Home Loan Glossary – H

Home Equity Line Of Credit (HELOC)

This is a mortgage loan, normally in a second position to another home loan, that's used much like a credit card or other line of credit. It permits the customer to borrow up to a certain fixed amount as the cash is needed. The total amount that can be borrowed is limited by the available equity in a property.

Home Inspection

A home inspection is a thorough investigation of the mechanical and structural condition of a property. Usually, buyers insist upon a satisfactory home inspection as a condition of the purchase of the property. Contrast with Appraisal.

Homeowners' Association

The Homeowners' Association is a not-for-profit organization that supervises the common or shared areas of a condominium or planned unit development (PUD) project. It has no ownership interest in the common areas of a condominium project, but it has title to the common elements of a PUD project. See Master Association.

Homeowner's Insurance (Hazard Insurance)

Homeowner's insurance covers property owners against physical damage to a home as a result of extreme weather conditions, fire, vandalism or other hazards. This insurance policy is usually a combination of property hazard insurance and personal liability insurance, which protects you financially in the event of an accident and personal injury on your property.

Homeowner's Warranty (HOW)

To protect homeowners from large, unplanned expenses, a homeowner's warranty covers maintenance work to certain parts of a home for a specified period of time. This warranty can be purchased by homebuyers, or it may be provided by the builder or seller of the property.

Housing Expense Ratio

The percentage of an individual's gross monthly income that is used for paying housing expenses. Like the Debt-to-Income Ratio, a very high percentage can signal the person is taking on too much debt.

HUD

HUD refers to the Department of Housing and Urban Development. Established in 1965 by Congress, HUD is responsible for carrying out and managing urban development and government housing initiatives. These initiatives include housing production and mortgage insurance (FHA), community planning and development, equal opportunity in housing, and secondary mortgage market activities that provide funds for home buying.

HUD Median Income

This is the average (statistically the median is the mid-point of population, not the average (mean). Please verify HUD's definition – mid-point or average)income of families living in a specific county or metropolitan statistical area (MSA). It is estimated by the Department of Housing and Urban Development (HUD).

HUD-1 Settlement Statement

A HUD-1 settlement statement gives a detailed listing of the funds owed by a borrower at closing. Home loan fees, real estate commissions, initial escrow amounts and points are some of the items included on the statement. Each item on the list is represented by an individual number within a standardized numbering system. The total amounts reflected at the bottom of the HUD-1 document indicate the seller's net profit as well as the buyer's net payment at closing. The blank HUD-1 document is published by the Department of Housing and Urban Development (HUD), and is also referred to as the "settlement sheet" or the "closing statement".

Hybrid Loans

These are adjustable rate mortgage home loans that offer an initial fixed-rate period, ranging from one to several years, before interest rates and payments begin to adjust.