Glossary of Mortgage Terms

A gift of equity is when a property seller sells a home for less than its appraised market value so that the buyer, usually a family member, can use the difference to help pay for the home.

Before closing, lenders used to give borrowers a Good Faith Estimate (GFE), which used to be a standard way to show them the estimated costs, fees, and terms of a mortgage loan. The GFE has been replaced by the Loan Estimate.

The gross rent multiplier (GRM) is a simple ratio that shows how much an investment property costs compared to how much money it makes in rent each year. This is a quick way to see how one property compares to another.

A hard money loan is a short-term loan backed by assets that private investors or lending companies give out instead of banks. These loans are often used for real estate investment projects that need money quickly.

Hazard insurance is the part of a homeowners insurance policy that covers damage to your home’s physical structure from events like fire, windstorms, hail, lightning, and theft.

A homeowners association (HOA) is a private group that runs a neighborhood by charging homeowners fees and making sure that everyone follows the rules that are meant to keep property values and common areas in good shape.

Homeowners pay a homeowners association (HOA) fee on a regular basis to cover the costs of maintaining shared community spaces, providing amenities, paying for insurance, and running the association.

An HOA special assessment is a one-time fee your homeowners association charges on top of regular dues, usually to cover a major repair or unexpected expense the existing budget can't handle.

Most mortgage lenders require a written opinion from a licensed professional about the current market value of a home before they will approve a purchase or refinance loan.

Home appreciation is the rise in a home's market value over time. This can happen because of things like supply and demand, location, the economy, and improvements made to the home.