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A

adjustable-rate mortgage (ARM)

A mortgage which is based on an interest rate that changes periodically based on the changes in a specified index. Some common indices are:

1. Treasury Indexed - Adjustments are based on the average interest rate that the government pays on its debt.

2. CD Indexed (certificate of deposit) - Adjusts to certificate of deposit index.

3. LIBOR (London interbank offer rate) - The rate on the dollar-denominated deposits, also known as Eurodollars, traded between banks in London.

4. COFI (cost of funds index) - The cost of funds is indexed to the average interest rate that banks in particular states pay their customers. One of the most common indexes is the 11th district cost of funds index, which covers banks in California, Nevada, and Arizona.

5. TCM - This index is the average of the twelve most recently published monthly yields on United States Treasury securities, adjusted to a constant maturity of one-year ("Index" or "Average One-Year Treasury Constant Maturity").

 

adjustment date

The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

 

adjustment period

The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

 

amortization

The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.

 

amortization term

The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

 

annual percentage rate (APR)

The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

 

application 

A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.

 

appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser.

 

appraiser

A person qualified by education, training, and experience to estimate the value of real property and personal property. The appraisal is performed based on Fannie Mae, Freddie Mac, FHA, or VA guidelines.

 

appreciation

An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

 

asset

Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, 401Ks, TSPs, and so on)

 

assignment

The naming or condition of being named a party to or a defined entity to a debt.

 

assumable mortgage

A mortgage that can be taken over (assumed) by the buyer when a home is sold.

 

assumption

The transfer of the seller's existing mortgage to the buyer.

 

assumption clause

A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.

 

assumption fee

The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

 

B

balance sheet

A financial statement that shows assets, liabilities, and net worth as of a specific date.

 

balloon mortgage

A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

 

balloon payment

The final lump sum payment that is made at the maturity date of a balloon mortgage.

 

bankrupt

A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.

 

bankruptcy

A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

 

before-tax income

Income before taxes are deducted.

 

biweekly payment mortgage

A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest over the life of the loan.

 

bond

An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

 

breach

A violation of any legal obligation.

 

bridge loan

A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."

 

broker

A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

 

buydown mortgage

A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.

 

buyer's agent

An agent retained by the buyer to represent the buyer's interests. Requires an agreement of the parties for agent to represent the buyer - not all agents who show homes to buyers represent them! Duty is to locate the right home for the buyer, 

and negotiate on buyers' behalf for best price and terms, maintain buyer's confidentiality and disclose all known information about the seller AND THE HOME to the buyer. Buyer is "client", sellers are "customers".

 

C

call option

A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.

 

cap

A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.

 

capital improvement

Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

 

cash-out refinance

A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

 

Certificate of Eligibility

A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.

 

Certificate of Reasonable Value (CRV)

A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.

 

certificate of title

A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

 

change frequency

The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).

 

clear title

A title that is free of liens or legal questions as to ownership of the property.

 

closing

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."

 

closing cost item

A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country.

 

closing statement

Also referred to as the HUD-1. The final statement of costs incurred to close on a loan or to purchase a home.

 

cloud on title

Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.

 

collateral

An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

 

collection

The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
combination loan (AKA piggyback loan) With this type of loan, you receive a first mortgage for 80 percent of the sales price, and a second mortgage at the same time for the remainder of the balance. For example, an 80/15/5 is a no PMI loan with first trust loan for 80% of the sales price and a second trust loan of 15% of the sales price. The down payment would then be 5%. If avoiding PMI (mortgage insurance) is important to you, consider combination loans - known as 80/15/5, 80/10/10 loans or 80/20's.

 

combined loan-to-value (CLTV)

The relationship between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property's appraised value (or sales price, if it is lower.)

 

co-maker

A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment.

 

commission

The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.

 

commitment letter

A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

 

common areas

Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

 

Community Home Buyer's Program

An income-based community lending model under which mortgage insurers Fannie Mae and Freddie Mac offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power, and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase homebuyer education sessions.

 

Community Home Improvement Mortgage Loan

An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.

 

community property

In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.

 

comparables

An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties similar to the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

 

condominium

A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

 

condominium conversion

Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

 

conforming loan

The current conforming loan limit is $333,700 and below. Conforming loan limits change periodically.

 

construction loan

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

 

consumer reporting agency (or bureau)

An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.

 

contingency

A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

 

contract

An oral or written agreement to do or not to do a certain thing.

