In the world of homeownership, there are a lot of terms that people are expected to familiarize themselves with. Since these terms play a big role in how you understand your mortgage and your continuing needs as a homeowner, these terms are important for you to learn. While there are many of them, they are not that difficult to learn when you have a dedicated resource to help you define and understand them in an accessible way. Here, you'll find an extensive, though not exhaustive, list of important terms and acronyms that all homeowners should know.
ARM - Adjustable Rate Mortgage
This is a mortgage that has an interest rate that will vary depending on a number of factors. These mortgages are often easier to get, though they can be prone to strong fluctuations in overall interest rates.
ACH - Automated Clearinghouse
These are banking alternatives that can be used to make certain payments or store money. They can often be used in a similar fashion as a checking account, however they are not always an accepted form of payment for automated transfers in mortgage payments.
CRV - Certificate of Reasonable Value
This is a term that is only seen by veterans in the United States who are trying to buy a home. The value of the CRV is determined by the Department of Veterans Affairs based off of an appraisal done by a professional.
DE - Direct Endorsement
A direct endorsement is a privilege that is granted to certain lending institutions that have been empowered by the Department of Housing and Urban Development to directly approve FHA loans. Approximately one third of all mortgages in the United States are underwritten by the FHA. If the loan is underwritten by the FHA through a non-direct endorsement lender, then the loan has to be approved directly by the FHA.
EEM - Energy Efficient Mortgage
The Energy Efficient Mortgage program is a program that is an Energy Star program that provides a mortgage credit directly to borrowers who are investing in an energy efficient home. The lender approves a certain amount of money for a mortgage, but that amount can be extended by the federal government if the home being purchased has efficient features.
FHA - Federal Housing Administration
The Federal Housing Administration is an insurance element within the Department of Housing and Urban Development. It insures the loans that are made by "direct endorsement" lenders that have been cleared to give out FHA loans. The FHA insures more mortgages than any other organization in the world.
GEM - Growing Equity Mortgage
A growing equity mortgage is a mortgage with a consistently rising monthly payment. The payment will grow every month on a schedule that has been agreed upon by the lender and borrower together. The benefits of this type of mortgage is that more of the payment will go toward paying down the principle of the loan instead of simply the interest on it. This can result in the loan being paid off faster.
LTV - Loan to Value
The loan to value is a ratio that is used to express the value of the property versus the amount of the loan used to acquire the property. This can tell people how much more they're spending on their home than its listed value by taking on the mortgage.
MIP - Mortgage Insurance Premium
Mortgage insurance premiums are the fees paid by lenders to have mortgages insured. The insurance protects the lenders from the risk of borrower default on a mortgage. Around one third of the loans insured in the United States are insured by the FHA.
NOR - Notice of Rejection
A notice of rejection is a notice that needs to be sent to anyone who is rejected for a home loan, rental or lease on the basis of a consumer report. These reports can be many things, but they are generally based on a credit report. In some situations, these notices are required by law if an application has been rejected.
SOA - Section of Act
Section of act is a term that refers to the specific location where information can be found regarding a home ownership act. It literally refers to the section of the act where the information can be found by anyone searching for it.
UCC - Uniform Commercial Code
The uniform commercial code is a set of guidelines that provide cohesiveness to state sales rules on a national level. Each state has a certain range of laws that apply specifically to buying houses in that state. This can make interstate commerce very difficult, so the government developed a uniform code that could be used to streamline the home buying process.
VC - Valuation Condition
The valuation condition relates to the value of a property based upon the physical condition it's in.