Mortgage Glossary

Hazard Insurance

Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.

Home Equity Conversion Mortgage (HECM)

A special type of mortgage developed and insured by the Federal Housing Administration (FHA) 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. Sometimes called a reverse mortgage.

Home Equity Line of Credit

A type of revolving loan, that enables a home owner 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 the property.

Home Inspection

An examination of the construction, condition and internal systems of a home prior to purchase; satisfactory home inspection may be a condition of purchase.

Homeowner's Insurance

A broad form of insurance coverage that combines hazard insurance with personal liability protection and other coverage.

Homeowner's Warranty (HOW)

Insurance offered by a seller that covers certain home repairs and fixtures for a specified period of time.

Homeowners' Association

An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.

Housing Expense Ratio

The percentage of a borrower's gross monthly income that is devoted to housing costs.

HUD-1 Settlement Statement

A document that lists all closing costs on a real estate purchase or refinance transaction. Also known as the "closing statement" or "settlement sheet."