FHA Loan and Mortgage Glossary - Terms Beginning with 'E'
Earnest Money Deposit: This is a specific amount of money that a buyer will give to a seller to hold a house with the intent of purchasing the home as long as the appraisal and home inspection are good.
Easement: The part of a property that may be given access to for the city or county the property resides in. This is for electric poles and lines, gas lines, sewer lines, tree removal that may damage these utilities, and other reasons.
Effective Gross Income: This is the amount of income a person receives that includes over time pay, holiday pay, tips, and wages. This takes into account the total income of the mortgage loan applicant which includes multiple jobs and self employment income sources.
Encumbrance: Any right to or dispute over a property that makes it difficult to transfer a property free and clear of liens or debts. For instance a mortgage lien is an encumbrance, but a neighbor’s fence on your property is also an encumbrance because there is a property division problem in this case.
Endorser: The person who signs over the interest in ownership of a property to a new owner.
Entitlement: For VA Home Loans a veteran must prove that they are entitled to this benefit in order to use it. To prove this the veteran must obtain a Certificate of Eligibility.
Equal Credit Opportunity Act: Also know as ECOA. This is a law established by the Federal Government that requires lenders to equally offer credit to all borrowers only based on their income and credit eligibility. All people will receive the same equal chances regardless of race, age, sex, sexual orientation, religion, ethnicity, marital status, color, or other factors.
Equity:This is the amount of value a property has minus what is still owed on the mortgage loan. For instance, if the property would sell right now for $100,000 and the balance of the mortgage loan is only $75,000 then the owner owns 25% of the home and has $25,000 built in equity.
Escrow: This is where a third party, usually a law firm or title company, plays the middle entity by making sure a fair trade is made between interested parties. In the case of a home loan the escrow company would take the money from the mortgage lender and keep it safe until the borrower gave the escrow company their down payment, closing costs, and signed the closing paperwork. Once everything was legally in place then the seller would get their money and the buyer would get their home. Escrow accounts are also used to hold money for property taxes, mortgage insurance, and homeowners insurance when necessary.
Escrow Analysis: This is when the escrow company occasionally reviews the account to see if the funds that have been charged for the homeowner’s expenses are the right sum. Sometimes the amount paid to escrow will increase or decrease depending on this review.
Estate: The total amount of all assets a person has at the time of his or her death.
Examination of Title: This is when a title company reports on the results from searching public records of a property title for sale.