Real Estate Terms and Definitions
Acceleration clause
Also known as an acceleration covenant, this is a contract provision requiring the borrower to repay all of their outstanding loan to a lender if certain requirements — outlined by the lender — aren’t met.
Active contingent
When a seller accepts an offer from a buyer, that offer is contingent upon the buyer’s ability to meet certain conditions before finalization of the sale. Contingencies might include the buyer selling their home, receiving mortgage approval, or reaching an agreement with the seller on the home inspection.
Active under contract
A house is listed as “active under contract” when the seller has accepted an offer with contingencies, but still wants the house to be listed as active. In this situation, the seller is also likely accepting backup offers in case their current offer fails to meet its contingencies.
Addendum
If a buyer or seller want to change an existing contract, they might add an addendum outlining the specific part of the contract they’d like to adjust and the parameters of that change. The rest of the contract stays the same, regardless of the addendum.
Adjustable-rate mortgage (ARM)
The interest rate for an adjustable-rate mortgage changes periodically. You might start with lower monthly payments than you would with a fixed-rate mortgage, but fluctuating interest rates will likely make those monthly payments rise in the future.
Adjustment date
This is the date your mortgage begins to accrue interest (though you might not have made a mortgage payment yet). The adjustment date usually falls on the first day of the month after mortgage funds are advanced or dispersed to the borrower.
Amortization
Amortization is the schedule of your mortgage payments spread out over time. In real estate, a buyer’s amortization schedule is usually one monthly payment scheduled over a 15- or 30-year period of time.
Annual percentage rate (APR)
The annual percentage rate (APR) is the amount of interest charged on your loan every year.
Appraisal
An appraisal on your home is an unbiased estimate of how much a home is worth. When buying a home, the lender requires an appraisal by a third party (the appraiser) to make sure the loan amount requested is accurate. If the home’s appraised value is below what the buyer has offered, the lender may request the buyer pay the difference in cost.
Appreciation
Appreciation is the amount a home increases in value over time. To calculate a home’s likely appreciation rate, add one to the annual appreciation rate, raise this to a power equal to the number of years you’d like to estimate, then multiply that by the current value of the property.
Assessed value
An assessment is used to determine how much in taxes the owner of a property will pay. An assessor calculates the assessment of a home’s value by looking at comparable homes in your area and reviewing an inspection of the home in question.
Assignment
An assignment is when the seller of a property signs over rights and obligations to that property to the buyer before the official closing.
Assumable mortgage
Assumption is when a seller transfers all terms and conditions of a mortgage to a buyer. The buyer takes on the seller’s remaining debt instead of taking out a new mortgage of their own.
Balloon mortgage
Instead of a traditional fixed-rate mortgage in which the owner pays on the loan in installments, a balloon mortgage is paid in one lump sum (e.g., the balloon payment). It’s usually associated with investment or construction projects that are issued for the short term and don’t require collateral.
Bi-weekly mortgage
A bi-weekly mortgage payment means a homeowner pays their monthly mortgage payment in two monthly installments instead of one. With a bi-weekly mortgage, you’ll make 26 payments per year instead of 12. The end result is that you’ll pay the equivalent of 13 monthly payments each year lowering interest rates and your principal balance at a faster pace.
Bridge loan
A bridge loan is a short-term loan a homeowner takes out against their property to finance the purchase of another property. It’s usually taken out for a period of a few weeks to up to three years.
Broker
A broker has passed a broker’s license exam and received education beyond what the state requires of real estate agents. They understand real-estate law, construction, and property management. Real estate agents are required to work under the supervision of a broker.
Buydown
A buydown is a mortgage-financing technique lowering the buyer’s interest rate for anywhere from a few years to the lifetime of the loan. Usually, the property seller or contractor makes payments to the mortgage lender lowering the buyer’s monthly interest rates, which, in turn, lowers their monthly payments.
Call option
A call option is a contract giving one party the right to buy and another party the right to sell a piece of property at a future time and specific price.
Cash-out refinance
A cash-out refinance, also known as a cash-out refi, is when a homeowner refinances their mortgage for more than it’s worth and withdraws the difference in cash. To be eligible for this kind financing, a borrower usually needs at least 20% in equity.
