Robert Moore | Mortgages

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Abstract of Title
A written history of all the transactions that bear on the title to a specific piece of land. An abstract of title covers the time from when the property was first sold to the present. Used by the title company to produce a title binder.

Acceleration Clause
A loan provision giving the lender the right to declare the entire amount immediately due and payable upon violation of a specific provision of the loan, such as failure to make payments on time.

Acre
An area of land that is 43,560 square feet.

Additional Principal Payment
A payment made by a borrower in addition to the scheduled principal amount due, in order to reduce the outstanding balance on the loan, to save on interest over the life of the loan and/or pay off the loan early.

Agreement of Sale
A written agreement between the seller and the buyer in which the buyer agrees to buy certain real estate and the seller agrees to sell upon the terms of the agreement; also called contract of sale; EARNEST MONEY contract.

Adjustable Rate Mortgage (ARM)
A mortgage loan in which the interest rate is changed periodically in accordance with the loan agreement and is calculated by adding a margin to a specific index. ARM loans usually have provisions (called "caps") that limit how much the loan rate can increase at one resetting and over the term of the loan.

Annual Percentage Rate (APR)
A standardized formula for calculating the cost of a mortgage; expressed as a yearly interest rate, it includes the interest, certain points or credit costs, mortgage insurance, and other fees associated with the loan.

Application (or 1003)
A form to be completed by a home loan applicant with the lender's assistance to provide pertinent information about a prospective borrower's employment, income, assets, debts and other financial information, about the purpose of the home loan, and about the property securing the home loan. Lenders also sometimes call it a 1003-the form number of Fannie Mae's standard application form.

Application Fee
A fee generally paid to the lender at the time of application to cover the credit report and other initial expenses. In addition, most lenders collect fees for a property appraisal report at the time of application.

Appraisal
A document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser
A qualified and licensed individual who uses his or her experience and knowledge to prepare the appraisal estimate.

Appreciation
An increase in the value of a property due to changes in market conditions or other causes. Inflation, increased demand, home improvement, and sweat equity are all causes of appreciation.

Assessed value
A value assigned to a property based on the public tax assessor's opinion for the purpose of taxation. Also know as the assessment.

Assessor
A government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable Mortgage
A mortgage that may be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.

Balloon Mortgage
A mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due in full or is refinanced by the borrower.

Basis Points
1/100th of 1 percent. If an interest rate changes 50 basis points, for example, it has moved 1/2 of 1 percent.

Biweekly Payment Loan
A loan that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30 year fixed rate loan, and they are usually drafted from the borrower's bank account. The result for the borrower is faster amortization leading to substantial interest savings from faster principal reduction.

Bridge Loan
A loan that "bridges" the gap between the purchase of a new home and the sale of the borrower's current home. The borrower's current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home's first mortgage at the bridge loan's closing, while others pile the new debt on top of the old. They usually run for a term of six months.

Broker
A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction or negotiating the terms of a home loan. See mortgage broker or REALTORŽ.

Buydown
A temporary buydown is a mortgage on which an initial lump sum payment is made by any party (e.g. builder, buyer, developer, lender, or seller) to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.

Cap
A limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash-Out Refinance
A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity.

Certificate of Title
A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be free and clear of all liens or other claims.

Closing
Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing Costs
Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application. Closing costs are broken into two segments:

Closing Statement
An accounting of funds given to both buyer and seller before real estate is sold. Also known as a HUD-1 settlement statement.

Cloud on Title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.

Commission
An amount, usually a percentage of the property sales price, that is collected by a real estate professional for bringing the principles together and helping negotiate a real estate transaction.

Comparables
An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Condominium
A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conforming Loan
A loan that conforms to the standard rules for purchase by Fannie Mae (FNMA) or Freddie Mac (FHLMC).

Single-Family Mortgage Loan Limits effective January 1, 2006:

ˇ First mortgages
ˇ

One-family loans: $417,000
ˇ

Two-family loans: $533,850
ˇ

Three-family loans: $645,300
ˇ

Four-family loans: $801,950

Note: One- to four- family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country.

Second mortgages
$208,500
In Alaska, Hawaii, Guam, and the U.S. Virgin Islands: $312,750

Construction Loan
A short-term, interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses. Some construction programs offer a one-time-close feature that converts the loan to a permanent loan after completion.

Contingency
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Conventional Loan
A mortgage loan that is not insured by FHA (Federal Housing Administration) or guaranteed by VA (Veterans Administration). There are two types of conventional loans: conforming and non-conforming.

Conveyance
The transfer of a real estate title from one party to another.

Credit Report
A report of an individual's credit history prepared by the credit bureau's (Equifax, Experian, and/or TransUnion) and used by a lender in determining a loan applicant's creditworthiness.

