We hope this Glossary of Mortgage and Real Estate Terms helps you understand the home buying and financing process. Should you have any further questions, please do not hesitate to contact your Loan Officer for answers.

Additional Terms: # A B C D E F G H I J K L M N O P Q R S T U V W XYZ

H Terms

Habendum Clause: The name for a "to have and to hold" clause that defines or limits the estate in a deed.  For example: The habendum clause "to have and to hold for one's lifetime" creates a life estate.

 

Half Bath: A room which contains a toilet and wash basin but no bathing facilities, such as a bathtub or shower stall. A three-quarter bath contains a toilet, wash basin, and a shower, but no bathtub.

 

Handyman's Special: In real estate advertising generally refers to a house that requires extensive repair and remodeling, selling at a relatively low price.

 

Hard Money: 1) Currency that has wide acceptance, such as the U.S. dollar. 2) Gold or silver coins, as compared to paper currency. 3) A term sometimes used to describe extremely high-interest-rate mortgage loans made to desperate borrowers by private lenders.

 

Hazard: A condition that affects the probability of losses or perils occurring, such as flood damage to a house.

 

Hazard Insurance: A broad form of casualty insurance coverage for real estate that includes protection against loss from fire, certain natural causes, vandalism and malicious mischief.

 

Hearing: A formal procedure, with issues of fact or law to be tried, in which parties have a right to be heard. Similar to a trial and may result in a final order.

 

HECM: See Home Equity Conversion Mortgage.  A reverse mortgage.

 

HECM 100: A now discontinued HUD insured monthly adjustable reverse mortgage program based on the CMT index with a margin of 100 basis points (1%).

HECM 125: A now HUD insured monthly adjustable reverse mortgage program based on the CMT index with a margin of 125 basis points (1%).

HECM 150: A HUD insured monthly adjustable reverse mortgage program based on the CMT index with a margin of 150 basis points (1.5%).

HECM Annual: A HUD insured annually adjustable reverse mortgage program based on the CMT index with a margin of 310 basis points (3.1%).

HECM Fixed: A HUD insured fixed for the life of the loan reverse mortgage program based.

HECM LIBOR: Also called the HECM LIBOR65, it is a HUD insured monthly adjustable reverse mortgage program based on the CMT index with a margin of 65 basis points (.65%).

Hectare: A metric land measurement equal to about 2.471 acres or about 107,637 square feet.

 

Heir: One who inherits property. 

 

Heir and Assigns: A term often found in deeds and wills to grant a fee simple estate. 

 

Hereditaments: Any property, whether real or personal, tangible or intangible, that may be inherited.

 

Heterogeneous: 1) A mixed assortment of housing styles in a residential development. 2) Mixed zoning uses in an urban development plan.

 

Hiatus: A gap between two parcels of land, which is not included in the legal description of either parcel.

 

Hidden Clauses: Ambiguous contractual language that may result in an unsuspecting buyer of real estate incurring obligations or riskes not clearly evident.

 

High Density:Tthe concentration of housing units on a specific property or in a specific area.

 

High Rise: Generally a building that exceeds 4 stories in height and is equipped with elevators. 

 

Highest and Best Use: An appraisal term meaning the legally and physicality possible use that, at the time of appraisal, is most likely to produce the greatest net return to the land and/or buildings over a given period.

 

Hip Roof: One formed by four walls sloped in different directions with the two longer sides forming a ridge at the top.

 

Historic District: A designated area where the buildings are signification makes the area eligible for certain federal assistance programs.

 

Historic Structure: A home or building that is listed in the National Register of Historic Places and certified as historic by the U.S. Secretary o fthe Interior. A building that is officially recognized for its historic significance has special status under the 1997 Tax Reform Act, which encourages rehabilitation and discourages demolition or substantial alteration of the structure.

 

HOA: See Homeower's Association.

 

Homeowner's Package: A broad form of insurance coverage for real estate that combines hazard insurance with personal protection and other items. Also known as a Homeowner's Policy.

 

Holdback: Money not paid until certain events have occurred. 

 

Hold Harmless Clause: A clause in a contract  whereby or party agrees to protect another party from claims. 

 

Holding Company: A company that owns or controls another company or companies. 