Certificate of eligibility
During the VA loan process, lenders require veterans to show proof they’ve met the minimum service requirement to qualify for a VA loan.
Certificate of reasonable value
A certificate of reasonable value (CRV) is issued by the Department of Veterans Affairs and is required for veterans to receive a VA loan. It establishes the maximum value of the property and therefore the maximum size of the loan.
Chain of title
Like a Blue Book for homes, the chain of title is the documentation of all past ownership of a property. It runs from the present owner to the very first owner of the property.
Clear title
Also known as a “just title,” “good title,” or a “free and clear title” — a clear title doesn’t have any kind of lien or levy from creditors. It means there’s no question of legal ownership of the property such as building code violations or bad surveys.
Closing
Closing is the final stage of the real estate transaction. The date is agreed upon when both the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.
Closing costs
Closing costs are usually comprised of between 2-5% of the total purchase price of the home. According to a recent survey by Zillow, the average homebuyer pays approximately $3,700 in closing costs. These fees are paid on or by the closing date.
Co-borrower
If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who’s added to the mortgage and guarantees the loan. They’re listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.
Commission
Real estate commission is generally 5-6% of the home’s sale price. That commission is usually split between the buyer’s and seller’s agents and is paid by the seller at the time of closing.
Common area assessments
If you pay a monthly fee towards a Homeowners Association (HOA), part of that fee likely goes toward a common area assessment to maintain an area open to the community.
Community property
Community property refers to property acquired by a married couple and owned equally by both spouses.
Comparable sales
Comparable sales are used by an appraiser to establish how much a home is worth based on what other similar homes in the area have sold for recently. Only homes that have legally closed count as a comp — and most lenders and insurance providers require appraisers to use at least three closed sales.
Construction loan
A construction loan — or self-build loan — is a short-term loan used to finance the construction of a home or real estate project. This type of loan covers project costs before long-term funding can be financed.
Contingency
If a property is contingent, or the contract contains a contingency, certain events must transpire or the contract can be considered null. A contingency might be that the home must past an appraisal or receive a clean inspection.
The sale of a home could also be contingent on the buyer selling their home by a specified date. If either the buyer or seller fail to meet the expectations of the contingency, either party can exit the contract.
Contingent vs. pending
When a property is contingent, it means the owner has accepted an offer — but certain contractual expectations must be met or the offer will be void. If all contingencies are met, the property changes status to “pending.” While contingent offers are still considered active listings, pending offers are taken off the market and other offers will not be entertained.
Conventional mortgage
A conventional mortgage is a loan not guaranteed or insured by the federal government. These borrowers usually make larger down payments (at least 20%), don’t require mortgage insurance, and are at a lower risk of defaulting on their home loan payment.
Convertible ARM
A convertible adjustable rate mortgage (ARM) allows buyers to take advantage of low interest rates by receiving a loan at a “teaser” loan interest rate.
Their monthly mortgage payment stays the same, but interest rates fluctuate (usually every six months). The borrower has the option of converting their ARM to a fixed-rate mortgage, but there are generally fees for the switch.
Cost of funds index (COFI)
A cost of funds index is an average of the regional interest expenses acquired by financial institutions. It’s used to calculate variable rate loans.
Deed
A housing deed is the legal document transferring a title from the seller to the buyer. It must be a written document and is sometimes referred to as the vehicle of the property interest transfer.
Deed-in-lieu of foreclosure
A deed-in-lieu of foreclosure is a document transferring the title of a property from a homeowner to the bank that holds the mortgage. A homeowner might submit a deed-in-lieu of foreclosure if the bank has denied them a loan modification or short sale. However, the bank can deny the request for a deed-in-lieu (and often do).
Default
If a homeowner defaults on their loan, it means they have not paid the sum they agreed to. Typically, a mortgage default means the homeowner hasn’t made a home loan payment in 90 days or more.
Delinquency
A mortgage is considered delinquent when a scheduled payment is not made. If a payment is more than 30 days late, a lender might begin collection or foreclosure proceedings.
Discount points
Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments.
Down payment
The down payment is the amount of cash a homebuyer pays at the time of closing. Typical home loans require a 20% down payment. Some conforming loans will accept a 5% down payment, and FHA loans will accept a 3.5% down payment.
