Mobile Home Dictionary

Mobile home finance is a very specific industry, and there is much to learn. Below are some answers to common questions. If you have any questions not included, plaese call us at (800) 882-1999. We would be happy to answer any questions you have.

Real Estate & Mobile Home Dictionary

Mobile home finance is a very specific industry, and there is much to learn. Below are some answers to common questions. If you have any questions not included, please call us at (760) 593-5593. We would be happy to answer any questions you have.

1031 Exchange: An exchange which is officially called an Internal Revenue Code 1031 Exchange which allows an owner to trade one like property for another under very specific guidelines and defer paying income tax.

Abatement: A termination, ending, reduction or decrease which usually applies to the assessed value of ad valorem taxes following their assessment and levy.

Accrued: Something that has been accumulated over a period of time for future disposition or use.

Actual Rate: The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the "note rate"), and is the rate used to calculate your monthly payments.

Adjustable Rate Mortgage: A loan that adjusts on a regular schedule based on a national economic index and the lender's margin. Also called "variable rate mortgage."

Amortized loan: A mortgage where the principal and interest are repaid according to a plan through a series of equal or nearly equal payments in monthly or other periodic installments without any special balloon payment prior to maturity. Also known as a Level payment loan.

Amortization Schedule: A timetable for payments of a manufactured home mortgage showing the amount of each payment that is applied to interest & principle.

APR (Annual Percentage Rate): The APR includes both your interest and any additional costs or prepaid finance charges you might pay, such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.

Application Fee: A one-time fee charged by a lender for processing a borrower's application for a manufactured home mortgage loan. Sometimes the application fee covers the cost of the credit report. SD Mortgage Group does not charge an application fee.

Appraisal: A professional opinion of the market value of a manufactured home property, in comparison to other manufactured homes that have sold within or in proximity to the home in question.

Appreciation: An increase in the value of a mobile home due to change in market conditions, home improvement or other factors. Contrary to popular belief, manufactured homes can and do appreciate.

Assessed Value: The value placed on a manufactured home by a public tax assessor for the purpose of determining property taxes. This is considered the least reliable method of determining a manufactured home value and should be given little weight when making a buying or selling decision.

Assumable Mortgage: A loan that can be taken over, or assumed, by a buyer when the mobile home is sold. Only some of SD Mortgage Group's financial products are assumable.

Automated Underwriting: A computer-based method that enables mortgage lenders to process a loan application more quickly by using credit scores and other loan application data to make a recommendation on whether or not to extend a mortgage loan. SD Mortgage Group personally reviews each and every application and does not use automated underwriting.

Balance sheet: A statement of the financial condition of a business as of a certain time showing its assets, liabilities and capital.

Balloon Payment Mortgage: A loan with fixed monthly payments based on a 30-year schedule of payments, but the entire balance of the loan comes due at the end of a set period, usually five, seven or ten years. SD Mortgage Group does not offer balloon payment mortgages and does not endorse or recommend their use.

Bank: A depository institution chartered under federal and state regulations that offers services such as checking accounts, savings accounts, consumer loans, safe-deposit boxes, investment services and automatic payment of bills.

Bankruptcy: The inability of a debtor to pay one's financial debts when due and where relief has been sought and has been granted though a special court action that makes it possible to resolve or eliminate the debtor's debts.

Beneficiary: (1) A party entitled to the benefit of a trust; (2) A party who receives profit from an estate, the title of which is vested in a trustee; (3) A party to whom a insurance policy is payable; (4) The lender on the security of a note and trust deed.

Book value: The current value for accounting purposes of an asset expressed as original cost, plus capital additions and less accumulated depreciation.

Borrower: The person who applies for and obtains a manufactured home mortgage loan.

Breach of contract: The violation of any terms or conditions in a contract without having a legal excuse such as the failure to make a loan payment when due.

Budget: A financial plan for spending and saving money.

Building codes: A systematic method established by ordinance or law of regulating and setting minimum construction standards for buildings within a municipality to protect the public's safety and health.

Building Permit: A written permit that must be purchased from the local government by anyone doing remodeling or rehabilitation work on a property.

Buy-Downs: Points a borrower pays in advance to lower the interest rate. Only recommended for long term ownership. SD Mortgage Group can sometimes finance Buy Down points into the mobile home loan.

Buyer's Agent: A real estate professional who enters into a contract of agency relationship with a buyer, and typically gets paid by splitting the sales commission with the selling or listing agent.

Cap: The maximum amount an interest rate can increase or decrease in a designated period of time (interest rate cap) or over the life of the loan (lifetime cap) on an adjustable rate loan.

Capacity: The legal ability of a person or entity to enter into a contract that is legally binding and to perform certain other civil acts such as making a will.

