Insurance coverage that compensates for physical damage to
a property from fire, wind, vandalism, or other hazards.
Equity Conversion Mortgage (HECM)
A special type of mortgage that enables older home owners
to convert the equity they have in their homes into cash,
using a variety of payment options to address their specific
financial needs. Unlike traditional home equity loans, a borrower
does not qualify on the basis of income but on the value of
his or her home. In addition, the loan does not have to be
repaid until the borrower no longer occupies the property.
Sometimes called a reverse mortgage.
equity line of credit
A mortgage loan, which is usually in a subordinate position,
that allows the borrower to obtain multiple advances of the
loan proceeds at his or her own discretion, up to an amount
that represents a specified percentage of the borrower's equity
in a property.
A thorough inspection that evaluates the structural and mechanical
condition of a property. A satisfactory home inspection is
often included as a contingency by the purchaser. Contrast
Fannie Mae's adjustable-rate conventional reverse mortgage,
which allows older homeowners to borrow against the value
of their homes and receive the proceeds according to the payment
option they select. The amount available is based on the number
of borrowers and their ages and the adjusted property value.
Anyone 62 years or older who either owns his or her own home
free and clear or has very low mortgage debt is eligible.
A nonprofit association that manages the common areas of a
planned unit development (PUD) or condominium project. In
a condominium project, it has no ownership interest in the
common elements. In a PUD project, it holds title to the common
An insurance policy that combines personal liability insurance
and hazard insurance coverage for a dwelling and its contents.
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.
A mortgage that enables eligible borrowers to obtain financing
to remodel, repair, and upgrade their existing homes or homes
that they are purchasing.
The percentage of gross monthly income that goes toward paying
Median family income for a particular county or metropolitan
statistical area (MSA), as estimated by the Department of
Housing and Urban Development (HUD).
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, 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 Department
of Housing and Urban Development (HUD). The HUD-1 statement
is also known as the "closing statement" or "settlement