FEDERAL HOUSING ADMINISTRATION. (FHA) An agency of the federal government that insures private mortgage loans for financing of new and existing homes and home repairs.

FHA (Federal Housing Administration): This federal agency established by Congress in 1934, insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders.

FIXTURES. Appurtenances attached to the land or improvements, which usually cannot be removed without agreement as they become real property; examples. plumbing fixtures, store fixtures built into the property, etc.

HUD. The Department of Housing and Urban Development, which is responsible for the implementation and administration of U.S. government housing and urban development programs.

IMPOUNDS. A trust type account established by lenders for the accumulation of borrowers funds to meet periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security. Impounds are usually collected with the note payment. The combined principal, interest, taxes and insurance payment is commonly termed a PITI [...]

INTEREST ONLY LOAN. A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.

INTEREST The cost paid by a borrower for use of money borrowed to purchase a home.

JOINT TENANCY. Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship, i.e., the right to share equally with other surviving joint tenants in the interest of a deceased joint tenant.

MORTGAGE COMMITMENT. A formal written communication by a lender agreeing to make a mortgage on specific property, specifying the loan's amount, length of time and conditions.

MORTGAGE/DEED OF TRUST. Pledge of property as security for the payment of debt.

MORTGAGEE. The lender who has agreed to lend money to the mortgagor.

MORTGAGOR. The homeowner (borrower), who has agreed to repay a mortgage loan to the mortgagee.

NEGATIVE AMORTIZATION. Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due.

PAYMENT CAP. With regard to an adjustable rate mortgage, this limits the amount of increase in the borrower’s monthly principal and interest at the payment adjustment date, if the principal and interest increase called for by the interest rate increase exceeds the payment cap percentage. This limitation is often at the borrower’s option and may [...]

POINTS. A point is a charge of one percent of the mortgage value. Points are a one-time charge assessment by the lender to increase the interest yield from the mortgage loan to a position competitive with the interest yield from other types of investment. Points are usually paid by the buyer or seller or split between [...]

PRINCIPAL. This term is used to mean the employer of an agent; or the amount of money borrowed, or the amount of the loan. Also, one of the main parties in a real estate transaction, such as a buyer, borrower, seller, lessor.

PRINCIPLE. Amount of money borrowed in mortgage loan, excluding interest and other charges.

PROMISSORY NOTE. Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.

PRORATION OF TAXES. To divide or prorate the taxes equally or proportionately to time of use, usually between seller and buyer.

QUITCLAIM DEED. A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA). A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.

RECORDING. The process of placing a document on file with a designated public official for public notice. This public official is usually a county officer known as the County Recorder who designates the fact that a document has been presented for recording by placing a recording stamp upon it indicating the time of day and [...]

RIGHT OF SURVIVORSHIP. The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant; the distinguishing feature of a joint tenancy.

SALES CONTRACT. The contract between the buyer and seller. The contract should explain, in detail, exactly what your purchase includes, who is responsible for providing it, what guarantees there are, when you can move in, what the "closing costs" are, and what "outs" parties have in case the contract is not fulfilled or if you [...]

SEPARATE PROPERTY. Property owned by a married person in his or her own right outside of the community interest including property acquired by the spouse (1) before marriage, (2) by gift or inheritance, (3) from rents and profits on separate property, and (4) with the proceeds from other separate property.

SETTLEMENT EXPENSE. This is different from closing costs, but also involves charges that a buyer or seller must pay in closing a deal on a house. Settlement costs include insurance, tax payments, special assessments for improvements to municipal facilities and sales commissions.

TITLE INSURANCE. Insurance to protect a real property owner or lender up to a specified amount against certain types of loss, e.g., defective or unmarketable title.

TITLE REPORT. A report which discloses condition of the title, made by a title company preliminary to issuance of title insurance policy.

TITLE SEARCH OF TITLE GUARANTY. Detailed review of title records, generally at the local courthouse, to assure that the property is bought from the legal owner and to determine if any liens, special assessments, other claims or outstanding restrictive covenants are on record.