Capital: 1. A sum of money used to purchase long-term assets. 2. Stocks, bonds, or mortgages that were sold to raise money to purchase assets, as well as retained earnings. 3. Assets, other than land, used to generate income.

Capital improvement: Any structure erected as a permanent improvement to real estate, usually extending the useful life and value of a property such as the replacement of a roof.

Cash-Out Refinance: When an owner refinances their manufactured home loan and takes some home equity out as cash. SD Mortgage Group offers Cash-Out Refinance loans on manufactured homes in parks.

Cash Reserves: A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first several mortgage payments. SD Mortgage Group does not have any cash reserve requirements.

Chapter 7 Bankruptcy: A form of bankruptcy that involves total liquidation of assets. There is no repayment of debt on a Chapter 7 Bankruptcy.

Chapter 13 Bankruptcy: A form of bankruptcy that involves a repayment plan.

Charge Off: An accounting term to indicate that the creditor does not expect to collect the balance owed on an account. However, most creditors will continue to pursue collection of the debt.

Chattel: A loan secured against personal property, which is common in the financing of manufactured homes.

Clear Title: A title that is free of liens and legal encumbrances on the ownership of personal property.

Closing: The final steps in the transfer of property ownership, which usually occurs at a formal meeting between the buyer, seller, and third party agent(s), where the buyer signs the manufactured home mortgage contract. The seller receives payment for the property, the buyer and/or seller pay closing costs, and the title is transferred from the seller to the buyer.

Collateral: Expenses accepted as security for a loan, that measures the value and condition of the mobile or manufactured home to make sure it is worth at least as much as is being borrowed against it..

Commercial mortgage banker: A person who works for a bank who is in the business of making commercial mortgage loans and who is typically paid a commission based on a small percentage such as less than one percent of the loan.

Commission: The fee a real estate agent is paid for helping to sell a manufactured home that is usually based on a percentage of the purchase price of the home.

Commitment Letter: A formal offer by a lender stating the terms under which it agrees to loan money to a mobile home buyer or borrower.

Community Reinvestment Act (CRA): A federal law that encourages lenders to meet the credit needs of their local communities.

Comparative Market Analysis (CMA): A written analysis of comparable houses currently being offered for sale and comparable houses sold in the past six months in the general area.

Condominium: A home that is attached to other homes and shares common areas that everyone in the building, development, or community owns together and maintains through a homeowner's association fee.

Concession: A benefit granted by a seller to induce a buyer to make an offer

Consolidation Loan: A manufactured home loan obtained that combines payments of separate bills into one loan payment.

Contingency: A condition put in a purchase agreement when an offer is made to buy a manufactured home.

Contract for Deed: A type of seller financing, also known as "owner carry", where the buyer makes a down payment and installment payments to the seller, but there is no transfer of title for the borrower to own the home until the loan is fully paid or the manufactured home is refinanced into the borrower's name.

Contractor: An individual who is hired to build or rehabilitate a property.

Conventional Mortgage: A loan made by for-profit lenders and not insured by the federal government.

Cooperative (Co-op): A type of group ownership where all members own the community's living units and common areas by owning shares of the property. See Condominium.

Co-signer: A person who agrees to share credit responsibilities and repays the debt if the original borrower defaults.

Counteroffer: A response from the seller changing some of the terms of an original offer.

Credit: The granting of money in exchange for a promise of future repayment that measures an applicant's likeliness to repay a loan based on how previous debts have been handled and paid.

Credit Counseling: Advice given by professional counselors to inform people about how to use credit responsibly and how to get out of serious debt. Credit Counseling services will also make repayment arrangements with the original creditors.

Creditor: Any person or business to whom the consumer owes money and who has the right to undertake legal action to attain money owed on the original debt..

Credit Report: A record of how a consumer has paid credit in the past. Used as a guide to determine a potential manufactured home buyer's creditworthiness.

Credit Reporting Agency: A company that gathers, files and sells information to creditors and others with a legitimate business purpose. Also called a "credit bureau."

Credit scoring: In mortgages, the process of evaluating and rating a loan applicant according to the quality of his or her credit worthiness based on past use of credit, current indebtedness and frequency of application for credit and where a person's score may determine whether he or she is eligible for conventional loan standard terms or must obtain a sub-prime loan with less favorable terms.

Credit Union: A financial institution that is a cooperative and offers checking and savings accounts and other financial services for its members. Many credit unions now offer manufactured home financing.

Creditor: A party who is owed money such as mortgage lenders, credit card companies and bond holders.

Dealer: In taxation, a party who buys and sells merchandise for his or her own account which is his or her own inventory and consequently any gain on the sale is considered ordinary income by the IRS.

