Real Estate Definitions

Glossary of Mortgage Terms H-O

Hazard Insurance: A contract whereby an insurer, for a premium, undertakes to compensate the insured for loss on a specific property due to certain hazards (i.e. fire).
High-Ratio Loan: Mortgage loans in excess of 80 percent of the loan amount divided by the lower of the sales price or appraised value.
Homeowners' Association Dues: The fees imposed by a condominium or home owners' association for maintenance of common areas.
Insured Loans: A loan insured by HUD-FHA or a private mortgage insurance company.
Interest: Consideration in the form of money paid for the use of money. Also a right, share or title in property.
Interest Rate: The percentage of an amount of money which is paid for its use for a specified time.
Investment Property: Real estate owned with the intent of supplementing income and not intended for owner occupancy.
Lien: A legal claim or attachment against property as security for payment of an obligation.
Loan-To-Value Ratio: The ratio between the amount of a given mortgage loan and the lower of sales price of appraised value.

Market Value: The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed under no pressure to act. The market value may be different from the price a property can actually be sold for at a given time (market price).

Maturity: The termination or due date on which final payment on a loan must be paid in full.
Monthly Payment: Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan.
Mortgage: The conveyance of an interest in real property given as security for the payment of a loan.
Mortgagee: The lender on a mortgage transaction.
Mortgage Insurance Premium (MIP): The consideration paid by a mortgagor (borrower) for mortgage insurance - either to the FHA or to a private mortgage insurer.
Mortgage Note: A written promise to pay a sum of money at a stated interest rate during a specified term. The note contains a complete description of the conditions under which the loan is to be repaid and when it is due.
Mortgagor: The borrower in a mortgage transaction who pledges property as security for a debt.
Non-Conforming Loan: Conventional home mortgages not eligible for sale and delivery to either FNMA or FHLMC because of various reasons, including loan amount, loan characteristics or underwriting guidelines.
Occupancy: The use of a property as a full-time residence, either by the title holder (owner-occupancy) or by another party through a formal agreement (rental).
Origination Fee: The amount charged for services performed by the company handling the initial application and processing of the loan.