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Debt
Any amount one person owes to another.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income.

Deed
The legal document that transfers property ownership from the seller to the buyer.

Deed of trust
A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.

Default
The failure to fulfill a duty or discharge an obligation - such as making monthly mortgage payments.

Delinquency
Failure to make mortgage payments on time.  Severe delinquency can lead to foreclosure.

Delinquent mortgage
A mortgage that involves a borrower who is behind on payments.  If the borrower cannot bring the payments up to date within a specified number of days the lender may begin foreclosure proceedings.

Department of Veterans Affairs (VA)
An independent agency of the federal government which guarantees long-term, low or no down payment mortgages to eligible veterans.

Deposit
Funds provided by the buyer with an offer to purchase property.  Also referred to as "earnest money".

Disclosure
A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.

Discount points
Fees charged by a lender to provide a lower interest rate.  One discount point equals one percent (1%) of the loan amount.

Document needs list
A list of documents required by a lender from a potential borrower submitting a loan application.  Documents requested can range from paycheck stubs to bank statements.

Documentation Preparation Fee
A fee charged by lenders, brokers and/or settlement agents to prepare the necessary documents for closing.

Down payment
The difference between the purchase price and the portion financed by a mortgage lender.

Draw
A payment made to contractors, subcontractors, home builders or suppliers from the proceeds of a construction loan.

Due on Sale clause
Standard language in a mortgage that states the loan must be repaid upon sale.

Earnest money
Money a buyer provides with an offer to purchase a property.  Also called a deposit.

Earthquake insurance
An insurance policy that provides coverage against damage to a home from an earthquake.

Easement
A right given to a third party to use a portion of the property for certain purposes, such as power lines or sewage mains.


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Encumbrance
Any right or interest in property interfering with its use or transfer.

End loan
The conversion from a construction loan to permanent financing.

Entitlement
The VA home loan benefit is called an entitlement and often referred to as eligibility.

Equal Credit Opportunity Act (ECOA)
Federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age.

Equifax
One of the main credit-reporting bureaus.

Equity
The value of a property after existing liens are deducted.

Errors and omissions insurance
A policy that insures against mistakes made by a builder or architect.

Escrow
A neutral third party holds documents and money for a real estate transaction and ensures that all conditions of a sale are met before any disbursement of funds or articles.

Escrow account
An account that a mortgage lender or mortgage servicing company establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes.  Also commonly referred to as an impound account.

Escrow agent
A neutral third party who ensures that all conditions of a real estate transaction are met before any transfer of funds or property is recorded.

Escrow closing
Escrow closes when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer.

Escrow company
A firm that acts as a neutral third party to ensure that all conditions established by the buyer, seller and lender in a real estate transaction are met.

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
Funds that a mortgage servicer withdraws from a borrower's escrow account to pay property taxes and insurance.

Estate
The total assets of a person, including real property, at the time of death.

Estimated closing costs
An estimate of expenses related to the sale of real estate including title and appraisal fees.

Estimated hazard insurance
An estimate of hazard insurance, also known as homeowners insurance, to cover physical risks such as fire and wind damage.

Estimated property taxes
An estimate of property taxes payable on the property according to state and county tax rates.  The amount due is based on the property's assessed value which is based on the most recent sale price plus any assessment updates.


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Examination of title
An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Executed contract
A contract in which all parties have fulfilled their promises.

Experian
Experian is one of the main credit reporting bureaus.

Fair Credit Reporting Act
Federal law designed to regulate procedures and prevent old or inaccurate information from staying in consumer credit files.  This act provides individuals the right to inspect their own credit files, although the credit bureau may charge a fee.

Fair Housing Act
Federal law making it illegal to refuse to rent or sell to anyone based on race, color, religion, sex, national origin, family status or disability.

Fannie Mae
The official name of the Federal National Mortgage Association - it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Farmer's Home Administration (FMHA)
A U.S. Department of Agriculture agency that provides credit to farmers and rural residents.

Federal Home Loan Mortgage Corporation (FHLMC)
The Federal Home Loan Mortgage Corporation is commonly known as Freddie Mac.  This corporation buys mortgages from lending institutions, pools them with other loans and sells shares to investors.

Federal Housing Administration (FHA)
This government agency provides low-rate mortgages to buyers who make a down payment as small as 3 percent.

Federal National Mortgage Association (FNMA) also know as "Fannie Mae"
A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA.

FHA loans
Mortgages that are insured by the Federal Housing Administration (FHA). The FHA operates loan plans for investors and purchasers of rural property, and provides low-rate mortgages to buyers who make a down payment as small as 3 percent.

FHA Mortgage Insurance
Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with the Federal Housing Administration (FHA).  In addition to the one time fee, the FHA also requires an additional insurance fee of up to 0.5 percent of the current loan amount, paid in monthly installments.  The lower the down payment, the more years the fee must be paid.

Firm commitment
A written promise made by a lender to loan money for the purchase of property.


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First mortgage
The primary mortgage on a property.  As the most senior voluntary lien, the first mortgage takes priority over all other voluntary liens.

Fixed time
The specific weeks in a year that an owner of a timeshare arrangement has access to accommodations.

Fixed-rate mortgage
A home loan with an interest rate that will remain at a specific rate for the term of the loan.

Flood certification
The process of determining whether a property is located within a known flood zone.

Flood insurance
Insurance coverage that is required in designated flood areas.

For Sale By Owner (FSBO)
A selling method whereas the owner of the property acts as the selling agent and handles the sales process directly with the buyer or buyer's agent.  This is most commonly done y owners in order to avoid having to pay a listing commission.

Freddie Mac
A congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.  Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation (FHLMC).

Front-end ratio
A lender calculation that compares a borrower's monthly housing expense (principal, interest, taxes, and insurance) to gross monthly income.

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.


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