A  B  C  D  E  F  G  H  I  J  L  M  N  O  P  Q  R  S  T  U  V  W  Z

BOOKMARK THIS PAGE

Mortgage and Real Estate Glossary ~ H

Hazard insurance

An insurance policy to protect homeowners against property damage. Lenders require that you get hazard insurance policy before you buy or refinance a home. Hazard insurance shields you against property damages caused by a fire or a severe storm. If you live in an area that's prone to natural disasters, like earthquakes and floods, you might need a separate policy. If a catastrophe does happen, hazard insurance should cover the costs to rebuild your home. You have to pay for first year of hazard insurance on the closing date. The lender may also require that you deposit up to 2 months of premiums into an escrow account.
See: Impound account, Homeowner's insurance

Home equity line of credit

A line of credit, secured by a property, that allows owners to tap into their home's equity. You can get a line of credit equal to your home's equity that works like your checking account or credit card. Equity is the difference between the value of your home and the amount you owe on your mortgage. It's flexible, so, if your equity is $20,000, you can withdraw at will up to this amount simply by writing a check. Note that you'll have restrictions on how much you can withdraw at one time. You only pay interest on what you borrow and your credit limit is restored as you pay back what you owe. A home equity line of credit typically stays open for 10 years. Once it closes, you normally have 10 to 15 years to pay back what you owe. The added bonus is that the interest you pay can be deducted from your taxes. But this isn't free money, if you can't repay the credit line you could risk losing your home.

Home equity loan

A loan that allows home owners to borrow against the equity in their property. A home equity loan lets you use your equity, the value of your home minus what you owe, as a guarantee that you will repay the loan. Depending on the lender, you could borrow between 80% to 100% of your home's equity, and sometimes more. Homeowners often apply for home equity loans to pay college tuition, to make major renovations on a home, or to pay off credit card debt.

Home equity loans have a fixed interest rate and payment for usually 10 to 15 years. Since these loans are riskier than mortgages for lenders, the interest rates are higher. Keep in mind that you still have to fork out closing costs, such as the processing and appraisal fees.

Home inspection

Before or after you make an offer on a home, it is a good idea to cover all your bases by requesting a property inspection. Make sure that you hire an experienced professional who has nothing to gain from finding a problem with a property. You might also want to watch the inspection to fully understand the property's condition and to find out what, if any, repairs need to be made. The cost to inspect an average-sized home is usually between $250 and $300.
If the property does not pass the inspection with flying colors, you can either ask the seller to make the needed improvements or you can withdraw your offer-that is, if you included a contingency clause in the purchase agreement.
See: Contingency

Homeowners' Association

The association that manages a condominium or a planned unit development. A Homeowners' Association is usually made up of homeowners living in the development. The 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 Homeowners' Association dues.
See: Condominium

Homeowners' Association dues

Monthly fees paid to maintain a condominium or planned unit development. Your monthly Homeowners' 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 outside of the building a coat of fresh paint.
See: Condominium

Homeowner's insurance

An insurance policy that protects homeowners against theft and property damage. Lenders require that you open a hazard insurance policy when you buy a home. Buyers and owners, though, often opt for the extended policy called homeowner's insurance. This policy protects you not only against property damage caused by a fire or a severe rainstorm, but can also shield you against theft, vandalism, as well as for stolen cash and personal items.

Basically, the more coverage you want, the higher your monthly premium will be. If a catastrophe does happen, homeowner's insurance should cover the costs to rebuild your home. If you live in an area that is prone to natural disasters, like earthquakes and floods, you will need a separate policy. Homeowner's insurance can extend to personal liability, which covers any damage that either you or your family might cause someone. It also protects you against any accident that happens around your home, like the postman or pizza delivery person getting nipped by your dog.

HUD-1

A document that gives a breakdown of the costs that the buyer and seller pay at closing. A HUD-1 gives you the final record of the fees paid at closing. In some states, you receive the HUD-1 on or after the closing date. If your property closes in escrow, you may receive the final HUD-1 in the mail, normally within 24 hours after the deed of trust is recorded. The lender, broker, escrow agent or attorney can prepare the HUD-1, which is also called a closing statement and settlement statement.
See: Closing costs

10 minute ~ easy qualification. Call directly...800-931-0011