| E |
| Earnest Money Deposit: A deposit
made by a potential home buyer to show that they are
serious about purchasing the property. |
| Equal Credit Opportunity Act (ECOA):
The act declaring the elimination of discrimination
on the basis of age, sex, and race in finance. |
| Equity: The difference between
the current market value of a property and the principal
balance of all outstanding loans. |
| Escrow: A third party agent
that receives, holds, and/or disburses certain funds
or documents upon the performance of certain conditions.
For example, an earnest money deposit is put into escrow
until the transaction is closed. Only then can the seller
receive the deposit. |
| Escrow Account (impound account):
An account that a borrower can hold with a lender once
a purchase transaction is closed. This requires borrowers
to pay more than the principal and interest each month.
The overage is put into escrow, which the lender uses
to pay items like property taxes and homeowner's insurance
when they are due. This eliminates the actual number
of payments that a homeowner has to worry about, but
not the amount that has to actually be paid. |
| F |
| Fair Credit Reporting Act:
A law that protects consumer that regulates the reporting
of consumer credit by agencies and establishes procedures
for correcting errors on an individual record. |
| Fees: Up-front costs associated
with a loan. Clicking on the word VIEW shown under the
"Fees Detail" column on the quotes results
page will display detailed information about the financial
institution's fees and requirements pertaining to that
rate. |
| FHA Loan: A government-backed
mortgage loan supported by the US FHA and the Department
of Housing and Urban Development (HUD). |
| FICO (Credit Rating/Score): Borrowers are rated
by lenders according to the borrower's credit-worthiness
or risk profile. Credit ratings are expressed as letter
grades such as A-, B, or C+. These ratings are based on
various factors such as a borrower's payment history,
foreclosures, bankruptcies and charge-offs. There is no
exact science to rating a borrower's credit, and different
lenders may assign different grades to the same borrower.
|
| First Mortgage: A mortgage
that has priority over other mortgages. |
| Fixed-Rate Mortgage: A mortgage
where the interest rate does not change for the life
of the loan. |
| Float: Between the time of
application and closing, a borrower may choose to bet
on interest rates decreasing by electing to float. Floating
is essentially choosing not to lock the interest rate. Since it is the
borrower's responsibility to lock his or her rate before
(or at) closing, choosing to float is considered risky
and may result in a higher interest rate. Request information
from your lender regarding lock procedures. |
| Foreclosure: A legal procedure
in which real estate is sold by the lender to pay a
defaulting borrower's debt . |
| G |
| Good Faith Estimate (GFE): An
estimate of charges which a borrower is likely to incur
in connection with a loan closing. |
| Government Loan: A type of
mortgage insured by the FHA (Federal Housing Authority),
VA (Veteran's Administration), or RHS (Rural Housing
Authority). |
| Grace Period: A time allowed,
usually 15 days, for making late payments without a
penalty. |
| Gross Monthly Income: The total
amount the borrower earns per month, not counting any
taxes or expenses. Often used in calculations to determine
whether a borrower qualifies for a particular loan.
|
