Issue Spotlights
Housing Glossary
Housing Glossary
adjudicated: refers to a property that has been transferred to the local or state government due to unpaid taxes and/or safety liens. The government obtains the tax title for the property once the property goes unpurchased at tax sale.
Adjustable Rate Mortgage(ARM): a mortgage loan whose interest rates are subject to periodic adjustments, for instance, a lender can decide to adjust interest rates on the loan from month to month. However, the amount by which the interest rate can increase or decrease in a given month is normally subject to a Cap.
Appraisal: the estimated Fair Market Value of a property as determined by a licensed or authorized person. Appraisals are generally required prior to the sale, taxation, or insurance of a house.
Appraiser: A licensed or certified individual who estimates the Fair Market Value of a property. This estimate is referred to as an appraisal.
Blight: a legal classification after a city hearing.
Cap: a limit to the amount by which an interest rate, from an Adjustable Rate Mortgage for instance, can increase or decrease in a given period of time.
Certificate of title: a document, written by an attorney or title company, that identifies the legal owner(s) of a property. A Certificate of Title is generally required when transferring property ownership.
Closing: the finalized transfer of a property to a buyer: at this point, the buyer receives the property title from the seller, pays all closing costs, and takes on any loan obligations.
Code Enforcement: the city office responsible for inspecting and maintaining housing up to city code. Violations can be reported to this office by calling 311.
Credit report: a report prepared by the Credit Bureau that details an individual’s credit, employment, and residence history and includes all past and present debts in addition to when/if the debts were repaid. A credit report is used by lenders to determine an individual’s credit worthiness.
Deed: A legal document that certifies ownership of a property.
Deed-in-lieu: the transfer of a deed from the homeowner to the lender as a means of avoiding foreclosure: Upon deed transfer, the borrower is no longer responsible for repaying the defaulted loan to the lender.
Default: failure to make the required monthly mortgage payments or to otherwise fail to comply with the terms of the mortgage.
Delinquency: failure to repay monthly mortgage payments in a timely manner.
derelict/dilapidated: Properties that are dangerous, unsafe and/or marked by debris and decay.
Equity: refers to the current market value of the property and is calculated by subtracting the amount of mortgage payments still owed from the Fair Market Value.
Escrow account: a separate trust account into which the lender deposits portions of the borrower’s monthly mortgage payments: These funds are used to make timely payments on, for instance, property taxes, and insurance premiums during the term of the mortgage.
Fair Housing Act: Federal laws that prohibit housing discrimination on the basis of race or color, national origin, religion, sex, familial status or disability.
Fair Market Value: the estimated value of a property in a reasonable marketplace.
Federal Housing Administration (FHA): the Federal Housing Administration was established in 1934 and is now the largest insurer of mortgages in the world. The FHA provides mortgage insurance on loans made by FHA-approved lenders to cover any losses that may occur if a borrower defaults. This encourages lenders to provide mortgage loans to borrowers who might not otherwise qualify.
Fixed-rate mortgage: the interest rates on a fixed-rate mortgage remain the same throughout the life of the loan resulting in monthly mortgage payments that also remain the same for the entirety of the loan period.
Flood insurance: federally subsidized insurance that protects homeowners from any property damages due to flooding.
Foreclosure: refers to a legal process in which a owner loses their right to a property usually due to a defaulted loan. The property is seized by the lenders and sold at auction in order to pay off the mortgage debt.
Homeowner’s insurance: a package policy that protects a homeowner from damage or loss of property as well as liability insurance for any accidents that may occur at home . Homeowner’s insurance covers the homeowner, his/her spouse, and any residents of the house under the age of 21.
Housing counseling agency: an agency that provides counseling and assistance on a variety of issues including homebuying, renting, loan default, and foreclosure.
Interest: a fee charged by a lender for the use of borrowed money.
Interest rate: a monthly rate, usually expressed as a percentage, that is charged for the use of borrowed money.
Lien: the legal claim of a creditor or bank to take hold of or sell a property as security for payment or to reclaim a debt.
Mortgage: a mortgage refers to the borrower of a mortgage loan giving the lender a lien on the property as collateral for the loan.
Mortgage loan: a loan that is used to finance the purchase of real estate.
Origination: the process of applying for and securing a loan: this includes a credit check, property appraisal, and proof of employment as well as establishing the amount of loan, interest rates, etc.
Principal: the amount borrowed from a lender, not including interest or any other additional fees.
Refinancing: securing a new loan in order to pay off an already existing loan. Refinancing is generally done in order to take out a more favorable loan (ie: lower interest rates).
Title insurance: an insurance policy, written by a title insurance company, which protects a mortgage lender from any losses due to ownership or title disputes. Title insurance remains effective until the property is resold.
Title search: a search of public records in order to verify that the seller is legally recognized as the owner of the property and that there are no pending liens or other claims against it.
Truth-in-Lending: a federal law that requires lenders to provide full written disclosure of all fees, terms, and conditions associated with the loan.
Underwriting: the process by which a lender determines whether a potential borrower is creditworthy enough to be granted a loan.
HUD was used as a source
