Glossary 

velopment (HUD) that guarantees se-

to an amount that represents a specified

curities backed by mortgages that are

percentage of the borrower's equity in

insured or guaranteed by other gov-

the property.

ernment agencies. Popularly known as

Home Inspection: A professional in-

"Ginnie Mae."

spection of a home to determine the

Gross Monthly Income: The income

condition of the property. The inspec-

you earn in a month before taxes and

tion should include an evaluation of the

other deductions. It also may include

plumbing, heating and cooling systems,

rental income, self-employed income,

roof, wiring, foundation and pest infesta-

income from alimony, child support,

tion.

public assistance payments, and re-

Homeowner's Insurance: A policy that

tirement benefits.

protects you and the lender from fire or

Ground Rent: Payment for the use of

flood, which damages the structure of

land when title to a property is held as

the house; a liability, such as an injury

a leasehold estate (that is, the borrow-

to a visitor to your home; or damage to

er does not actually own the property,

your personal property, such as your

but has a long-term lease on it).

furniture, clothes or appliances

Growing-Equity Mortgage (GEM):

Homeowner's Warranty (HOW): In-

A fixed-rate mortgage in which the

surance offered by a seller that covers

monthly payments increase according

certain home repairs and fixtures for a

to an agreed-upon schedule, with the

specified period of time.

extra funds applied to reduce the loan

Homeowners' Association: An organi-

balance and loan term.

zation of homeowners residing within a

particular area whose principal purpose

H

is to ensure the provision and main-

tenance of community facilities and

services for the common benefit of the

Hazard Insurance: Insurance cover-

residents.

age that compensates for physical

damage to a property from fire, wind,

Housing Expense Ratio: The percent-

vandalism, or other covered hazards

age of your gross monthly income that

or natural disasters.

goes toward paying for your housing

expenses.

Home Equity Conversion Mortgage

(HECM): A special type of mortgage

HUD-1 Settlement Statement: A final

developed and insured by the Federal

listing of the closing costs of the mort-

Housing Administration (FHA) that

gage transaction. It provides the sales

enables older home owners to convert

price and down payment, as well as the

the equity they have in their homes

total settlement costs required from the

into cash, using a variety of payment

buyer and seller.

options to address their specific finan-

cial needs. Sometimes called a "re-

Hybrid Loan: An adjustable-rate mort-

verse mortgage."

gage (ARM) that offers a fixed rate for

an initial period, typically three to

Home Equity Line of Credit

ten years, and then adjusts every six

(HELOC): A type of revolving loan,

months, annually, or at another speci-

that enables a home owner to obtain

fied period, for the remainder of the

multiple advances of the loan pro-

term.

ceeds at his or her own discretion, up