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Mortgage Glossary D-GHere is a Continuation of the Mortgage Glossary. These are the most essential words and phrases you should know if you wish to make an educated decision pertaining to home loans and mortgages in general, whether for business or personal reasons. The degree to which you know this vocabulary will in great part determine how good of a deal you recieve, as the fine print in the paperwork is loaded with many obscure terms which can be very confusing to a novice. Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income. Deed: the document that transfers ownership of a property. Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms. Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. EEM: Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc. Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely in a business or personal transaction, carefully, and with complete knowledge of the situation. Flood insurance: insurance that protects home owners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan. Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders. |
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