Letters E-H

Mortgage Glossary

We have assembled these terms to help you to have a better understanding of mortgage financing terminology. Click on a first letter of the word you want to look up.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

- E - Back to Top
Earnest Money: The deposit money given to seller or his agent by the potential buyer at the time of the purchase offer. If the offer is accepted, the money will become part of the down payment.
Easement: A right to the limited use of land owned by another. An electric company, for example, could have an easement to put up electric power lines over someone's property.
Encumbrance: Anything that affects or limits the title to a property, such as outstanding mortgages, easement rights or unpaid back taxes.
Equity: The value in which the owner has in real estate over and above the mortgages against it. When the mortgage and all other debts against the property are paid in full, the owner has 100% equity in his property.
Escrow: Funds and/or deed left in trust to a third party. Generally, a portion of the monthly mortgage payment is held in escrow by the lender to pay for taxes, hazard insurance and yearly mortgage insurance premiums.

- F - Back to Top
Fannie Mae: Fannie Mae (FNMA: Federal National Mortgage Association) is a stockholder-owned corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors. See Freddie Mac for further information.
First Mortgage: A mortgage that has a primary lien against a property.
Fixed-Rate Mortgage: A mortgage with an interest rate and monthly payments that remain constant over the life of the loan. See Our Fixed Rates Loan Type page.
Fixture: Property, such as a hot water heater or plumbing fixture, that has become permanently attached to piece of real estate and goes with the property when it is sold.
Flood Certification: An independent agency report required by the lender to determine whether a property is located in a flood hazard zone, which would then require a federally mandated flood insurance policy.
Forbearance: A lender's act of refraining from taking legal action despite the fact a mortgage is in arrears (past due). It's usually granted when a mortgagor makes a satisfactory arrangement by which the arrears will be paid at a future date.
Foreclosure: A legal procedure in which property mortgaged as security for a loan is sold to pay the defaulting borrower's debt.
Freddie Mac: Freddie Mac (FHLMC: Federal Home Loan Mortgage Corporation) is a stockholder-owned corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors. See Fannie Mae for further information.

Freddie Mac and Fannie Mae have the same charters, Congressional mandates and regulatory structure. The two companies, however, have different business strategies. Competition between Freddie Mac and Fannie Mae ensures that the benefits of the secondary market are passed on to homebuyers and renters in the form of lower housing costs. Both Freddie Mac and Fannie Mae operate as publicly traded corporations. See The Cost Of Money for more information.
Fully Documented Loan: Both income and assets are disclosed and verified, and income is used in determining the applicant's ability to repay the mortgage. Formal verification requires the borrower's employer to verify employment and the borrower's bank to verify deposits. Alternative documentation, designed to save time, accepts copies of the borrower's original bank statements, W-2s and paycheck stubs. See Income Reporting Options for further information.

- G - Back to Top
Gift of Equity: Often used in conjunction with family members helping out with first-time home purchasing. A 'gift of equity' is a gift of all or part of the equity in a property you currently own to the buyer so that the cash requirement for a down payment is smaller or eliminated. May have income tax implications.
Good Faith Estimate: A report that shows the estimated costs involved with obtaining a mortgage or refinancing. Line-by-line explanation. Compare with HUD-1.
Government National Mortgage Association (GNMA): Also known as "Ginnie Mae," provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA. Compare with Conventional Loan.
Graduated Payment Mortgage: A fixed rate loan with monthly payments that start low, increasing by a fixed amount for a specific number of years. After that period, the payments typically remain constant for the duration of the loan.
Gross Income: Normal income, including overtime, prior to any payroll deductions, that is regular and dependable. This income may come from more than one source.

- H - Back to Top
Hazard Insurance: Insurance protection against damage to a property from fire, windstorms, and other common hazards. Often called Homeowner's Insurance.
Holding Title: The legal way that you wish to own your property. Also known as vesting. See The Six Most Common Ways of Holding Title page.
Home Equity Line Of Credit (HELOC): Gives you the ability to utilize the equity in your home to pay off high interest credit card debt, finance college education costs or make improvements to your home. See Our HELOC Loan Type page.
Homeowner's Insurance: An insurance policy that covers the dwelling and its contents in case of fire or wind damage, theft, liability for property damage and personal liability.
HUD-1 Form: See Real Estate Settlement Statement. A line-by-line explanation.

Next Steps

Click on feedback or call (866) 822-8500 for assistance - Last Updated:

This Website is NOT intended as a solicitation to customers in any jurisdiction in which we are not authorized to operate.

