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Earned income
Compensation, such as salary, commissions and tips, you receive for your personal services. This is distinguished from unearned or investment income, such as interest, dividends and capital gains.
Earnest Money
Deposit made by a buyer toward the down payment as evidence of good faith when the purchase agreement is signed.
ECOA
See Equal Credit Opportunity Act
Effective Interest Rate
The cost of a mortgage expressed as a yearly rate, usually higher than the interest rate on the mortgage since this figure factors in the up-front costs of acquiring the loan.
Encumbrance
A legal right or interest in a property that affects title and may lessen the property value.
Equal Credit Opportunity Act (ECOA)
Federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.
Equity
Equity is the value of the property minus the amount of money still owed on the loan. If you have a $150,000 home and still owe $125,000 on the mortgage, you have $25,000 in equity assuming no complicating factors like market value changes.
Equity
The difference between the current market value of a property and the outstanding mortgage balance.
Equity Loan
A loan based on the borrower's equity in his or her home.
Escrow
An escrow is a holding account for money (or other securities) that is to be used for a specific purpose. In the case of a mortgage, when you make a mortgage payment, you are paying an additional amount above the principal and interest which is to be held for taxes and insurance. This money is held in escrow until it is time to make a payment to your insurance company or to the tax collector. At that time the escrow agent will disburse funds to make the payment.
Escrow
1. Neutral third party appointed to act as a custodian for documents and funds during the transfer of property from seller to buyer or in the course of refinancing property.
2. Account held by lender containing funds collected in conjunction with monthly mortgage payments. The funds in the escrow account are used by the lender to pay annual expenses such as taxes and insurance on behalf of the borrower.
Escrow Account
Account held by lender containing funds collected in conjunction with monthly mortgage payments. Also known as impounds, the funds in this account are held in trust by the lender on behalf of the borrower, and are used to pay expenses such as property taxes and homeowner's insurance.
Escrow Fee
This is the fee paid to the escrow agent, title agent, or attorney to execute the closing of your loan. This party completes tasks including coordinating document signing, obtaining payoff information for existing liens, obtain evidence of homeowners insurance, coordinate with the title insurer to obtain clear title, and disburse loan proceeds.
Escrow Officer
See Closing Agent
Estate
All assets owned by an individual at death, to be distributed according to the individual's will (or a court ruling if there is no will). see also real estate, administrator, beneficiary, decedent, executor, gross estate, net estate, inheritance.
Estimated Settlement (or Closing) Statement
A document provided by the closing agent a few days before closing, detailing all costs and indicating the final sum the buyer will be required to bring to the closing.
Expense-to-Income Ratio
Also known as Back-End Ratio and Debt-to-Income Ratio. The figure derived by dividing a borrower's monthly financial obligations by his/her gross monthly income.