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Gift
Funds a buyer receives from a relative or other source.  Mortgage lenders usually require a gift letter from the giver of this "gift money" stating that the money does not have to be repaid.

Ginnie Mae
See Government National Mortgage Association (below)

Good faith estimate
An estimate from an mortgage lender or broker showing the all the costs associated with obtaining a home loan including loan processing, title and inspection fees.

Government National Mortgage Association (GNMA)
This government agency buys home loans from lenders, pools them with other loans and sells shares to investors.  However, unlike Fannie Mae and Freddie Mac, Ginnie Mae only purchases loans backed by the federal government.  (Commonly known as Ginnie Mae)

Grace period
A specified amount of time in which a borrower may make a loan payment after its due date without penalty.

Graduated Payment Mortgage
A mortgage that requires a borrower to make larger monthly payments over the term of the loan.  Payments are lower for the first few years but gradually rise until year three or five, when payments become fixed.

Gross income
The total household income before taxes or expenses are subtracted.

Growing-equity mortgage
A fixed rate mortgage that increases payments over a specific period of time. The extra funds are applied to the principal.


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Hazard insurance
Hazard insurance provides coverage for damage from items as fire and wind.  Mortgage lenders require coverage for at least the replacement value of the home.  (Also known as homeowner's insurance or fire insurance)

High-rise
Any building taller than six stories.

Home equity line
An open ended line of credit based on a homeowner's accumulated equity.

Home equity loan
A loan that allows owners to borrow against the equity in their homes however unlike a home equity line this product provides a defined amount at closing without an option to redraw in the future.

Home inspection
An examination of a home's condition by a licensed inspector prior to purchase.

Home inspector
A licensed professional who evaluates the structural soundness and operating systems of a residence.

Home price
The price agreed upon by a buyer and seller, usually based on an appraisal of the house's market value.

Homeowner's insurance
Insurance that includes coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.

Homeowners Association (HOA)
A group that governs a subdivision, condominium or planned community.  The association collects monthly fees from all owners to pay for common area maintenance, handle legal and safety issues and enforce the covenants, conditions, and restrictions set by the developer.

Homeowners Association dues
Monthly payments due to a homeowners' association to be used for maintenance and communal expenses.  Condominiums, townhouse complexes, and planned unit developments (PUDs) may require monthly homeowners' association dues.

Homestead
A parcel of land used by the owner as a primary residence.

Housing expense ratio
The percentage of gross monthly income devoted to housing costs.

HUD
Abbreviation of (the U.S. Department of) Housing and Urban Development.  HUD is a federal agency that oversees the Federal Housing Administration (FHA) and a variety of housing and community development programs.

HUD-1 Uniform Settlement Statement
A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing for the buyer and seller.

Impounds
A portion of the monthly mortgage payment that is placed in an account and used to pay for hazard insurance, property taxes and private mortgage insurance( if applicable).

Income property
Property that is not occupied by the owner but is used to generate income.

Index
Financial tables used by lenders to calculate interest rates on adjustable mortgages.  Commonly used indexes are the Prime Rate, the LIBOR and Treasury bills.


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Indexed Rate
The sum of the published index plus a margin.  For example if the index were 5% and the margin 2.75%, the "fully indexed rate" would be 7.75%.

Initial interest rate
The original interest rate on an adjustable rate mortgage.  This rate may be subject to various adjustment at points throughout the mortgage.

Initial rate cap
A specific limit defined by some adjustable rate loans (ARMs) for the maximum amount the interest rate may increase at the expiration of the initial interest rate.

Initial rate duration
Most adjustable rate loans (ARMs) offer an initial interest rate below the current market rate. This initial or "teaser" rate expires after a period called the initial rate duration, which may last months or years.

Inspection fee
The fee paid to a licensed property inspector in order to determine the present physical condition of the property.

Inspection report
A licensed property inspectors; written report of the property's condition.

Insurance binder
A temporary insurance arrangement usually put in force until a permanent policy can be obtained.

Insured Mortgage
A mortgage that is insured (guaranteed) by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI).

Interest accrual rate
The rate at which interest accrues on a mortgage.

Interest paid over life of loan
The total amount paid to the lender for the use of money during the time the money is borrowed.

Interest rate
The fee, expressed as a percentage, charged for a loan.

Interest rate buy-down plans
For buyers with limited cash reserves some sellers are willing to advance funds from the sale of the home to buy down the interest rate and reduce the buyer's monthly obligation.

Interest rate cap
The maximum interest rate charge allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.

Interest rate ceiling
The highest interest rate a lender can charge for an adjustable rate mortgage.

Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum possible interest rate, as specified in the mortgage note.

Interest only loan
The borrower pays only the interest that accrues on the loan balance each month.  Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.

Interim financing
Short-term financing used by sellers to bridge the gap between the sale of one house and the purchase of another (also known as bridge or swing loans).  A construction loan is also a form of interim financing.

Investment property
Real estate that generates income, such as an apartment building or a rental home.

Joint liability
The responsibility of two or more people to fulfill the terms of a home loan or other financial debt.

Joint tenancy
Ownership by two or more people that gives equal shares to a piece of property.  Rights pass to the surviving owner or owners.

Jumbo loan
Loans that exceed the conforming limits set annually by Fannie Mae & Freddie Mac.

Junior mortgage
A loan that is subordinate to the primary loan.


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