Debt-to-income ratio, or DTI
The percentage of a person's monthly earnings used to pay off all debt obligations. Lenders consider two ratios, constructed in slightly different ways. The first, called the front-end ratio, the ratio of the monthly housing expenses --- including principal, interest property taxes and insurance (PITI) is compared to the borrower's gross, pretax monthly income. In the back-end ratio, a borrower's other debts, such as auto loans and credit cards, are also figured in. Lenders usually take both into account and set an acceptable ratio, which might be expressed as 33/39. Some lenders, and some lending qualifying agencies such as FHA, take only the back-end ratio into account.

Deed
A legal document that transfers ownership of a property.

Default
The failure of a borrower to comply with the terms of a note or the provisions of a mortgage.

Discount Points
Amounts paid to the lender at origination to lower the rate on the face of the note.

Down Payment
The portion of a home's purchase price that is paid in cash and is not financed with the mortgage loan.

Due-On-Sale Provision
A provision in a mortgage home loan that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan.

Earnest Money
A deposit made by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Easement
A right to the limited use of land owned by another. The most common easements are for utility lines, which could be above or below ground.

Encroachment
Anything that physically intrudes or trespasses on another's property, such as a fence or building.

Encumbrance
Anything that affects or limits the title to a property, such as mortgages, leases, easements, deeds, unpaid property taxes, or other restrictions.

Equity
A homeowner's financial interest in a property; calculated by subtracting the amount still owed on the home mortgage or liens from the fair market value of the property.

Escrow
The process of using a third party - usually a closing officer - to handle the exchange of funds between the buyer and seller in a real estate transaction. The escrow company is a fiduciary. Some states may use attorneys in lieu of escrow companies. Funds are deposited in an escrow account that neither the buyer nor seller can access. These funds may include the home's down payment and fees owed to insurers and real estate agents. The closing officer ensures that buyer and seller pay appropriate funds at loan closing.

Escrow Account
A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Exclusive Listing
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner's right to sell the property alone without the payment of a commission.

Fair Housing Act
A law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair Market Value
The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie MaeŽ or Federal National Mortgage Association (FNMA)
A federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.

Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur if a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

First Mortgage (also referred to as a home loan)
A home loan that is secured with a first position lien against a property.

Fixed-Rate Mortgage
A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Fixture
Personal property that becomes real property when attached in a permanent manner to real estate (such as a lighting fixture or an in-ground spa).

Flood Certification
An independent agency report required by the lender to determine whether a property is located in a flood hazard zone, which could then require a federally mandated flood insurance policy.

Foreclosure
The legal process by which a borrower's interest in mortgaged property is taken because of a default on the loan. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Freddie Mac or Federal Home Loan Mortgage Corporation (FHLM)
A federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders with funds for new homebuyers.

Ginnie Mae or Government National Mortgage Association (GNMA)
A government-owned corporation overseen by the U.S. Department of Housing and Urban Development. Created by Congress on September 1, 1968, GNMA pools FHA-insured and VA-guaranteed loans to back securities for private investment; as with Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good Faith Estimate
An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

Government Loan
A loan that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Contrast with conventional loan.

Graduated Payment Mortgage (GPM)
A fixed rate mortgage requiring lower payments in early years than in later years. Payment increase in steps each year until the installments are sufficient to amortize the loan.

Gross Monthly Income
Normal annual income including overtime that is regular or guaranteed. The before taxes 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.

Hazard Insurance
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm, and other common hazards.

Home Equity Line of Credit (HELOC)
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.

Homeowner's Insurance
Also called property insurance, homeowner's insurance provides coverage for weather-related damage, as well as potential liability from events that occur on the property. Lenders require homeowner's insurance coverage to protect the collateral that secures their loan. Most homeowner's insurance policies do not cover catastrophic events such as tornadoes, hurricanes or floods. These generally require a separate insurance policy.

Homeowners' Association
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

HUD
The U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement
Also known as the "real estate settlement statement," it itemizes all closing costs; must be given to the borrower at or before closing.

Impounds
Payments made in advance for homeowner's insurance premiums and real estate taxes. A homebuyer makes these payments to an escrow account at loan closing, and periodically replenishes the account. An escrow agent pays the local tax authority and insurer from this account. Analyzers calculate impounds for two months. Local lending requirements on funding the escrow account vary.

Income Property
Real estate owned to produce income and not used as the owner's residence.

Index
A measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Interest
A fee charged for the use of money.

Interim Financing
See Bridge Loan.

