Mortgage Terminology

Radon

A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

Rate Caps

Lenders offer caps with their adjustable rate mortgages (ARMs) so you can have more control over your monthly mortgage payment. Usually, there are two types of rate caps: -- A per-adjustment cap, which specifies the most your interest rate can rise from one adjustment period to the next, -- and a lifetime adjustment cap, which specifies how much your interest rate can rise over the life of your loan.

Rate-Improvement Mortgage

A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

Rate Lock

A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time. See "Lock-in"

Rate Reduction Refinance

The refinance of an existing mortgage balance solely to lower the interest rate.

Ratified Sales Contract

A ratified sales contract means both the buyer and the seller have signed off on the final offer. It also acts as a starting point for the loan application interview. The ratified sales contract specifies the amount of your down payment, the price you will pay for the house, the type of mortgage financing you will seek, your proposed closing and occupancy dates, and other contingencies. You will give all this information to your loan officer when you meet to discuss your financing options.

Raw Land

Land in its natural state, having no physical improvements such as grading, sewers, or structures.

Real Estate Agent

A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Attorney

Many homeowners hire a real estate attorney to represent them during the loan application process. If you do so, your attorney will review the sales contract and represent you at closing. There are many questions you can ask a personal attorney before deciding whether to have the attorney represent you at closing. They can include:

-- What is the attorney's fee for representing you at closing?
-- What is the attorney's experience with real estate transactions?
-- Are there fees for reading documents relating to the closing?
-- Are there fees for giving advice?

Remember that your personal attorney's fee is not part of your closing costs. You must pay for this expense separately.

Real Estate Owned (REO)

Property a lender acquires as the result of foreclosure.

Real Estate Settlement Procedures Act (RESPA)

A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Real Estate Taxes

Local government taxes levied on the ownership of real estate. Also known as "real estate property taxes."

Real Property

Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Reassessment

The revaluation of property for advalorem tax purposes.

Recasting

Modification of the terms of an existing mortgage to cure delinquency.

Recission

The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.

Receiver

An impartial person appointed by the court to administer properties involved in foreclosure or other litigation, to receive its rents and profits, and apply or dispose of them at the direction of the court.

Recordation Fees

Fees charged by a local government to record the documents of a real estate transaction.

Recorder

The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

Recording

The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Red Lining

Arbitrary denial of real estate loan applications in certain geographical areas, without considering individual applicant qualifications.

Redemption Period

The time allowed by law in some states during which mortgagors may buy back their foreclosed properties by paying the balance owed on their delinquent mortgages, plus interest and fees.

Reinstatement

The curing of all loan defaults by a borrower to return it to current status.

Refinance Transaction

The process of paying off one loan with the proceeds from a new loan using the same property as security.

Rehabilitation Escrow Account

A contingency reserve will be set up that contains funds borrowed to finance your home improvements. These will be placed into an escrow account upon the closing of your mortgage. Payments to the contractor will be periodically made from this fund as construction occurs. You will be paid interest on the funds that are in the escrow account that have not been paid to the contractor.

Rehabilitation Mortgage

A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Release

The discharging of secured property from a lien.

Remainderman

An individual entitled to the remainder of an estate.

Remaining Balance

The amount of principal that has not yet been repaid. Also see "Principal Balance" entry

Remaining Term

The original amortization term minus the number of payments that have been applied.

Remediation

The process by which contaminants are removed from a building or site.

Rent Control

Legal limitation of rent increases.

Rent Loss Insurance

Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

Rent with Option to Buy

There are two different Rent With Option to Buy options: Lease-Purchase Mortgage Loan: An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate. Lease-Purchase Option: Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs.

Repayment Plan

An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions."

Replacement Reserve Fund

A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.

Retirement Community

A planned community for those of retirement age, providing attractively sized and priced dwelling units, and offering construction features, amenities and locations for aging residents.

Reverse Annuity Mortgage

A type of mortgage loan in which the lender makes periodic payments to the borrower. The borrower's equity in the home is used as security for the loan.

Reverse Mortgage Counseling

In order to get a Home Equity Conversion Mortgage (HECM), you must receive counseling that explains how the financing option works. During your counseling, you will receive an estimate of your loan advances and an explanation of your responsibilities as a borrower. Other sources of unbiased information education may also be provided. A non-profit agency or a local lender typically conducts the counseling.

Revolving Liability

A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

RHS Loans

The Rural Housing Service (RHS), a branch of the U.S. Department of Agriculture, offers low-interest-rate homeownership loans with no down payment requirements to low- and moderate-income persons who live in rural areas or small towns. Check with your local RHS office or a local lender for eligibility requirements. For the location of RHS State Offices and details on RHS loans, see the RHS home page.

Right of First Refusal

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of Ingress or Egress

The right to enter or leave designated premises.

Right of Survivorship

In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Right of Rescission

When a borrower's principal dwelling is going to secure a loan, the borrower has three business days following signing of the loan documents to rescind or cancel the transaction. Any and all money paid by the borrower must be refunded upon rescission. The right to rescind does not apply to loans to purchase real estate or to refinance a loan under the same terms and conditions where no additional funds will be added to the existing loan.

Right of Way

The right to pass over land owned by another. Also, a strip of land used for a street or railway.

Riparian Rights

The right of owners to the water and land within the normal flow of a river or stream, or below a high water mark. These rights vary with state laws.

Rural Housing Service (RHS)

An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.