Real Estate Glossary

Earnest money deposit:

A deposit made by the potential homebuyer to show they are serious about buying the house.



Easement:

A right of way, access or other grant, giving persons other than the owner access to or over a property.



Effective age:

An appraiser's estimate of the current physical condition of a building. The actual age of a building may be different than its effective age.



Effective gross income:

Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income such as rent income or commissions may qualify if it is significant and stable.



Effective percentage rate (EPR):

Similar to the Annual Percentage Rate (APR), the Effective Percentage Rate (EPR) measures the cost of a mortgage stated as a yearly rate and includes such items as interest, mortgage insurance, and loan origination fees (points). The difference between the EPR and the APR is that the APR calculates the cost of a loan over the entire term of the loan (30 year, for example). The EPR calculates the cost of the loan over the time you expect to keep the loan or other specified period. This changes the relative costs of different loans because it spreads your closing costs over what is usually a shorter time.



Election to foreclose:

A process through which the defaulted borrower is provided notice as part of the procedural requirements of a foreclosure wherein the lender has determined to foreclose on the property held as collateral as opposed to some other remedy.



Emergency reserves:

Funds left over after down payment closing costs. Some lenders require enough funds in reserve to pay two monthly mortgage payments as part of their underwriting guidelines.



Eminent domain:

The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is used as the basis for condemnation proceedings.



Encroachment:

An improvement that intrudes illegally on another's property usually disclosed on a survey.



Encumbrance:

An outstanding lien, judgment or claim against real property.



Endorser:

A person who signs an ownership interest over to another party. Contrast with co-borrower.



Equal Credit Opportunity Act (ECOA):

A federal anti-discrimination law that requires lenders and other 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:

A homeowner's value in the financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage. For example, if the fair market value of a home is $125,000 and the mortgage balance is $119,000, then total equity equals $6,000.



Escrow:

A deposit of money, valuables or documents with a third party for subsequent use.



Escrow account:

The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses. See escrow disbursements.



Escrow analysis:

The periodic review of escrow accounts to determine if current monthly deposits are adequate to pay real property taxes, insurance, and other bills when they are due.



Escrow collections:

Funds collected by the servicer and set aside in an escrow account from mortgage payments to pay the borrower's property taxes, mortgage insurance, and hazard insurance.



Escrow disbursements:

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses when they become due.



Escrow payment:

The portion of a borrower's monthly mortgage payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, and other items as they become due. Known as "impounds" or "reserves" in some states.



Estate:

The ownership interest a person has in real property that has various facets such as tenants in the entirety, tenants in common, etc. Also, the total value of all the real property and personal property owned by an individual at the time of their death.



Eviction:

The legal process to remove an occupant from real property based on a defaulted lease or unlawful possession.



Examination of title:

Reviewing a property's chain of title from the public records or an abstract of the title for purposes of writing title insurance.



Exclusive listing:

A written contract that gives a licensed real estate agent or broker the exclusive right to sell a property and collect a commission for a specified time, but reserving the owner’s right to sell the property alone without paying a commission.



Executory process:

Refers to a form of foreclosure in Louisiana in which a confession of judgment is used in lieu of a contested litigation.


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