Joint Tenancy
A form of co-ownership that gives each tenant equal undivided interest and rights in the property, including the right of survivorship. Contrast with tenancy in common, tenancy by the entirety.

Judgment
A legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source.

Judgment Lien
A lien on the property of a debtor resulting from a judgment.

Jumbo Loan
A loan that exceeds Fannie Mae's legislated mortgage amount limits of $417,000. Also called a non-conforming loan.

Lender's Fees
Fees paid to the lender to cover costs associated with processing, underwriting and closing of the loan.

Lien
A legal claim against property that must be satisfied when the property is sold

Lifetime Cap
A lifetime cap is the limit to how much the interest rate on an adjustable mortgage rate can be increased over the term of the loan.

Loan Fraud
Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-To-Value (LTV) Ratio
A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment. For example, if you have a $200,000 1st mortgage on a home with an appraised value of $250,000, the LTV is 80% ($200,000 / $250,000 = 80%).

Lot/Land Loans
Loans specifically for the purchase of land that has not been built on. There are many different types of Lot/Land loans available with some offering up to 100% financing.

Market Value
See Fair Market Value

Margin
An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Mortgage
A lien on the property that secures the Promise to repay a loan.

Mortgage Banker
A company that originates loans and resells them to secondary mortgage lenders like :Fannie Mae or Freddie Mac.

Mortgage Broker
A firm that originates and processes loans for a number of lenders.

Mortgagee
The lender in a mortgage agreement.

Mortgage Insurance (MI)
A contract that insures the lender against loss caused by a borrower's default on a government mortgage or conventional mortgage; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan. See private mortgage insurance (PMI).

Mortgage Insurance Premium (MIP)
The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI)

Mortgagor
The borrower in a mortgage agreement.

Negative Amortization
An increase in the outstanding balance of a mortgage that occurs when the monthly payment is not large enough to cover interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization.

Non-Conforming Loan
Loans that do not follow the guidelines set by Fannie Mae and Freddie Mac. These loans are often sold on the secondary market to private investors or held in the lender's portfolio as an asset. See jumbo loan.

Non-Owner Occupied
Properties in which the owner does not live.

Note
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Notice of Default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Offer
A formal written proposal from the homebuyer to purchase a piece of real estate that becomes binding when accepted by the home seller. Also called a sales contract.

Origination Fee
A fee paid to a lender for processing a loan application, making a home loan, and recording a mortgage against the borrower's real property as security for repayment of the loan. The origination fee is stated in the form of points. One point is 1% of the mortgage amount (e.g., 1,000 on a $100,000 loan).

Owner Financing
A property purchase transaction in which the property seller provides all or part of the financing and takes back a security instrument.

Owner-Occupied
A property that the owner occupies as a principal residence.

Payment Cap
A limit on how much a monthly payment can increase at any one time. Some adjustable-rate mortgages have payment caps in addition to annual (or semi-annual) interest rate caps and lifetime interest rate caps. Payment caps don't limit the amount of interest charged and may cause negative amortization. Also called a cap.

Piggyback Loan
A combination of two loans. Example: A loan is made for 90% of the home price. 80% of the purchase price is supplied by a 1st mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st.

Points
Each point is equal to 1% of the loan amount (for example, two points on a $100,000 mortgage would cost $2,000). Points, if charged, are usually collected at settlement with all other closing costs. Negative points reflect the amount that will be credited to you and reduce the amount of closing costs you will pay. Also referred to as discount points.

Pre-Approval
A lender's conditional agreement to lend a specific amount on specific terms to a homebuyer.

Predatory Lending
Abusive lending practices that include making mortgage loans to people who do not have the income to repay them or repeatedly refinancing loans, charging high points and fees each time and "packing" credit insurance onto a loan.

Prepaid Expenses
The expenses that are usually paid in advance, such as escrows for taxes and insurance, which are paid at closing.

Prepaid Interest
The interim interest that's collected at closing of a first mortgage, covering the period from the date of disbursement to the first of the next month.

Prepayment Penalty
A penalty assessed by some lenders if a loan is paid off early. This is a lump-sum amount due and payable in addition to the loan balance, and is usually limited to the early years of a mortgage. Not all loans have prepayment penalties.

Prequalification
The process of providing financial and other information (such as employment history and proposed collateral) to a prospective borrower in conjunction with determining how much loan the borrower can obtain for the purchase of a home.

Primary Residence
This is the home in which a borrower resides most of the time.

Prime Rate
The interest rate that banks charge on short-term loans to its most creditworthy customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

Principal
The amount of money borrowed or remaining unpaid on a loan.

P&I
An acronym meaning principal and interest. Principal and interest accounts for the majority of your mortgage payment, but doesn't include escrow payments for taxes, insurance, and any other costs that are paid monthly, or fees that periodically come due.

