occupied homes that reduces the amount paid for property taxes. |
| Housing Co-Op | A legal entity by which a group of people share ownership of one or more residential buildings. The shareholder-owners divide the mortgage, taxes, insurance, maintenance, and other expenses. |
| Interest Rate | A charge for borrowing money, expressed as a percentage of the loan amount. |
| Judgment | A court decision that determines that a specific amount of money is owed by a debtor to another party, and that may be listed on a credit report as a public record. |
| Lien | A claim of money against a property. The value of the property is used as security for repayment of the debt. |
| Loan Closing | A point at which the loan will be finalized and legally executed with signatures of the borrower. This is also the point at which Escrow will collect any funds due as stated on the Closing Disclosure. |
| Loan Estimate | A federally mandated document that describes important facts about your loan such as interest rate and estimated closing costs. Lenders are required to give you this estimate by law after you submit a completed loan application. |
| Loan Prequalification | An estimate of what you can borrow from a lender to buy a home, based on gross income and debt. Many Lenders use Pre-Qual Letter and Pre-Approval Letter interchangeably. |
| Loan-to-Value Ratio | The relationship between the loan amount and the value of the property, used to determine what type of loan you might qualify for and how much you can borrow. |
| Manufactured Home | A home built entirely in a factory and then delivered to the site. |
| Market Value | The most likely sale price for a home at a specific point in time. |
| Modular Home | A home whose factory-built sections are brought to the site for assembly. |