 

conventional mortgage

A mortgage that is not insured or guaranteed by the federal government.

 

convertibility clause

A provision in some adjustable-rate mortgages (ARMS) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

 

convertible ARM

An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

 

cooperative (co-op)

A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

 

corporate relocation 

Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

 

cost of funds index (COFI)

An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

 

covenant

A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.

 

credit

An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

 

credit history

A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

 

credit report

A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

 

credit repository 

An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.

 

credit score

A credit score is a numerical analysis of a borrowers ability to manage their credit accounts.

 

D

debt

An amount owed to another.

 

deed

The legal document conveying title to a property.

 

deed-in-lieu

A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure.

 

deed of trust

The document used in some states instead of a mortgage; title is conveyed to a trustee.

 

default

Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

 

delinquency

Failure to make mortgage payments when mortgage payments are due.

 

deposit

A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

 

depreciation

A decline in the value of property; the opposite of appreciation.

 

discount points

Each point represents 1% of the buyer's loan amount. Discount points are a form of prepaid interest and are in many cases tax deductible. The more a buyer prepays in discount points, the lower the interest rate will be.

 

down payment

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

 

due-on-sale provision

A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.

 

E

earnest money deposit (EMD)

A deposit made by the potential home buyer to show that he or she is serious about buying the house.

 

easement

A right of way giving persons other than the owner access to or over a property.

 

effective age

An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

 

effective gross income 
Normal 

Annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.

 

eighty-ten-ten loan

See "combination loan" or "piggyback loan".

 

eighty-fifteen-five loan

See "combination loan" or "piggyback loan".

 

encumbrance

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

 

endorser

A person who signs ownership interest over to another party. Contrast with co-maker.

 

Equal Credit Opportunity Act (ECOA)

A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

 

equity

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

 

escrow

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

 

escrow account

The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.

 

escrow analysis

The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

 

escrow collections

Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.

 

escrow disbursements

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage, insurance, and other property expenses as they become due.

 

escrow payment

The portion of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.

 

estate

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

 

eviction

The lawful expulsion of an occupant from real property.

 

examination of title

The report on the title of a property from the public records or an abstract of the title.

 

extended lock

An extended lock allows a borrower to lock their interest in rate for a period longer than the standard 60 days. This service is usually available for an additional cost. Consult your loan officer for details.

 

F

Fair Credit Reporting Act

A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

 

fair market value

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

 

Fannie Mae (FNMA)

A congressionally chartered, publicly traded company that provides homeownership opportunities through loan programs established for low-, moderate-, and middle income Americans.

 

Federal Housing Administration (FHA)

An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

 

fee simple

The greatest possible interest a person can have in real estate.

 

FHA mortgage

A mortgage that is insured by the Federal Housing Administration'(FHA). Also known as a government mortgage. FHA loan limits vary by geographic area.

 

finder's fee

A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

 

first adjustment

When you can expect the first rate adjustment in your ARM loan.

 

first mortgage

A mortgage that is the primary lien against a property.

 

fixed-rate mortgage (FRM)

A mortgage in which the interest rate does not change during the entire term of the loan.

 

fixed second mortgage 

See " home equity loan"

 

flood insurance

Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

 

foreclosure

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

 

Freddie Mae (FHLMC)

A congressionally chartered, publicly traded company that provides homeownership opportunities through loan programs established for low-, moderate-, and middle income Americans.

 

fully amortized ARM

An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.

 

G

good faith estimate

An estimate of charges which a borrower is likely to incur in connection with a settlement.
 
H

 

H

hazard insurance

Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

 

home equity line of credit

A credit line that is secured by a second deed of trust on a house. Equity lines of credit are revolving accounts that work like a credit card, which can be paid down or charged up for the term of the loan. The minimum payment due each month is interest only.

 

home equity loan

A loan secured by a second deed of trust on a house, typically used as a home improvement loan.

 

housing ratio

The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front end ratio.

 

HUD

The U.S. Department of Housing and Urban Development.

 

I

index

A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used indices include the 1 Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI). 
 
J

 

J

jumbo mortgage

The current loan limit for a conforming loan is $333,700. Loans for amounts above $333,700 are considered non-conforming or jumbo mortgages. 
 
L

 

L

lien

An encumbrance against property for money due, either voluntary or involuntary.

 

lender

The bank, mortgage company, or mortgage broker offering the loan.

 

lifetime cap

A provision of an ARM that limits the highest rate that can occur over the life of the loan.

