Glossary of Real Estate Terms

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J

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 decree by a court of law that one person, a debtor, is indebted to another, a creditor, in a specified amount. The court may place a lien against the debtor's real property as collateral for payment of the judgment to the creditor.

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

Judicial Foreclosure - A type of foreclosure proceeding used in some states that is handled as a civil lawsuit where the court confirms the sales price for the property and the distribution of the sale proceeds.

Jumbo Loan - Any loan amount in excess of $252,700. Also called a nonconforming loan.

L

Late Charge - The penalty a borrower must pay when a payment is made a stated number of days (usually 10-15) after the due date.

Lease - A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid.

Leasehold Estate - A tenant's interest in or right to hold possession of a property.

Legal Description - A property description, recognized by law, using a government rectangular survey, metes and bounds, or a plot map to sufficiently locate and identify a property.

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

Lending Guidelines - Every loan program has different guidelines. Guidelines are used to meet Federal, State and Local laws and enforce minimum requirements by the lender. Guidelines ensure that prospective borrowers won't purchase a home that they won't be able to afford.

Liabilities - A person's debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.

Liability Insurance - Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. See also homeowners insurance.

Lien - A legal claim against a property that must be paid off when the property is sold. A lien is created when you borrow money to purchase or refinance a home loan or and with obtain a home equity loan.

Lifetime Rate Cap - For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.

Line/Loan Amount - The entire HELOC or Fixed Rate Second mortgage loan amount.

Line Of Credit - An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit.

Liquid Asset - A cash asset or an asset that is easily converted into cash.

Loan Amount - The amount of money you want to borrow to purchase or refinance a home. Also called the principal and is generally repaid over time with interest.

Loan Commitment - A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter.

Loan Origination - The process by which a mortgage lender makes a home loan and records a mortgage against the borrower's real property as security for repayment of the loan.

Loan Program - Typically a lender will have several types of loan programs available. They are described in accordance with the major features of the loan program. For example, a loan described as a "Fixed 30 Year" would mean that the interest rate and payment remain fixed over the thirty year life of the loan. A program described as "Fixed/ARM 5/1" means that the interest rate and payment remain fixed for the first five years, and then it is subject to adjustments every year thereafter.

Loan-To-Value Ratio - The ratio of the total amount borrowed on a mortgage against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%).

Lock-In - A written agreement in which the lender guarantees a specified loan program interest rate and points if a mortgage goes to closing within a set period of time.

Lock-In Period - The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.

M

Margin - For an adjustable-rate mortgage (ARM) or home equity line of credit, the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change. The margin is static and will not change during the life of the loan.

Master Association - A homeowners' association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a "second-level" association that handles matters affecting the entire development, while the "first-level" associations handle matters affecting their particular portions of the project.

Maturity - The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable. At the maturity of a 30-year loan the principal balance will be paid in full.

Maximum Financing - The maximum amount a lender will lend on a specific loan program.

Maximum Rate - The maximum interest rate that can accrue on a variable rate loan

Merged Credit Report - A credit report that contains information from more than one credit reporting agency. When the report is created, the information is compared for inconsistencies and duplicate entries. Any duplicates are combined to provide a summary of a your credit.

Minimum Payment - The minimum amount that must be paid monthly on an account. On the HELOC product, the minimum payment is interest only during the draw period. On the Fixed Rate Second products, the minimum payment is principal and interest.

Modification - The act of changing any of the terms of the mortgage.

Money Market Account - A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account.

Money Market Fund - A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury bills.

Monthly Debt - A borrower's monthly expenses including credit cards, installment loans, student loan payments, alimony and child support and housing payment expense.

Monthly Mortgage Insurance (MI) Payment - Portion of monthly payment that covers the cost of Private Mortgage Insurance.

Monthly Principal & Interest (P&I) Payment - Portion of monthly payment that covers the principal and interest due on the loan.

Monthly Taxes & Insurance (T&I) Payment - Portion of monthly payment that funds the escrow or impound account for taxes and insurance.

Monthly Payment (P&I) - This is the monthly mortgage payment on a home loan, this includes principal and interest, but excludes any amounts that are applied to taxes and insurance.

Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage Banker - A company that originates, sells and services mortgages exclusively for resale in the secondary mortgage market.

Mortgage Broker - An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services.

Mortgagee - The lender in a mortgage agreement.

Mortgage Insurance - A contract that insures the lender against loss caused by a borrower's default on a government mortgage or conventional mortgage. 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) company.

Mortgage Life Insurance - A type of term life insurance sometimes bought by borrowers. The amount of coverage decreases as the loan's principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. See credit life insurance.

Mortgagor - The borrower in a mortgage agreement.

Multi-Dwelling Units - Properties that provide separate housing units for more than one family, although they secure only a single mortgage. Typically a 2-4 unit property.

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