FHA Loan and Mortgage Glossary - Terms Beginning with 'H'

  • Hazard Insurance: Also called homeowners insurance. This is insurance that protects against damage to a property from natural disasters, vandalism, fire, weather damage, and more. The amount and extent of insurance coverage depends on the specific policy.
  • Home Equity Line of Credit: This is a credit line from a bank or credit union that allows a homeowner to tap into the equity of their home when they need it. The amount of the credit line and interest rate is established, and then it is used like a credit card so that the property owner can use the money, pay it back, and the credit line stays open for future needs.
  • Home Equity Loan: This is a type of loan that puts a second lien on the home so that the homeowner can take cash out of the equity they have built in the home.
  • Home Inspection: This is when a professional inspector comes to the property for sale and looks over all of the major systems and structural components of the home to make sure there are no problems or large expenses that need fixed.
  • Home Warranty: This is a contract that offers additional coverage and protection for home buyers. It usually covers the cost of repairs or replacement for large expense home items such as appliances, mechanical systems, roofs, and other areas that may have problems which were missed by the home inspector.
  • Housing Ratio: This is the equation that is used to determine the amount a buyer can afford to pay for a home. It is the total of all of the housing payments that includes the property taxes, homeowners insurance, mortgage payment, and mortgage insurance if needed, and then this total is divided by the monthly income to get the ratio.
  • HUD: Also known as the Department of Housing and Urban Development. They have programs for low interest rate mortgages and homes for sale.