Debt: An obligation or liability which is usually money and must be repaid from one person to another.

Debt Management Plan: A bill payment plan for a borrower in a credit emergency that is agreed to by the borrower and creditors.

Debt-to-equity ratio: The relationship of the loan and equity components which for example if the debt is $80,000 and the equity is $20,000 there would be a debt to equity ratio of 4:1 or the equivalent to a 80% loan to value ratio.

Debt-to-Income Ratio: The maximum percentage of a borrower's gross monthly income that can be spent on the mobile home payment and all other creditor debts.

Deductible: The amount of cash payment required by an insurance policy that is made by the homeowner to cover a portion of a damage or loss. Typically, the higher the deductible, the lower the cost of the policy.

Deed of Trust: An alternative to a mortgage in some states, whereby a third party holds the deed of the property as security until the buyer/borrower repays the loan. Also called "trust deed."

Default: The failure to fulfill a duty or promise or to discharge an obligation or the failure or omission to perform an act.

Depreciation: A decrease in the value of the property due to changes in market conditions, wear and tear on the property, or other factors.

Disclosures: Federal or State requirements to provide information about a property for sale, especially as it represents actual or potential defects or problems.

District: A city area with a land use different from that of adjacent areas like commercial, industrial or residential areas.

Document Recording: The process of recording certain documents and making them part of the public record that follows closing.

Double taxation: The taxation of the same income at two different levels like a corporation which pays corporate income tax and then its shareholders pay an additional tax on the dividend income.

Down payment: An initial partial payment of the total selling price.

Dual Agent: A real estate professional who represents both the buyer and the seller in a mobile home purchase transaction.

Due-on-Sale Clause: A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property that secures the mortgage.

Earnest Money: Funds that are included with an offer to purchase a manufactured home and to show good faith in following through with the transaction.

Easement: A right, privilege or interest limited to a specific use or control purpose which one party has in the land of another party and which run with the land and are not a personal right of an individual.

Effective gross income: The gross income of a property less an allowance for vacancy and bad debts.

Eminent domain: The right of the government to acquire property for necessary public use with just compensation the right of which is found in the 5th Amendment to the Constitution.

Encroachment: An unlawful intrusion onto adjacent property of another by improvements to real property such as a patio built across a property line which reduces the value of the property intruded upon.

Encumbrance: Anything which affects or limits the fee simple title to or value of property such as a mortgage or an easement.

Equal Credit Opportunity Act (ECOA): A federal law that requires all lenders and other creditors to make credit equally available to a potential borrower without discrimination based on race, color, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equitable mortgage: A legal document that encumbers property but is not technically a mortgage because of the existent some legal error. Example: Although there was an error in the property's description that was attached to the documents, the parties in the transaction to be a mortgage loan, and the judge enforced equitable mortgage as if it were a mortgage loan on the property.

Equity: The interest or value which an owner has in real property over and above any liens against it.

Equity Loan: A loan based on the borrower's equity in the home.

Escrow: An arrangement for the deposit of instruments and/or the handling of funds with instructions with a neutral third party to carry out the provisions of the agreement or contract when the specified conditions have been met.

Escrow Account: A special account set up by the lender to collect and hold monthly payments toward annual property taxes and homeowner's insurance. This is also called an "impound account."

Estate: In real estate, the degree, quantity, nature and duration of interest, share, right, equity of which riches or fortune may consist and which a person holds in real property.

Executor: A man named in a will and affirmed by the probate court who has agreed in accordance with the will to carry out its provisions as to the disposition of the deceased person's estate. See executrix, a woman so appointed. See testator, one who makes the will.

Fair Credit Reporting Act (FCRA): A federal law that enables all consumers to learn what information credit reporting agencies have on file and to dispute inaccurate date in the file.

Fair Debt Collection Practices Act: A federal law that protects all consumers from abuse or threats from collection agencies trying to collect overdue payments on behalf of the original creditor.

Fair Housing Act: A federal law that prohibits any type of discrimination in all housing and real estate transactions.

Fair Credit Reporting Act: A federal law that allows individuals to examine and correct credit information about them that is used by credit reporting services.

Fair market value: The amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under any pressure to buy or sell.

Fannie Mae: A quasi-governmental agency established to purchase from the primary lenders any kind of mortgage loans in the secondary mortgage market.

FHA loan: A loan made by an approved lender in accordance with the FHA's regulations and insured by the Federal Housing Administration.

Finance Charges: The total dollar amount that is charged to use credit, which includes any interest and/or other costs.

Financial institutions: The organizations such as commercial banks, savings and loan associations, credit unions, savings banks and insurance companies that deal in money or claims to money and serve the function of channeling money from those who wish to lend to those who wish to borrow.

