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A real estate insurance policy to protect home owners against certain types of property damage
Most lenders require that you obtain a hazard insurance policy prior to buying or refinancing a home. Hazard insurance shields you against property damage caused by certain natural disasters depending on the terms of the policy. If a catastrophe occurs, hazard insurance should cover the costs to rebuild your home.
See: Impound account, Home owner's insurance
Home equity line of credit
A combination of a line of credit and home equity loan where the equity built up in a property acts as the security on the line of credit
You may be able to get a line of credit that allows you to pull (borrow) money from the account when you may need it. Equity is the difference between the value of your home and the amount you owe on your mortgage. The equity on your home usually sets the ceiling on the line of credit.
You can withdraw at will simply by writing a check. You will most likely have restrictions on how much you can withdraw at one time. Your credit limit is restored as you pay back what you owe. The added bonus is that the interest you pay may be deductible from your taxes. Consult your tax advisor.
Home equity loan
A loan where the security is the equity built up in a property
A home equity loan lets you use your equity, the value of your home minus what you owe, as security. The lender determines what percentage of your equity you may borrow against. Home owners 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 monthly payment for the term of the loan.
See: Home equity line of credit
A thorough examination of a property by a professional
Before or after making an offer on a home, it is always good to request a property inspection by an experienced and impartial professional. You may wish to observe the inspection to get an idea of the property's condition. If problems with the property are found during the inspection, you may ask the seller to make the needed improvements or withdraw your offer provided a contingency clause was included in the purchase agreement.
Home Owners' Association
The group of people (normally home owners) that oversee maintenance and improvement of homes in a certain area
Condominiums are the properties that are most likely to have a Home Owners’ Association. 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 Home Owners’ Association dues.
See: Condominium (Condo)
Home Owners' Association dues
Monthly fees paid to maintain an area covered by a Home Owner’s Association
Your monthly Home Owners’ Association dues cover the costs of maintaining the common areas of the specified area. A portion of your dues is also put aside for high-cost repairs or future emergencies, such as replacing an elevator or giving the building a coat of fresh paint.
See: Condominium (Condo), Home Owners' Association
Home owner's insurance
Insurance that guards home owners against theft and property damage
Most lenders require you to obtain a hazard insurance policy when buying a home. An extended policy is also available that protects against theft and vandalism on top of property damage. If you live in an area that’s prone to natural disasters, like earthquakes and floods, you’ll need a separate policy.
Home owner’s insurance can also include personal liability insurance, which covers any damage that either you or your family might cause someone else, and theft away from home, such as anything stolen from the policy holders car.
Compare: Hazard insurance
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. The lender, broker, escrow agent or attorney can prepare the HUD-1, also called a closing or settlement statement.
See: Closing costs