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LOAN-TO-VALUE RATIO (LTV)
The percentage of the loan amount to the appraised value (or the sales price, whichever is less) of the property.

CERTIFICATE OF VETERAN STATUS
FHA form filled out by the VA to establish a borrower's eligibility for an FHA Vet loan. Obtainable through local VA office by submitting form DD 214 (Separation Paper) with form 26-8261a (request for certificate of veteran status).

DELINQUENCY
Failure to make payments as agreed in the loan agreement.

POWER OF SALE
A clause written into a mortgage authorizing the mortgagee to sell the property in the event of default.

LETTER OF INTENT
An expression of intent to invest, develop or purchase without creating any firm legal obligation to do so.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA, OR FANNIE MAE)
This agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

PAYMENT CAP
Consumer safeguards which limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, they may cause negative amortization.

BANKRUPTCY
A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts.

REPRODUCTION COST
The cost, on the basis of current prices, of reproducing a new replica property with the same or fairly similar material.

RENT
Fixed periodic payment made by a tenant or occupant of property to the owner for the possession and use thereof, usually by prior agreement of the parties.

QUALIFIED FEE
An estate in fee which is subject to certain limitations imposed by the owner.

QUANTITY SURVEY
A method of estimating construction cost or reproduction cost; a highly technical process used in arriving at the cost estimate of new construction and sometimes referred to in the building trade as the price take-off method.

SURVEY
The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of houses in a lot including the determination of any existing encroachments or easements.

INDEPENDENT CONTRACTOR
One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as how he performs the act. The critical feature, and what distinguishes an independent contractor and an employee or agent, is the right to control.

LOAN ORIGINATION FEE
Fee charged by a lender to cover administrative costs of processing a loan.

AGREEMENT OF SALE
An agreement between the seller (vendor) and buyer (vendee) for the purchase of real property.

GOOD WILL
An intangible, salable asset arising from the reputation of a business.

CONVERSION CLAUSE
A provision in some ARMs that allows you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate will be set at current rates, and there may be a charge for the conversion feature.

PRIVATE MORTGAGE INSURANCE (PMI)
Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's purchase price. (Note, however, that FHA and VA loans have different insurance guidelines.)

ADJUSTABLE RATE MORTGAGE LOANS (ARM)
Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as (but not always) Treasury bill rates. If interest rates rise, your monthly payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an ARM loan.

ESCROW ACCOUNT
An account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insurance. The lender disburses escrow account funds on behalf of the borrower when they become due. Also known as Impound Account.

BENCH MARK
A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.

ENTIRETY, TENANCY BY
A form of joint ownership of property between husband and wife with the right of survivorship.