Real Estate Glossary

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hazard insurance
Insurance coverage that compensates for physical damage to a property from fire,
wind, vandalism, or other hazards.

Home Equity Conversion Mortgage (HECM)
A special type of mortgage 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. Unlike traditional home equity loans, a borrower does not
qualify on the basis of income but on the value of his or her home. In addition, the
loan does not have to be repaid until the borrower no longer occupies the property.
Sometimes called a reverse mortgage.

home equity line of credit
A mortgage loan, which is usually in a subordinate position, that allows the borrower
to obtain multiple advances of the loan proceeds at his or her own discretion, up to
an amount that represents a specified percentage of the borrower's equity in a property.

home inspection
A thorough inspection that evaluates the structural and mechanical condition of a property.
A satisfactory home inspection is often included as a contingency by the purchaser.
Contrast with appraisal.

HomeKeeper_SM
Fannie Mae's adjustable-rate conventional reverse mortgage, which allows older
homeowners to borrow against the value of their homes and receive the proceeds
according to the payment option they select. The amount available is based on the
number of borrowers and their ages and the adjusted property value. Anyone 62 y
ears or older who either owns his or her own home free and clear or has very low
mortgage debt is eligible.

homeowners' association
A nonprofit association that manages the common areas of a planned unit development
(PUD) or condominium project. In a condominium project, it has no ownership interest
in the common elements. In a PUD project, it holds title to the common elements.

homeowner's insurance
An insurance policy that combines personal liability insurance and hazard insurance
coverage for a dwelling and its contents.

homeowner's warranty (HOW)
A type of insurance that covers repairs to specified parts of a house for a specific
period of time. It is provided by the builder or property seller as a condition of the sale.

HomeStyleŽ Mortgage Loan
A mortgage that enables eligible borrowers to obtain financing to remodel, repair, and
upgrade their existing homes or homes that they are purchasing. The financing takes the
form of a conventional second mortgage or a Federal Housing Administration (FHA)
Section 203(k) first mortgage.

housing expense ratio
The percentage of gross monthly income that goes toward paying housing expenses.

HUD median income
Median family income for a particular county or metropolitan statistical area (MSA), as
estimated by the Department of Housing and Urban Development (HUD).

HUD-1 statement
A document that provides an itemized listing of the funds that are payable at closing.
Items that appear on the statement include real estate commissions, loan fees, points,
and initial escrow amounts. Each item on the statement is represented by a separate
number within a standardized numbering system. The totals at the bottom of the HUD-1
statement define the seller's net proceeds and the buyer's net payment at closing. The
blank form for the statement is published by the Department of Housing and Urban
Development (HUD). The HUD-1 statement is also known as the "closing statement"
or "settlement sheet."