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wou Mortgage dyubecaob Index Szh he Rate housing ratio and 36 would be the debt ratio. It means that:

1. Your housing expenses should not exceed 28 percent of your gross monthly income and
2. Housing expenses plus long- term debt should not exceed 36 percent of your gross monthly income.

The housing expenses include monthly mortgage principal, interest payments, property taxes and homeowner’s insurance. There may be other expenses, such as condominium fees, homeowners fees, special assessments, etc., that are included. Long-term debt is defined as monthly expenses extending more than 10 months into the future. The qualifying ratios may vary from lender to lender.

Please note that qualifying ratios are only a rough guidelines and underwriters consider many variables in their analysis. Many times, borrowers fall outside the guidelines, but have strong compensating factors that reflect low credit risk. Some compensating factors are history of savings, long-term job stability, a substantial down payment or excellent credit history will influence the decision to approve or deny a particular loan.

R

Rate Reduction Option: A mortgage loan with rate reduction option can be adjusted, under the right conditions, to a lower interest rate with a payment of small fee. This allows the borrowers to adjust the interest rate on the loan without having to go through a refinancing, which could cost up to 5 percent or 6 percent of the loan amount. The interest rate or points may be somewhat higher for a loan with rate reduction option.

Real Estate Broker: A middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.

Real Estate Settlement Procedures Act (RESPA): A consumer protection statute designed to help consumers be better shoppers in the home buying process. It requires that borrowers receive disclosures at various times. RESPA also prohibits certain practices that increase the cost of settlement services. More about RESPA

Recorder: The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

Refinancing: The process of the same mortgagor paying off one loan with the proceeds from another loan.

Rescission: The cancellation of a contract. When you use your home as collateral for a loan, you generally have the right to cancel the credit transaction within three business days. This is called your "right of rescission," and it is guaranteed by the Federal Truth in Lending Act. See FTC publication Getting a Loan: Your Home as Security

Restrictive Covenants: Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer. The determination whether a covenant runs with the land or is personal is governed by the language of the covenant, the intent of the parties, and the law in the State where the land is situated. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title. Restrictive covenants may limit the density of buildings per acre, regulate size, style or price range of buildings to be erected, or prevent particular businesses from operating or minority groups from owning or occupying homes in a given area. (This latter discriminatory covenant is unconstitutional and has been declared unenforceable by the U.S. Supreme Court.)

Reverse Mortgage: A special type of home loan that lets elderly homeowners convert the equity in their home into cash.

Right of Survivorship: In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

S

Sales Agreement: See Agreement of Sale

Second Home (or Vacation Home): This home is not rented and is occupied occasionally by the owners.

Second mortgage: A mortgage in addition to the first mortgage. Home equity loans, credit lines, home improvement loans are second mortgage loans. Second mortgage is subordinate to the first one. Second mortgage loans are non-conforming loans, so, they usually carry a higher interest rate, and they often are for a shorter time.

Secondary (subordinate) financing: Borrowing additional money toward the down payment. If it is acceptable, usually subject to a maximum combined LTV. Secondary financing is used as an alternative to obtaining Private Mortgage Insurance

Section 1031: Under section 1031 of the IRS, owners or real estate held for investment or for use in a trade or business can exchange their property tax-free for "like-kind" real estate.

Servicing: Servicing means the collection of payments, handling your escrow accounts and management of operational procedures, related to mortgages, that a lender performs.

Set Back Ordinance: Regulates the distance from the lot line to the point where improvements may be constructed.

Settlement (Closing)
Shared Appreciation Mortgage: A residential loan in which a borrower receives a below-market interest rate in return for which the lender receives a specified share of the future appreciation in the value of the property.

Special Assessments: A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

Special Lien: A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien. (See lien.)

Special Warranty Deed: A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has, or which might in the future, impair the grantee's title.

State Stamps: See Documentary Stamps

Survey: A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.

T

Tax: As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.

Taxable Assessed Value: The assessed value of a parcel against which the tax rate is applied to compute the tax due. In case of a partial exemption, the exempt amount is subtracted from the assessed value in order to determine the taxable assessed value.

Teaser Rate: A low initial interest rate on a mortgage. A feature of option ARM loans.
Title: As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.

Title Insurance