First Mortgage: A home loan that has priority over the claims of any additional or subsequent lenders for the same property in the event of default.

Fixed assets: The tangible property such as buildings, furniture and fixtures and equipment that are used in a business operation that is not for sale and is shown on the financial statement of the company.

Fixed Expense: Any expense that does not change from period to period, such as loan payments.

Fixed-Rate Mortgage: A loan where the interest rate and payments remain the same over the life of the loan. All of Chattel Mortgage loans have a fixed rate.

Floating rate: An interest rate that is not fixed over the term of a loan, bond, or other fixed-income security, but is allowed to vary according to the change in a specified index. See adjustable Mortgage. Example: Financial Securities Company created a floating mutual fund based on a portfolio of adjustable-rate mortgages yield on the fund varies from year to year depending on the in rates charged on the ARMS in portfolio.

Flood Insurance: An insurance policy required by a lender if a buyer's house is located in a flood zone, as determined by the National Flood Insurance Program (NFIP).

Forbearance: The act by which a creditor extends time for payment of a debt or forgoes for a time the right to enforce legal action on the debt or the legal process used to force the payment of a debt secured by collateral whereby the property is sold to satisfy the debt.

For-Sale-By-Owner (FSBO): A home that is offered for sale by the owner without the use of a real estate agent.

Freddie Mac: An independent stock company that creates a secondary market by purchasing conventional and also FHA and VA residential loans.

Gap loan: A loan that fills the difference between the first loan and the full amount of the permanent loan. See Bridge loan and Swing loan. Example: A developer arranges a permanent mortgage R fund $1,000,000 when the apartments she is building are 80% pied. From completion of construction until 80% occupa reached, the mortgage is only $700,000. The developer arrange loan of $300.000 for the RENT-UP PERIOD.

General contractor: A party who constructs buildings or other improvements for an owner or developer and who might employ a construction labor force or use subcontractors. See Contractor. Example: Collins. a landowner, has architectural plans and specifications for an office building. She enters into a contract with Baker, a general contractor, to build the structure. Baker hires subcontractors who put up the foundation, walls, roof, electrical and plumbing systems, etc.

General lien: A lien on all of the property of a debtor.

Gift Letter: A document that is required by a lender if a borrower receives a down payment or any part of a down payment from an individual as a gift, that is not to be repaid.

Good faith: An honest intention to abstain from taking conscious advantage of another.

Grace Period: An agreed-upon time after the payment of a debt is past due and during which time a party can perform without being considered in default.

Graduated payment loan: A loan that provided for partially-deferred payments of principal during the first five years of the loan term after which the principal and interest payment is substantially higher in order to make up for the principal portion of the payments that were lost at the beginning of the loan. See Variable interest rate loan.

Gross Income: Money earned before any taxes are withdrawn.

Growing-equity loan: A mortgage in which the monthly payments increase annually, with the increased amount being used to reduce the outstanding principal balance and therefore shorten the overall term of the loan.

Guaranteed mortgage: A mortgage in which a party other than the borrower assures payment in the event of default by a mortgagor such as VA-guaranteed mortgages.

Hard money: The cash including the cash proceeds from a loan as distinguished from credit extended by a seller. See Soft money.

Hazard Insurance: Insurance that protects the homeowner against physical damage to the manufactured home from fire, wind, vandalism and other hazards.

Holding company: An entity that owns or controls another company(ies) which often allows more latitude for business practices than the operating company can achieve alone

Home Equity Line of Credit: A type of loan that allows the homeowner to access the loan money with checks or a credit card as needed. Based on the equity in your home. SD Mortgage Group does not have a program in place for this type of loan.

Home equity loan: A loan sometimes called a "line of credit" where an owner uses his or her residence as collateral for a loan which permits the draw of funds up to a preset amount.

Home Improvement: Changes to a house that increases its value, such as modernizing a kitchen or replacing carpet or flooring. SD Mortgage Group can provide Home Improvement loans if the home is located in a manufactured home park or community.

Home Owners Association, HOA: A collectivity of home owners into which monthly fees are paid in exchange for the ability to use common areas.

Homeowner's Insurance: An insurance policy that combines liability coverage and hazard insurance on your home.

Home Warranty: A guarantee for certain features of a new home, such as the materials, workmanship and/or its main components offered by a dealership or builder.

Home Warranty Policy: An optional policy that is available that protects a homeowner against the cost of high repair bills for one year if the heating, plumbing, air conditioning or appliances break down.

Housing Allowance: A calculation which considers the monthly home payment, land payment and/or lot lease payment. Lenders in the manufactured home industry try to keep this to no more than 34% of an applicants monthly gross income.