 

Holding Costs: Expenses necessary for holding property, such as taxes and interest on idle property or property under construction. Also called carrying costs or carrying charges.

 

Holding Period: The time span of ownership. A term often with investment real estate. 

 

Holdover Tenant: A tenant who remains in possession of leased property after the expiration of the lease term. Also see tenancy at sufferance.

 

Home Affordability Index: A measure of the typical U.S. family's ability to buy a home, published by the National Assoi Realtors. When the Index measures 100, a family earning the median income has exactly the amount needed to purchase a median-priced, previously owned home, using conventional financing and a 20 percent down payment.

 

Home Equity: The market value of a property minus any debts against it.

 

Home Equity Converstion Mortgage (HECM): The most common of the three major types of reverse mortgages made to older homeowners - 62 and over - to convert the equity of their homes into money. This is not the same as a home equity loan where the homeowner has a not only qualify for the loan but make monthly payments to pay it off. This loan does not have to be repaid until the borrower(s) no longer occupy the property. The equity is paid to the homeowner in a lump sum, in a stream of monthly payments, drawn from a line of credit, or a combination of monthly payments, lump sum, and line of credit.  Reverse mortgages allow many older homeowners to afford to stay in their homes.  The HECM is the only type of reverse mortgage backed by the U.S. Department of Housing (HUD). Mortgage Trust Group offers HECM loans as well as other reverse mortgages.

 

Home Equity Line of Credit (HELOC): An open-ended line of credit based on a homeowner's equity. Generally a second mortgage behind a primary or first mortgage.  Most loan amounts are limited to 75 or 80 percent of the appraised value. Mortgage Trust Group has products which go to 100% and up to 125% of value.  Withdrawals can be made at any time with the guidelines and monthly payments are based on the principal owed versus the line limit.

 

Home Equity Loan: A loan allowing owners to borrow against th equity in the home; usually a second mortgage. An equity loan is a lump sum versus an equity line which is a line of open credit. Mortgage Trust Group offers both equity loans and equity lines.

 

Home Improvement Loan: A loan used to pay for major remodeling, reconstruction, or additions to the home.  Somethimes called a rehab loan.  The loan can be a refinance for improvements or a purchase with a construction feature.  Mortgage Trust Group offers home improvement and construction loans.

 

Home Inspection: An examination of a home's condition, internal systems, or construction prior to purchase.This should be done by a professional contractor or home ispector knowledgeable about the following: roof and siding; windows and doors; foundation; insulation; ventilation; heating and cooling systems; plumbing and electrical systems; walls, floors and ceilings; common areas in a condominium or cooperatives. Prospective buyers should view the home inspection report as a way to identify major problems before purchase, to help negotiate adjustments in the purchase price if problems exist, and to help get the sellers to make any needed improvements before the deal is finalized.

 

Home Inspector: A professional who evaluates the structural and mechanical condition of a home prior to its being sold for either the Seller or the Buyer. Some states require home inspectors to be bonded or licensed.

 

Home Keeper Mortgage: The second most common of the three major types of reverse mortgages made to older homeowners - 62 and over - to convert the equity of their homes into money. This is not the same as a home equity loan where the homeowner has a not only qualify for the loan but make monthly payments to pay it off. This loan does not have to be repaid until the borrower(s) no longer occupy the property. The equity is paid to the homeowner in a lump sum, in a stream of monthly payments, drawn from a line of credit, or a combination of monthly payments, lump sum, and line of credit.  Reverse mortgages allow many older homeowners to afford to stay in their homes.  The Home Keeper is a Fannie Mae insured loan versus the HECM is which is backed by the U.S. Department of Housing (HUD). The Home Keeper is available only on 1 unit - single family homes and condos, versus the HECM loan which is possible on 1, 2, 3, and 4 unit properties.  Mortgage Trust Group offers the Home Keeper loan as well as other reverse mortgages.

 

Home Inventory: Tthe listing of items of an individual's possessions at his or her residence, and their costs. Having a home inventory with photographs, is a good practice of insurance purposes.

 

Home Loan: Also known as a mortgage, it is a loan with a lien that makes property security for the repayment of a debt, such as the one incurred upon purchase of a home.

 

Homeowner's Association (HOA) : An organization of homeowners that governs a planned community or condominium and collects monthly fees from all owners to pay for common area maintenance, to handle legal and safety issues, and to enforce the conditions and restrictions set the developer. . Sometimes called a community association or condo association.

