RE Glossary 2

Title search: A check of the title records to ensure that the seller is the legal owner of the property and the there are no liens or other claims outstanding.  

Total expense ratio: Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.

Transfer of ownership: Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.

Transfer tax: State or local tax payable when title passes from one owner to another.

Truth-in-lending: A federal law that requires lenders to fully disclose. In writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

Two-to-four-family property: A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.

Trustee: A fiduciary who holds or controls property for the benefit of another.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

Unethical: Lacking in moral principal; failing to conform to an accepted code of behavior.

Unsecured loan: A loan that is not backed by collateral.

VA mortgage: A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

Vacate: To give occupancy or surrender possession.

Variance: Permission obtained from governmental zoning authorities to build/alter a structure or conduct a use which is expressly prohibited by current zoning laws; an exception from the zoning laws.

Vested: Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.

Department of Veterans Affairs (VA): An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

Violation: An act, deed, or condition contrary to the law or permissible use of real property.

Wear and tear: The gradual physical deterioration of property, resulting from use, passage of time, and weather.

What-if analysis: An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.

What-if scenario: A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.

Wraparound mortgage: A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgage, who then forwards the payments on the first mortgage to the first mortgagee.