Housing and Urban Development, HUD: A department of the federal government created in 1965 which is responsible for the implementation and administration of the U.S. government Housing and Urban Development programs which include FNMA, FHA, Public Housing Urban Renewal and Community Facilities

Housing Inspection: A professional opinion of the structural soundness and condition of a manufactured home..

Housing Ratio: The maximum percentage of a borrower's gross monthly income that can be used to make the monthly mortgage payments and land or lot rent. Also called "housing allowance".

HUD-1 Settlement Statement: A final statement listing all of the costs of the sale of a property and who pays for them. HUD-1 Settlement Statements are prepared by escrow/title companies and may or may not applicable to manufactured home sales, depending on the State.

Index: A published market index rate tied to an economic indicator that is used to calculate the interest rate of an adjustable rate mortgage at origination and at each adjustment period.

Income: A stream of financial benefits generally measured in terms of money as of a certain time or a flow of service which is the origin of value.

Income statement: A historical financial report prepared on either an accrual or a cash basis that indicates, sources and amounts of revenues, amounts of expense accounts, and profit or loss.

Inheritance taxes: The state-imposed taxes collected on a decedent's real and personal property.

Installment Loan: A credit account in which the amount of the payment and the number of payments are fixed.

Interest: 1. The cost in dollars for the use of money for a period of time or "rent" paid for the use of money. 2. The type and extent or having a portion, share or right in the ownership of something. Example: Lenders require payment of interest at a specified rate, to compensate for risk. deferment of benefits, inflation. and administrative burdens. Example: One may hold either a partial or fee simple interest in a property That interest entitles one to specific ownership rights.

Interest Factor: The cost for borrowing $1,000 of a mortgage loan based on interest rate and term.

Interest rate: The percentage of a sum of money charged for its use and like rent paid for use of the money. It is expressed as a percentage - usually annually, but can also be monthly or daily - of the sum borrowed.

Interest Rate Lock-In: A written guarantee that a buyer will receive a specified interest rate from a lender, provided that the loan closes within a set period of time.

Interim loan: A temporary or short-term loan that is also called an interim financing that is secured by a mortgage which is used until permanent financing is available and then paid off from the proceeds of permanent financing. See Construction loan.

Joint tenancy: An equal undivided ownership interest of a property by two or more natural persons each of whom has the right, called the right of survivorship, upon the death of one joint tenant to the automatic succession of the title of the deceased tenant.

Judgment: The official court decision of an action or lawsuit that may be listed on a credit report as a public record.

Judicial foreclosure: A court action to taken to collect a debt owed.

Just compensation: The amount paid to the owner of a property when it has been acquired under eminent domain. See Condemnation. Example: Property is condemned to construct a sewage treatment plant. The owner is entitled to just compensation equal to the fair market value of the property taken.

Land: The material of the earth, whatever it may be such as soil, rock or other substance and it includes the free or unoccupied space for an indefinite distance upwards as well as downwards.

Land and improvement loan: A loan obtained by the builder-developer for the purchase of land and to cover expenses for subdividing.

Lease: 1. A contract between owner and tenant setting forth conditions upon which a tenant may possess and use the property and the term of the occupancy. 2. Sometimes used as a method of financing as an alternative to purchasing property outright.

Lease-purchase agreement: An arrangement whereby a portion of the rent may be applied toward an established down payment or purchase price. Upon payment of the down payment the tenant, using borrowed funds, purchases the property and becomes the owner outright rather than a mere lessee.

Lender: The entity, business or person who offers a mortgage loan.

Leverage: 1. A real estate financing principle that uses investment debt financing to maximize the return per dollar of equity invested. 2. A financial method applied with the anticipation that the acquired property will increase in return so that the investor will realize a profit not only on his or her own investment but also on the borrowed funds and with the return to the borrowed funds being predominant.

Levy: 1. The legal seizure of property to satisfy a judgment. 2. The imposition of a tax.

Liability: 1. An obligation or duty that must be performed. 2. A claim of creditors for a debt due

Liability Protection: Insurance that covers people (other than the insured) and their personal property in cases of injury or damage while on the homeowner's property.

Licensee: A person to whom a license has been granted.

Lien: A legal hold or claim of one person on the property of another as security for a debt or charge that may be listed on a credit report as a public record. When the mobile home or manufactured home is in a park or is not attached to real property, the lien will normally appear on the home's title.

Limited liability: A restriction of a party's personal liability for potential business losses to be only up to the amount invested.

Liquidity: 1. The ease with which a person is able to pay his or her maturing obligations. 2. The holdings such as common stocks and U.S. savings bonds which have the ability to be able to be easily converted to cash or its equivalent.