 

Homeownership: The state of living in a structure that one owns versus being a renter or tenant in one's home. 

 

Homeowner's Insurance Policy: A type of insurance policy covering the risks of homeownership, including damage, theft, fire, personal liability, etc. Homeowner's insurance also called hazard insurance, should be equal to at least the replacement cost of the property. Replacement cost coverage ensures that a home will be fully rebuilt in case of a total loss. Most homebuyers purchase a homeowner's insurance policy that includes personal liability insurance, in case someone is injured on their property; personal property coverage, for loss and damage to personal property due to theft or other events; and dwelling coverage, to protect the house against fire, theft, weather damage, and other hazards. If the home is located near water or is in a flood zone, a lender might require flood coverage as well. This insurance is generally expensive. Lenders often want the first year's insurance premium to be paid at or before closing. A lender may require insurance payments to be made montly with the mortgage payment, and placed in a required escrow account.

 

Homeowners Protection Act of 1997: An act that requires private mortgage companies to inform borrowers of their right to cancel mortgage insurance when the loan amount is reaches more than 80 percent of the value of the home. The Act covers loans originated after July 31,1999.

 

Homeowner's Warranty Program (HOW): A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.

 

Homeowner's Warranty Insurance: A private insurance prograrn that protects purchasers of newly, constructed homes against structural and mechanical defects and provides reimbursement for the cost of remedying the situation, if the builder does not do so.

 

Home Sale Exemption: The Taxpayer Relief Act of l997 dramadcally changed the way home sales were taxed. Prior to the change, homesellers could delay paying tax on a principal home sale if they rolled-over the captial gain and purchased a more expensive home within 2 years of the sale. A separate rule applied to those over age 55, that gave them a once in-a-lifetime $125,000 exclusion from capital gains tax on the sale of an primary home. However, under the new tax code, both the rollover provision and $125,000 exclusion are replaced with a new exclusion that should allow most homeowners to sell their primary residence without any capital gains tax.

 

Homestead: A legal status provided to a homeowner's principal residence by some state statutes; provides protection against creditor claims or forced sale for general debts as long as the homeowner continues to maintain his/her residence there.  Statutory requirements to establish a homestead may include a formal declaration to be recorded.

 

Homestead Exemption: In some jurisdictions, a reduction in the assessed value and therefore property taxes allowed for one's principal residence. 

 

Homogeneous: Uniform, of like characteristics or quality. The opposite of heterogeneous. The values of an area tend to be maximized when properties are homogeneous, because low valued or unusual properties are likely to reduce the value of other nearby properties properties of higher cost. 

 

Horizontal Property Laws: State statutes that enable condominium ownership of property. Property laws generally recognize ownership rights to all space from the center of the earth to some distance in space, condominium laws allow individual ownership to be split on a horizontal plane that generally limits the unit owner's interest to the inside dimensions of the unit limits.

 

House Poor: Purchasing a more expensive house than a buyer can afford based on his/her income.

 

Housing and Urban Development (HUD): A federal government agency established to implement certain federal housing and community development programs.

 

Housing Code: A local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings. Versus building codes, which affect new construction. 

 

Housing Discrimination: The illegal practice ofdenying the righ buy or rent a home to an individual based on race, religion, color, national origin, sex, disability, or family status.

 

Housing Expense Ratio: Also called the income ratio or front ratio, it is the percentage of gross monthly income that goes toward paying housing expenses.  The calculation is the monthly principal and interest payment + insurance (or condo fee) + taxes (or PITI) / monthly gross income.

 

Housing Starts: An estimate of the number of dwelling units on which construction has begun during a stated period.  Use as an economic statistic to measure the growth or decline of the economy.

 

HUD: See Housing and Urban Development.

 

HUD Median Income: The median family income for a particular county or metropolitan statistical area (MSA), as estimated by the U.S. Department of Housing and Urban Development (HUD).

 

HUD-1 Uniform Settlement Statement: A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, payoffs, recording fees and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the U.S. Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the closing staternent or settlement sheet.

 

HVAC: An acronym that refers to heating, ventiladon, and air conditioning.

 

Hypothecate: To pledge an item as security without having to give up possession of it.