Glossary of Mortgage Terms

A rent-to-own home is a property you lease with an agreement that gives you the right, and sometimes the obligation, to buy that home at a set price once the lease period ends.

Rental property depreciation is a tax deduction that allows real estate investors to recover the cost of an income-producing property by deducting a portion of its value each year over a set recovery period.

A real estate owned (REO) property is a home that a bank, lender, or government agency has taken back after it failed to sell at a foreclosure auction. Because the lender now holds the property on its books, it typically prices and lists it for sale quickly — often below market value — in order to recover its losses.

A resale house is a home that has already been owned and is now up for sale again, as opposed to a brand-new home.

A restrictive covenant is a legal rule written into a property deed or community agreement that limits how homeowners can use, change, or build on their land.

The Section 504 Home Repair Program is a USDA program that gives very-low-income rural homeowners access to low-interest loans and grants so they can fix, improve, or make their homes safer.

Section 8 is a federal housing assistance program, officially called the Housing Choice Voucher Program, that helps low-income families, seniors, and people with disabilities afford safe rental housing in the private market.

A seller’s disclosure is a written document that requires a property seller to share known defects, past repairs, and material conditions of a home with potential buyers before closing.

Shadow inventory refers to homes that aren't listed for sale on the open market but could become available, including properties in foreclosure, bank-owned homes, and houses held back by sellers waiting for better conditions.

A short sale is a type of real estate deal in which a homeowner sells their home for less than what they owe on their mortgage, and the lender agrees to accept the lower amount.