Listing Agent: A real estate professional who has a contract with the seller of a house to advertise the property for sale and represent the seller when offers are made. If the listing agent is listing a mobile or manufactured home in a leased lot situation, most states require that the listing agent be a licenced dealer.

Loan application: A source of information on which a lender bases a decision about making a loan which defines the loan contract, shows the desired loan amount, the repayment terms, the name of the borrower, place of employment, salary, bank accounts, credit references and describes the real estate that is to be mortgaged.

Loan origination fee: A fee charged to the borrower by the lender for the administrative costs of processing and creating a mortgage loan which is usually computed as a percentage of the loan amount and is often expressed in points.

Loan terms: The conditions on which the mortgage is made including the rate and the length of the repayment period

Loan-to-Value Ratio (LTV): The ratio of the loan balance to the appraised value of the house.

Manufactured homes: A popular broad group of alternative housing construction types such as mobile homes which are produced mainly in and by factories and later moved to a permanent sites.

Manufactured Home: A home built entirely in a factory under a federal building code administered by the Department of Housing and Urban Development (HUD) that went into effect June 15, 1976.

Marginal tax rate: The amount of income tax that an investor would pay on the next dollar of income which is generally higher than the nominal or named tax rate because of the progressive income tax rate structure.

Market value: The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale like the buyer and seller acting prudently with knowledge and neither being affected by undue pressures.

Master deed: A title document used in common area projects such as condominiums which creates both the fee units and the common interests involved in the projects.

Material change of ownership: The sale of X or more parcels to one buyer by a subdivider which is restricted in some states.

Material fact: Any fact that would affect the judgment or decision making of a person in giving his or her consent to enter into a particular transaction based on the proposed terms and one which an agent must disclose about his non-client to his or her principal and one which an agent must disclose about the property or the area to his non-clients.

Maturity: The date a loan is due.

Mobile Home: A factory constructed home built from 1970 to June 15, 1976.

Modular housing: A system used for the construction of factory-built homes and other improvements to real property that comply with local building codes, using very little labor through the on-site assembly of component parts or modules that have been mass produced at a different location. See Manufactured home.

Money market: A market for borrowed funds which are generally only short-term funds.

Mortgage: A security agreement between the lender and the borrower in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on a loan and to foreclose if the loan obligations are not met.

Mortgage Bank: A type of financial institution that offers only mortgage financing and/or loans.

Mortgage Broker: A company or individual that locates lender for the borrower for a fee. Brokers are considered the middle man. The use of a mortgage broker can increase your rate and fees that a borrower would have received had they borrowed from a lender directly.

Mortgage insurance: A policy that guarantees the repayment of a loan in the event of the death or disability of the borrower.

Mortgage Life Insurance: An optional form of life insurance that pays off a mortgage if the borrower dies. This has proven to not be cost effective for consumers. Chattel mortgage does not offer mortgage life insurance.

Mortgage Note: A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period that is secured by a mortgage and either recorded by title or in the public records along with the deed, in the case of a real property transaction.

Mortgage Payment: The total monthly loan payment known as principle, interest, taxes and insurance (PITI).

Multiple Listing Service(MLS): A service within a given community or area that allows real estate professionals to submit listings and agree to attempt to sell all properties in the service. Some MLS services also list manufactured homes in parks.

National Association of REALTORS®, NAR: A national trade group of real estate licensees.

Negative amortization: A loan in which the outstanding principal balance goes up instead of down because the monthly payments are not large enough to cover the full amount of interest due and being insufficient the unpaid interest needs to be added to the principal amount.

Negative fraud: The act of not disclosing a material fact which thereby induces him or her to enter into a contractual situation that causes him or her damage or loss.

Negotiable: The capablity of being assigned or transferred in the ordinary course of business.

Net income: The profit or money remaining after the expenses have been deducted from all income.

Net listing: A listing that is illegal in most states which provides that the licensee may retain as compensation for the licensee's services all sums received over and above a predetermined net price asked for by the owner.

Nominal tax: The named income tax rate paid.

Nontraditional Credit History: A record of credit performance shown with receipts and check stubs from payments to landlords, utility companies, child-care providers and other applicants who do not have a credit history from traditional loans and other forms of credit.

Notary public: A government-appointed officer having the authority to take the acknowledgments of persons executing or signing documents and a party who signs the certificate and affixes an official seal.

Note: A unilateral written agreement acknowledging a debt concerning real property that contains an express and absolute promise with the signer promising to pay according to the specified terms and conditions to a named person, or order, or bearer, a definite sum of money at a specified date or on demand and that usually provides for interest and which is secured by a mortgage or trust deed. Also called a promissory note.