PITI
An acronym for Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

PMI
An acronym for private mortgage insurance. If your down payment is less than 20%, most lenders will require you to get private mortgage insurance. This is insurance that protects the lender if you default on your loan. This insurance usually costs from 0.15% to 2.5% of the loan amount. Also called mortgage insurance.

Property Tax
A fixed percentage based on the appraised value of your home that you pay to the county in which the home is located. The specific percent varies dramatically from county to county in every part of the country. You pay this tax annually, semi-annually or as part of your monthly mortgage payments. Depending on when you actually close your loan, some of this property tax may be due at the time of closing. The local county assessor's office can give you the rate for your county.

Qualifying Ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quit Claim Deed
A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made.

Radon
A toxic radioactive gas found in the soil beneath some homes that, if occurring in strong enough concentrations, can cause cancer and other health problems.

Real Estate Settlement Procedures Act (RESPA)
A law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships

Real Estate Settlement Statement
Final settlement statement often referred to as the HUD-1 form, used to itemize buyer, seller, broker, and lender charges and credits at closing.

REALTORŽ
A real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.

Recording Fee
A fee you pay for recording a transaction for the transfer of title at a records office. This kind of fee is usually included in the closing costs when you buy a home.

Reduced Documentation
A method used to determine income when qualifying a borrower(s) for a loan. Borrower(s) provide their income, however no verification documentation is typically required.

Refinance
Paying off your existing loan with the proceeds from a new loan in order to take advantage of lower monthly payments, lower interest rates, or save on financing costs.

Rescission
The act of cancellation or annulment of a transaction or contract by the operation of a law. Borrowers usually have the option to cancel certain credit transactions, including a refinance or home equity transaction, within three business days after consummation (when the consumer becomes contractually obligated by, for example, signing the loan documents).

Reverse Mortgage
A lump sum payment or annuity that is paid from a lender or insurance company to the homeowner to supplement or provide income. The homeowner or estate repays the mortgage obligation when he or she sells or vacates the home, or dies. Reverse mortgages allow older homeowner to borrow from the equity in their homes. Reverse mortgages are not considered taxable income, and do not affect Social Security or Medicare benefits. No mortgage interest tax deduction is available.

Right of Survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Second Home
A property occupied part-time by a person in addition to his or her primary residence.

Second Mortgage
The traditional term for a home loan that's a subordinate lien and not a first mortgage, such as a home equity loan or line of credit.

Secondary Mortgage Market
An informal market where lenders and investors buy and sell existing mortgages. Government-sponsored entities and private investors buy mortgages from lenders who use the proceeds to make additional loans.

Secured Loan
A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.

Settlement
Another name for closing.

Single-Family Residence (SFR)
A detached individual housing unit. The property shares no common ground with neighboring properties and shares no wall or roof, but can be part of a planned unit development (PUD).

Subdivision
A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Subordinate Financing
Any mortgage or other lien that has a priority that is lower than that of the first mortgage. The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid.

Survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Sweat Equity
Contribution to the construction or rehabilitation of a property in the form of labor or services performed personally by the owner.

Tax Lien
Lien's placed on property for nonpayment of taxes

Tax Sale
A public sale in which property is put on auction by the federal government to recover unpaid taxes.

Tenancy by the Entirety
A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. One spouse dies the property goes to the other spouse. Contrast with tenancy in common and joint tenancy.

Tenancy in Common
A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenancy.

Title
A legal document evidencing a person's right to or ownership of a property.

Title Company
A company that specializes in examining and insuring titles to real estate.

Title Insurance
Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

Title Search
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

Transfer Tax
State or local tax payable when title to a property passes from one owner to another.

Truth-In-Lending Act (TILA)/Truth-In-Lending Statement
The Truth in Lending Act (TILA) is a consumer protection law that requires lenders to disclose (the Truth in Lending Statement) all of your loan costs, your true interest cost as an annual percentage rate, and total number of payments you will make over the loan term.

Underwriting
The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

Uniform Residential Loan Application (Form 1003
A standard mortgage application your lender will ask you to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Unsecured Loan
A loan that is not backed by collateral.

V
VA (Department of Veterans Affairs)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

VA Mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

Variable Interest Rate Loan
A variable interest rate loan is a loan whose interest rate adjusts periodically over the loan term. The loan interest rate is usually calculated by adding a margin, or spread, to a base rate. The base, or index rate, is a variable interest rate.

Verification of Deposit (VOD)
Verification of account balance and history. This information is verified through the borrower's bank.

Verification of Employment (VOE)
Verification that a borrower is employed. The documents states the starting date, job title, salary, and probability of future employment.