© Lightning Mortgage 2002-2008 All Rights Reserved. No part of this website may be reused commercially without the expressed
written consent of Lightning Mortgage. This site is directed at, and made available to, persons in the continental U.S., Alaska and Hawaii only.

Now You Can Learn Those Closely Guarded Mortgage Secrets and Save Thousands!

I'll show you step-by-step exactly what to look for and avoid when obtaining or refinancing a mortgage - especially if you've owned a home before.

Pleasanton, California

Dear Friend,

Of course, you want to pay the least for owning your home.

But you're received conflicting, confusing advice, and you don't know where to turn. You want to pay the least amount both at closing and with your monthly payments, and you should!

That's where I come in. I have saved thousands of home owners millions of dollars over the years. It has been my lifelong goal.

In the past 20 years money-saving strategies have changed as mortgage types and loan programs have multiplied. Over the years I've discovered exactly what works and what doesn't work when it comes to paying the least amount to own the same house.

Keep reading, and I'll show you exactly what works and what does not work when it comes to saving you the most amount of money.

The first thing we need to do is get you to understand what you're up against. Well-meaning family members and friends sometimes pass along misleading tactics and along with advice for avoiding bait-and-switch schemes as you discuss your plans for buying or refinancing a home.

Other times ill-informed or unethical real estate professionals deliver the information to you. They really aren't at fault.

Part of the problem is our own addiction to strategies that never work...

Four strategies for saving money that never work

...Yet people always try

The first is to scan the newspaper and look for the lowest advertised interest rate. Since interest rates are subject to change at least daily, the rate you'll receive has as much similarity to the advertised rate as today's winning lottery numbers have to tomorrow's numbers.
The second strategy is to partially fill-out loan applications on the Internet. You expect for lenders to "fight for your business" and judge the winner as the one who quotes you the lowest rate. This never works because there are too many unknowns and assumptions made.
The third strategy is leaving the choice to your real estate agent. Agents may have the best of intentions, but don't necessarily understand mortgage financing. Would you expect your psychologist to be up on the latest bone cancer treatments?
The fourth strategy is to just go to your local bank. If you are satisfied with any loan offered to you, then just trot down to your local bank.

You see banks have many different products (savings accounts, checking accounts, travelers checks, credit cards, ATM cards, Christmas accounts, car loans, etc.), but usually offer very few choices of loans.

If you think they'll make it easier to qualify since you have a savings account with them, think again. Loan underwriting qualifications do not check simply because you have been a customer of theirs all your life.

My strategy is to use the most appropriate loan product for each borrower's particular needs. It is not a matter of finding the best 30-year fixed rate mortgage. An interest-only mortgage may be most appropriate for you.

Is a second mortgage a better solution than a home equity line of credit?

Is really depends on how you'd like to repay the loan and how much you can afford to pay each month.

How can a person save money using negative amortization when the loan amount is going up as opposed to a traditional mortgage with the principal is being paid down?

You bet, but this option might not be right for you.

So what's the best way to obtain a mortgage?

Many people take a pessimistic view. They figure there's too much to learn, too many options. They just want to move into the home of their dreams, and be done with it. Spending a few dollars more each month is no big deal. Well, they are wrong.

Would you needlessly spend $50,000 to $200,000 more for a home than you need to pay? Probably not. But if you accept the wrong loan you could wind up over-paying even more for the same house.

What you Can Do Right Away to Turn The Tide in Your Favor

Buying a home is one of the most stress-filled, and most expensive, things that most of us will ever do. Here are three things that can make a difference:

I've discovered that arming yourself with knowledge about your loan options is the best defense against paying more than you need to pay when buying and owning a home.
Having a clear overall financial picture, and how your mortgage fits into that picture.
Working with and obtaining advice from a trusted source, a down-to-earth, level headed expert.

I am available to help you obtain the right mortgage. One that will meet your needs. Sign-up to receive strategies that will save you money, big money. I discuss many of them in my free Mortgage Insider Secrets series. This information will be emailed to you in weekly messages.

Sincerely,

Anthony Ferlazzo
Mortgage Consultant

Rest assured, we respect your privacy and will not give your email address to anyone under any circumstance.

Sign Up and You'll Enter Our Web Site, Too!

Letters E-H

Mortgage Glossary

Mortgage Glossary

Next Steps

Now You Can Learn Those Closely Guarded Mortgage Secrets and Save Thousands!

Four strategies for saving money that never work...Yet people always try

What you Can Do Right Away to Turn The Tide in Your Favor

Sign Up and You'll Enter Our Web Site, Too!

Four strategies for saving money that never work

...Yet people always try