Glossary of Terms

Following are mortgage and real estate related terms and definitions you may find helpful.

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Hazard Insurance: Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards. (See Homeowner's Insurance).

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 Association: The association that manages a condominium or a planned unit development.

A Homeowner's Association oversees how the common areas of a building are maintained and regulated, including everything from paying hazard insurance, to cleaning the pool, to collecting the garbage. The association also decides how to spend your monthly Homeowner's Association dues.

Homeowner's Association Dues: Monthly fees paid to maintain a condominium or planned unit development.

Your monthly Homeowner's Association dues cover the costs of maintaining the parts of the building that are shared with everyone else - everything from the lighting in the hallways to the artwork in the lobby. A portion of your dues is also put aside for high-cost repairs or future emergencies, such as replacing an elevator or giving the building a fresh coat of paint.

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: A type of insurance that covers repairs to specified parts of a house for a specific period of time.

Housing Expense Ratio: The percentage of your gross monthly income that goes toward paying for your housing expenses. (See Housing Ratio).

Housing Ratio: The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

HUD: (Department of Housing and Urban Development). A cabinet department responsible for the implementation and administration of government housing and urban development programs.

HUD-1 Settlement Statement: A final listing of the costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller.

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