 

loan to value ratio (LTV)

The ratio of the amount of your loan to the appraised value of your home or sales price (which ever is lower). The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of 

the programs offered by lenders.

 

lock period

The amount of time that a lender will guarantee a loan's interest rate. Once you've locked in the interest rate on a loan, the lender will guarantee that rate for a certain period of time, usually for 30 or 60 days. There are other lock periods available. Consult your loan officer for details.

 

lock-in

A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

 

M

Margin

The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period. A representative margin would be 2.75%. Depending on the ARM product, margins vary from 2.75 to 3.25.

 

mortgage

A legal document that pledges a property to the lender as security for payment of a debt.

 

mortgage disability insurance

A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.

 

mortgage insurance (MI)

Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LTV of 80.01% or higher.

 

mortgagee

The person or company who receives the mortgage as a pledge for repayment of the loan. The mortgage lender.

 

mortgagor

The mortgage borrower who gives the mortgage as a pledge to repay.

 

N

no income verification

See " stated income".

 

non-conforming loan

Also called a jumbo loan. Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non- conforming loans usually incur a rate and origination fee premium. The current non- conforming loan limit is $333,700 and above.

 

Note

A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.

 

O

origination fee

A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.

 

owner financing

A property purchase transaction in which the property seller provides all or part of the financing. 
 
P

 

P

periodic cap

The maximum rate increase for a specific period for a specific loan (ARM) only.

 

piggyback loan (AKA combination loan)

With this type of loan, you receive a first mortgage for 80 percent of the loan amount and a second mortgage at the same time for the remainder of the balance. For example, an 80/15/5 is a no PMI loan with first trust loan for 80% of the sales price and a second trust loan of 15% of the sales price. The down payment would then be 5%. If avoiding PMI (mortgage insurance) is important to you, consider combination loans - known as 80/15/5, 80/10/10 loans or 80/20's.

 

PITI

Principal, interest, taxes, and insurance--the components of a monthly mortgage payment.

 

Planned Unit Developments (PUD)

A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.

 

points

Charges levied by the mortgage lender and usually payable at closing. One point represents I% of the face value of the mortgage loan. See origination fee and discount points.

 

prepaids

Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

 

prepayment penalty

A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule. Most loans do not have a prepayment penalty but it is always advisable to ask in advance.

 

principal

Amount of debt, not including interest. The face value of a note or mortgage.
private mortgage insurance (PMI)
Insurance provided by non-government insurers that protects lenders against loss if a borrower defaults. Fannie Mae and Freddie Mac generally require private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.

 

Q

qualifying ratios

Ratios calculated to aid in determining how much a borrower can afford to borrower. The “front ratio” is calculated by dividing your monthly housing expense (PITI) by your Gross monthly income. The “back ratio” is calculated by dividing your total fixed monthly expenses by your gross monthly income. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans or leases, credit card payments, alimony, and child support.

 

R

Rate

The annual rate of interest on a loan, expressed as a percentage of 100.

 

rate cap

A limit on how much the interest rate can change; either at each adjustment period or over the life of the loan.

 

rate lock-in

A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

 

refinancing

The process of paying off one loan with the proceeds from a new loan using the same property as security.

 

residential mortgage credit report (RMCR)

A report requested by your lender that utilizes information from at least two of the three national credit bureaus, as well as information provided on your loan application.

 

S

seller carry back

An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.

 

stated income

Some loan products require only that applicants "state" the amount of their income without providing supporting documentation such as tax returns.

 

survey

A print showing the measurements of the boundaries of a parcel of land, together with the location of all improvements on the land and sometimes its area and topography.

 

T

TCM

This index is the average of the twelve most recently published monthly yields on United States Treasury securities adjusted to a constant maturity of one-year ("Index" or "Average One-Year Treasury Constant Maturity")

 

tenants-in-common

An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of one or more persons, there is no right of survivorship.

 

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

The evidence one has of right to possession of land.

 

title insurance

Insurance against loss resulting from defects of title to a specifically described parcel of real property.

 

title search

An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions, or problems to prove that the seller can transfer free and clear ownership.

 

total debt ratio

Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-income Ratio or Back-End Ratio.

 

Truth-in-Lending Act

A federal law requiring a disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

 

V

Veterans Administration (VA)

A government agency guaranteeing mortgage loans with no down payment to qualified veterans. The current VA loan limit is $240,000.