Glossary of Real Estate Terms E-H
Earnest Money Deposit – The deposit to show that you’re committed to buying the home. The deposit usually will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.
Easement – A right to the use of, or access to, land owned by another.
Effective age – The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive wear and tear can cause a property’s effective age to be greater than its actual age.
Employer Assisted Housing – A program in which companies assist their employees in purchasing homes by providing assistance with the down payment, closing costs, or monthly payments.
Encroachment – The intrusion onto another’s property without right or permission.
Encumbrance – Any claim on a property, such as a lien, mortgage or easement.
Equal Credit Opportunity Act (ECOA)- A federal law that requires lenders to make credit equally available without regard to the applicant’s race, color, religion, national origin, age, sex, or marital status; the fact that all or part of the applicant’s income is derived from a public assistance program; or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. It also requires various notices to consumers.
Equity – The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.
Errors and omissions insurance – An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.
Escrow – An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
Escrow Account – An account that a mortgage servicer establishes on behalf of a borrower to pay taxes, insurance premiums, or other charges when they are due. Sometimes referred to as an “impound” or “reserve” account.
Escrow Analysis – The accounting that a mortgage servicer performs to determine the appropriate balances for the escrow account, compute the borrower’s monthly escrow payments, and determine whether any shortages, surpluses or deficiencies exist in the account.
Escrow disbursements – The payout of funds from an escrow account to pay property expenses such as taxes and insurance.
Estate – The total of all property and assets owned by an individual.
Eviction – The legal act of removing someone from real property.
Exclusive Agency Listing – A listing agreement under which a real estate broker (known as the listing broker) acts as an exclusive agent to sell the property for the property owner, but may be paid a reduced or no commission when the property is sold if, for example, the property owner rather than the listing broker finds the buyer. This kind of listing agreement can be used to provide the owner a limited range of real estate brokerage services rather than the traditional full range. As with other kinds of listing agreements, if a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.
Exclusive Right to Sell Listing – The traditional kind of listing agreement under which the property owner appoints a real estate broker (known as the listing broker) as exclusive agent to sell the property on the owner’s stated terms, and agrees to pay the listing broker a commission when the property is sold, regardless of whether the buyer is found by the broker, the owner or another broker. This is the kind of listing agreement that is commonly used by a listing broker to provide the traditional full range of real estate brokerage services. If a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.
Executor – A person named in a will and approved by a probate court to administer the deposition of an estate in accordance with the instructions of the will.
Fair Credit Reporting Act (FCRA)- A consumer protection law that imposes obligations on (1) credit bureaus (and similar agencies) that maintain consumer credit histories, (2) lenders and other businesses that buy reports from credit bureaus, and (3) parties who furnish consumer information to credit bureaus. Among other provisions, the FCRA limits the sale of credit reports by credit bureaus by requiring the purchaser to have a legitimate business need for the data, allows consumers to learn the information on them in credit bureau files (including one annual free credit report), and specifies procedure for challenging errors in that data.
Fair Market Value (FMV)- The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.
Fannie Mae – A New York stock exchange company. It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers.
Fannie Mae Seller/Servicer – A lender that Fannie Mae has approved to sell loans to it and to service loans on Fannie Mae’s behalf
Fannie Mae/Freddie Mac Loan Limit – The Fannie Mae/Freddie Mac loan limit is subject to change. In 2018, for a single family home is $453,100, with a maximum of $679,650 for high cost areas (e.g. Monroe County, Key West is $529,000). The Fannie Mae / Freddie Mac loan limit is $870,225 for a two unit home; $1,051,875 for a three unit home; and $1,307,175 for a four unit home. Also referred to as the “conventional loan limit.”
Federal Housing Administration (FHA)- An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.
Fee simple – A complete, unencumbered ownership right in a piece of property.
FHA Insured Loan – A loan that is insured by the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD).
Fha mortgage – A mortgage that is insured by the Federal Housing Administration (FHA).
First Mortgage – A mortgage that is the primary lien against a property.
First Time Home Buyer – A person with no ownership interest in a principal residence during the 3 year period preceding the purchase of the security property.
Fixed Period Adjustable Rate Mortgage – An adjustable rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term. Also known as a “hybrid loan.”
Fixed Rate Mortgage – A mortgage with an interest rate that does not change during the entire term of the loan.
Flood Certification Fee – A fee charged by independent mapping firms to identify properties located in areas designated as flood zones.