Notice of default: A letter sent as a reminder to a borrower who has breached one or more of the loan covenants that may indicate the grace period and any penalties for failing to cure the default.

Notice of intention to sell: A document that is recorded and published prior to the sale of a business opportunity in order to give the seller's creditors notice. Also called notice to creditors of bulk transfer.

Null and void: Being of no legal validity or effect.

Objective value: The value used in the income and market data approaches of appraisal that can be easily determined using data directly from the market.

Offer to purchase: A presentation of a set of terms made by a potential buyer to a property owner to purchase his or her property.

Open listing: A nonexclusive authorization given to a licensee and which may be given to a number of licensees by a property owner, who retains the right to sell directly, to try to secure a purchaser without any liability to compensate anyone but the one who is the first to produce a ready, willing and able buyer who meets the terms of the listing or the one who gets the seller to accept an offer. Upon the sale of the property, the owner is under no obligation to notify anyone of the fact of the sale.

Option: A right, given for a consideration, to purchase or lease a property, upon specified terms and within a specified time period, and placing no obligation on the party receiving the option to purchase the property.

Oral contract: A verbal agreement which has not been reduced to writing.

Origination Fee: A fee charged for the work involved in the evaluation, preparation and submission of a proposed mortgage loan.

Overage: The amount in retail stores leases that is to be paid over the base rent that is based on the stores' gross sales. See Percentage lease.

Passive activity income: The income from real estate or another business in which an owner is not actively involved or participate in on a day-to-day basis.

Payback period: The period of time necessary for the cash flow from a project to equal the amount of money invested.

Payment Plan: An agreement with a lender in which a borrower promises to make up any missed payments by sending one full payment and one partial payment each month until delinquent mortgage payments are caught up.

Payment rate: The rate at which the borrower repays an adjustable rate loan that reflects any buy downs or payment caps.

Perpetuity: An existence without any time limits which would theoretically be forever.

Personal property: Any property which is not real property.

Planned Unit Development (PUD): A type of property that is part of a subdivision and has common areas that are shared with all residents and maintained through a homeowner's association fee. Usually, the owner owns the home and the land on which it stands. Also called a "co-op" in the case of mobile or manufactured homes.

Points: A charge assessed by a lending institution to increase the yield of a mortgage loan above the contract rate to the market rate so that it is competitive with other investments and is equal to the difference between the stated principal amount on the note and the lesser amount loaned. One point equals 1 percent of the loan amount. See Discount points.

Power of attorney: A written instrument whereby a principal authorizes an agent who is sometimes called an attorney in fact to perform specified acts on his or her behalf.

Pre approval: A guarantee that a lender will loan a potential buyer a fixed dollar amount as long as they buy a home within a certain time frame and the house appraises for the amount of money for which they qualify.

Predatory Lending: A type of lending that falls between appropriate risk-based pricing and blatant fraud and combines certain products, terms, prices and practices.

Pre-Foreclosure Sale: When the lender agrees to allow a delinquent borrower to sell the house to avoid foreclosure.

Prepayment: Paying more each month than the amount of the regular mortgage loan payment to pay the loan off sooner and save money on interest charges.

Prepayment Penalty: Some lenders will charge a borrower either a flat rate, or percentage of the loan, if the loan is paid in full prior to the maturity date.

Pre qualification: The process used by lenders to calculate a potential buyer's mortgage affordability, usually based on unverified information.

Prime Lending: Lending to borrowers with highly rated credit histories.

Prime rate: The lowest commercial interest rate charged by banks on short-term loans to their most creditworthy customers.

Principal: 1. A main party in a real estate transaction such as a buyer, seller, owner, lessor or borrower. 2. A party who is also called a client who has authorized another to act on his or her behalf and is represented by an agent. 3. An amount invested as an investment which is different than income or profits. 4. The amount of money borrowed or the amount of the loan due and payable at a certain date.

Promissory Note: A document in which the borrower promises to repay a loan.

Property tax: A government levy on privately owned property based on its market value or other uniformly-applied standard which is sometimes referred to as ad valorem tax or real estate tax.

Prorations: Certain items that are continuing expenses such as property taxes and space rent that must be distributed between the buyers and the sellers at the close of sale and/or escrow.

Proxy: 1. The document given by one person giving another person the lergal authority to represent them. 2. The person who represents another, particularly in some meeting.

Public Record: Information obtained by a credit reporting agency from court records, such as liens, bankruptcy filings and judgments.

Purchase and Sale Agreements: A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Purchase Offer: A purchase proposal to the seller of a house, telling the amount a certain buyer would pay for the house and other conditions that would have to be met before the proposed home sale.

