Mortgage Glossary E-Z

Mortgage Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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E
Earnest Money
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 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.

Encroachment
An improvement that intrudes illegally on another's property.

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

Equal Credit Opportunity Act
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 form pulic 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 when they become due.

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

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.

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.

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

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
A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

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 standard for construction and underwriting but does not lend money.

Fee Simple
The maximum form of ownership, with the right to occupy a property and sell it to a buyer at any time. In the event of the death of the owner, the property goes to the owner's designated heirs.

First mortgage
A mortgage that is the primary lien against a property.

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

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

Flood Letter or Flood Certifications
An assessment is done using maps and other tools to attest as to whether the property is in a flood area.

Foreclosure
The legal process by which a borrower in default under a mortgage/deed of trust, loses their interest in the mortgaged property; This process usually involves a forced sale of the property at public auction with the proceeds of sale paying mortgage debts.