Flood Insurance – Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood hazard zones.
Floor plan – The representation of a building which shows the basic outline of the structure, as well as detailed information about the positioning of rooms, hallways, doors, stairs and other features. Often includes detailed information about other fixtures and amenities.
Foreclosure – A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)- (1) You (the transferee) acquire the property for use as a residence and the amount realized (sales price) is not more than $300,000. You or a member of your family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant. For this exception, the transferee must be an individual.
Forfeiture – The loss of money, property, rights, or privileges due to a breach of a legal obligation.
Fully Amortized Mortgage – A mortgage in which the monthly payments are designed to retire the obligation at the end of the mortgage term.
General Contractor – A person who oversees a home improvement or construction project and handles various aspects such as scheduling workers and ordering supplies. See, Fla. Stat. Chapter 489.
Gift Letter – A letter that a family member writes verifying that s/he has given you a certain amount of money as a gift and that you don’t have to repay it. You can use this money towards a portion of your down payment with some mortgages.
Good Faith Estimate – A form required by the Real Estate Settlement Procedures Act (RESPA) that discloses an estimate of the amount or range of charges, for specific settlement services the borrower is likely to incur in connection with the mortgage transaction.
Government Mortgage – A mortgage loan that is insured or guaranteed by a federal government entity such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).
Government National Mortgage Association (Fanny Mae)- A government owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Popularly known as “Fanny Mae.”
Grantee – Any person who is given ownership of a piece of property.
Grantor – Any person who gives away ownership of a piece of property.
Gross Monthly Income – The income you earn in a month before taxes and other deductions. It also may include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.
Ground Rent – Payment for the use of land when title to a property is held as a leasehold estate (that is, the borrower does not actually own the property, but has a long term lease on it).
Growing Equity Mortgage (GEM)- A growing-equity mortgage (GEM) is a variation on a fixed-rate mortgage where additional principal payments are pre-scheduled and increase over time, often at 5% a year. The additional payments allow the mortgage to be paid off quicker and with lower total interest payments.
Hazard Insurance – Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.
Home Equity Conversion Mortgage (HECM)- A special type of mortgage developed and insured by the Federal Housing Administration (FHA) 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. Sometimes called a “reverse mortgage.”
Home Equity Line of Credit (HELOC)- A line of credit that allows you to borrow against your home equity. Equity is the amount your property is currently worth, minus the amount of any mortgage on your property. Unlike a home equity loan, helocs usually have adjustable interest rates. For most helocs, you will receive special checks or a credit card, and you can borrow money only for a specified time, from when you open your account.
Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation, and pest infestation.
Homeowner’s Insurance – A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances.
Homeowner’s Warranty (HOW) – Insurance offered by a seller that covers certain home repairs and fixtures for a specified period of time.
Homeowners’ Association (HOA)- An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.
Homestead #1 (regarding taxes) – When someone owns property and makes it his or her permanent residence or the permanent residence of his or her dependent, the property owner may be eligible to receive a homestead exemption that would decrease the property’s taxable value by as much as $50,000. The first $25,000 of this exemption applies to all taxing authorities. The second $25,000 excludes School Board taxes and applies to properties with assessed values greater than $50,000. You are entitled to a Homestead Exemption if, as of January 1st, you have made the property your permanent home or the permanent home of a person who is legally or naturally dependent on you. By law, January 1 of each year is the date on which permanent residence is determined. An application for exemption with the county property appraiser must be filed by March 1, subject to stringent late filing exceptions. See Fla. Stat. §196.011(8)
Homestead #2 (regarding creditor exemption)- Tax liens due to property taxes owed, specific liens due to mortgages and other voluntary instruments, construction liens, and/or claims of any creditor who has a judgment pre-dating the establishment of the homestead.
Housing Expense Ratio – The percentage of your gross monthly income that goes toward paying for your housing expenses.
Hud statement – A standardized, itemized list, published by the U.S. Department of Housing and Urban Development (HUD), of all anticipated CLOSING COSTS connected with a particular property purchase.
HUD-1 Settlement Statement – HUD-1 Settlement Statement is a document that lists all charges and credits to the buyer and to the seller in a real estate settlement, or all the charges in a mortgage refinance.
HUD-1A – In transactions that do not include a seller, such as a refinance loan, the settlement agent may use the shortened HUD-1A form.
Hybrid Loan – An adjustable rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term.