Qualifying ratio: The maximum percentage of a borrower's income that a lender or government agency will allow a prospective debtor's payments to be and still be able to approve the loan and which is often referred to as a debt-to-income ratio or DTI.

Quiet title action: A court action brought to establish title from a questionable claim or to remove a defect or cloud on the title to property.

Quitclaim deed: A deed used to surrender any interest in property which the grantor may have without any warranty of title or interest.

Real Estate Broker: A real estate agent that is authorized to open and run his or her own agency. Most states require real estate brokers to also be licensed dealers when selling manufactured homes in parks or communities where the land is leased.

Real Estate Owned: (REO) A term used for property acquired through foreclosure by a lender and currently held in inventory.

Real Estate Settlement Procedures Act (RESPA): A lending regulation that establishes laws and procedures for closing mortgage loans. RESPA prohibits cost increasing practices, such as kickbacks and referral fees and requires advance disclosure of settlement costs.

Real estate trust: A special arrangement under federal and state laws whereby investors may pool funds for investments in real estate and mortgages and be able to avoid corporate taxation by having the profits passed to individual investors who pay taxes.

REALTOR®: A licensee who is either a broker or a salesperson and is affiliated with and a member of a local, state and the National Association of REALTORS®, NAR.

Reciprocity: The mutual exchange of privileges between groups or states which in real estate would be the recognition of the license of one state in another which very few states do.

Redlining: An illegal practice of discrimination against a particular ethnic group by mortgage lenders who decide that certain areas of a community are too high risk and refuse to lend to buyers who want to purchase property in those areas, regardless of their qualifications or creditworthiness.

Refinancing: The process of paying off one loan with the proceeds from a new loan secured by the same property.

Replacement Coverage: An optional insurance feature available on both a house and its contents that pays to restore it to it's original condition if the home is damaged or replace contents if they are lost.

Repossession: Property that is taken back by the creditor when the borrower does not make payments due on the property.

Reverse Mortgage: A special type of home loan that lets an elderly homeowner convert the equity in the home into cash. Reverse mortgages are not offered by SD Mortgage Group.

Revolving Account: A credit agreement that allows a borrower to pay all or part of the outstanding balance on an account. As credit is paid off, it becomes available again to use for another purchase or cash advance.

Risk rating: A quatifiable rating system used by a lender that usually employs grids to develop precise and relative figures for the purpose of determining the overall soundness of a loan.

Rollover loan: A mortgage that at its termination can be rewritten or renewed and whose terms may be changed with each rollover period.

Savings and Loan Association: (S&L) A state or federally chartered thrift institution that specializes in making residential mortgages.

Second Mortgage: A home loan that has rights subordinate to the rights of the first mortgage. Not normally offered to manufactured homes located in parks and/or leased lot communities.

Secondary mortgage market: A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.

Servicing: The collection of payments and management of operational procedures related to a mortgage.

Settlement Statement: A document required by the Real Estate Settlement Procedures Act that is an itemized statement of services and charges relating to the closing or settlement of the property transfer. Also called "HUD-1 Settlement Statement" or "Uniform Settlement Statement."

Single-Family Home: A type of property, usually detached, where one family owns the home and the land on which it stands.

Sole and Separate: A form of ownership where one individual owns the property, another the manufactured home.

Specifications: A detailed description of the size, shape, materials and other details of a building or remodeling project.

Sub prime Lending: A type of lending that relies on risk-based pricing to serve borrowers who cannot obtain credit in the prime market, where higher degrees of risk for borrowers carry higher costs for loans. Sub prime loans are often called "B- through D" credit.

Survey: A professional measurement of a property and the land around it.

Tenancy in Common: A form of ownership where two or more people own a property and can have different shares of ownership. Also called a "co-op".

Title: A legal document establishing the right of ownership in a property.

Title Insurance: Insurance to protect the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

Truth-In-Lending Act (TILA): A federal law that requires creditors to give complete and accurate information about the cost of credit to consumers and the terms of repayment.

Truth-In-Lending Statement: A document that discloses the terms and cost of a mortgage loan, including APR.

Underwriting: The process of analyzing a borrower's finances and payment history in order to approve or deny a loan.

VA Loan: A loan that is guaranteed by the Veterans Administration, a department of the Federal Government.

Variable Expense: An expense that changes from period to period, such as utilities, food, clothing and entertainment.

Verification: The process of making sure that all of the borrower's loan application information is accurate.

Walk-Through: A final inspection of the property by the buyer to determine that the property is as described in the purchase agreement, which is usually conducted right before closing.

Workout Agreement: The negotiated agreement that is made with the lender or servicer to address a debt by the homeowner in order to avoid foreclosure.

Zoning: A county or city law stating the types of use to which properties can be put in specific areas.