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Real Estate Glossary (Q & R)

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Q

Qualifying Guidelines

 

There are two main elements lenders consider when determining whether you and any co-borrowers qualify for a specific mortgage.

The first is your monthly mortgage costs, including mortgage payments, property taxes and insurance. If you’re considering buying a condominium or cooperative, any associated fees are also considered. Your mortgage costs should not exceed 28 percent of your gross monthly (pre-tax) income.

The second qualifying guideline relates to your total monthly housing costs and other debts you and any co-borrowers have. These costs should not exceed 36 percent of your gross monthly income.

Lenders follow these guidelines because they believe these percentages allow homeowners to pay off their mortgages fairly comfortably without the worry of loan defaults and foreclosures.

However, these guidelines can be exceeded in certain cases, such as borrowers with a good credit history or with a larger down payment.

Qualifying Ratios

 

Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quitclaim Deed

 

A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

R

Radon

 

A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

Rate Caps

 

Lenders offer caps with their adjustable rate mortgages (ARMs) so you can have more control over your monthly mortgage payment. Usually, there are two types of rate caps:

  • A per-adjustment cap, which specifies the most your interest rate can rise from one adjustment period to the next
  • A lifetime adjustment cap, which specifies how much your interest rate can rise over the life of your loan

Ask your lender about both caps when evaluating any ARM product.

Rate Lock

 

A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time.

Rate-Improvement Mortgage

 

A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

Ratified Sales Contract

 

A ratified sales contract means both the buyer and the seller have signed off on the final offer. It also acts as a starting point for the loan application interview.

The ratified sales contract specifies the amount of your down payment, the price you will pay for the house, the type of mortgage financing you will seek, your proposed closing and occupancy dates, and other contingencies.

You will give all this information to your loan officer when you meet to discuss your financing options.

Real Estate Agent

 

A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Attorney

 

Many homeowners hire a real estate attorney to represent them during the loan application process. If you do so, your attorney will review the sales contract and represent you at closing.

There are many questions you can ask a personal attorney before deciding whether to have the attorney represent you at closing. They can include:

  • What is the attorney’s fee for representing you at closing?
  • What is the attorney’s experience with real estate transactions?
  • Are there fees for reading documents relating to the closing?
  • Are there fees for giving advice?

Remember that your personal attorney’s fee is not part of your closing costs. You must pay for this expense separately.

Real Estate Settlement Procedures Act (RESPA)

 

A consumer protection law that requires lenders to give borrowers advance notice of closing costs

Real Property

 

Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Realtor

 

A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

Recorder

 

The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”

Recording

 

The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Refinance Transaction

 

The process of paying off one loan with the proceeds from a new loan using the same property as security.

Rehabilitation Escrow Account

 

A contingency reserve will be set up that contains funds borrowed to finance your home improvements. These will be placed into an escrow account upon the closing of your mortgage. Payments to the contractor will be periodically made from this fund as construction occurs.

You will be paid interest on the funds that are in the escrow account that have not been paid to the contractor.

Rehabilitation Mortgage

 

A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Remaining Balance

 

The amount of principal that has not yet been repaid.

Remaining Term

 

The original amortization term minus the number of payments that have been applied.

Rent Loss Insurance

 

Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

Rent with Option to Buy

 

There are two different Rent With Option to Buy options:

Lease-Purchase Mortgage Loan: An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate.

Lease-Purchase Option: Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or “leaseholder.” The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.

REO (Real Estate Owned)

 

This is Real Estate that is owned by the lender. This status indicates the property is owned by a lender or bank as a result of a foreclosure.

Repayment Plan

 

An arrangement made to repay delinquent installments or advances. Lenders’ formal repayment plans are called “relief provisions.”

Replacement Reserve Fund

 

A fund set aside for replacement of common property in a condominium, PUD, or cooperative project - particularly that which has a short life expectancy, such as carpeting, furniture, etc.

Rescission

 

The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.

Reverse Mortgage Counseling

 

In order to get a Home Keeper® reverse mortgage or a Home Equity Conversion Mortgage (HECM), you must receive counseling that explains how the financing option works.

During your counseling, you will receive an estimate of your loan advances and an explanation of your responsibilities as a borrower. Other sources of unbiased information education may also be provided. A non-profit agency or a local lender typically conducts the counseling.

Revolving Liability

 

A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

Right of First Refusal

 

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of Ingress or Engress

 

The right to enter or leave designated premises.

Right of Survivorship

 

In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Rural Housing Service (RHS)  Loans

 

The Rural Housing Service (RHS), a branch of the U.S. Department of Agriculture, offers low-interest-rate homeownership loans with no down payment requirements to low- and moderate-income persons who live in rural areas or small towns. Check with your local RHS office or a local lender for eligibility requirements. For the location of RHS State Offices and details on RHS loans, see the RHS home page.

Rural Housing Service (RHS)

 

An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

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