Due-on-sale clause
A due-on-sale clause protects lenders against below-market interest rates. It’s a contract provision requiring the seller of the property to repay the mortgage in full when the property is next sold. It is also called an acceleration clause.
Earnest money deposit
Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer’s interest in the property and is generally deducted from your total down payment and closing costs.
Easement
An easement grants someone else the legal right to use another person’s land or property while leaving the title in the owner’s name.
Eminent domain
The right of eminent domain gives the government the ability to use private property for public purposes. It’s only exercisable when and if the government fairly compensates the owner of the property.
Encroachment
When a property owner violates the rights of a neighbor by building or adding on to a structure that extends onto a neighbor’s land or property line, that is called encroachment.
Encumbrance
A real estate encumbrance is any claim against a property that restricts its use or transfer, including an easement or property tax lien.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act (ECOA) was enacted on October 28, 1974 and rules it unlawful for creditors to discriminate against applications because of race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.
Equity
Home equity is the part of your property you actually own. While you do “own” your home, your mortgage lender has interest in the property until it’s paid off.
To calculate your home’s equity, subtract your outstanding loan balance from the current market value of your property. Home equity will increase as you pay down your loan or the market value of your home increases.
Escrow
Escrow is part of the homebuying process. It happens when a third party holds something of value during the transaction. Most often, the “value” the third party holds onto is the buyer’s earnest money check. When the transaction is complete (usually at closing), the third party will release those funds to the seller.
Examination of title
A title examination reviews all public records tied to a property. It generally reviews all previous deeds, wills, and trusts to ensure the title has passed cleanly and legally to every new owner.
Exclusive listing
An exclusive listing is used to motivate an agent to sell a property quickly — within a specific number of months. If they meet that goal, the agent gains a commission regardless of how a buyer is found.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) was enacted in 1970 and ensures fairness, accuracy, and privacy of personal information contained in files maintained by credit reporting agencies. The goal of this act is to protect consumers from having misinformation used against them.
Fair market value
A property’s fair market value is its accurate valuation in a free and open market under the condition that buyers and sellers are knowledgeable about the asset, acting in their best interests, and free of undue pressure to complete the transaction.
Fee simple
Fee simple refers to the most common type of property ownership. It means the owner’s rights to the property are indefinite and can be freely transferred or inherited when the owner chooses. It is most often associated with single-family homes, as condominiums and townhomes are purchased with covenants, conditions, and restrictions.
FHA mortgage
Federal Housing Administration (FHA) loans have been around since 1934 and are meant to help first-time homebuyers. The FHA insures the loan, making it easier for lenders to offer the homebuyer a better deal, including a lower down payment (as low as 3.5% of the purchase price), low closing costs, and easier credit qualifying.
Fixed-rate mortgage
A fixed-rate mortgage is one of the most common types of loans. It comes with an interest rate that stays the same for the lifetime of the loan, and provides the borrower with more stability and predictability over the lifetime of their loan.
While mortgage payments can fluctuate as property taxes and homeowner’s insurance change, many consumers prefer the fixed-rate mortgage for its long-term reliability.
For sale by owner
Homes listed as for sales by owner (FSBO) are being sold without the help of a real estate agent. The biggest benefit to the seller is they avoid paying commission fees — but there are few benefits to the buyer.
Foreclosure
If a homeowner doesn’t make a mortgage payment (usually, for more than 90 days), foreclosure is a legal process during which the owner forfeits all property rights.
If they are unable to pay off outstanding debt on the property or sell it via short sale, the property enters a foreclosure auction. If no sale is made there, the lender takes control of the property.
Home Equity Conversion Mortgage
The Home Equity Conversion Mortgage (HECM) is an FHA reverse mortgage program enabling homeowners to withdraw equity on their home through either a fixed monthly payment, a line of credit, or a combination of the two.
Home equity line of credit
A home equity line of credit (HELOC) provides a revolving credit line that can be helpful in paying for large expenses or consolidating higher-interest rate debt on loans — like credit cards.
Home inspection
A home inspection is carried out by an objective third party to establish the condition of a property during a real estate transaction. An inspector will report on such things as a home’s heating system, the stability of the foundation, and the condition of the roof. The inspection is meant to identify major issues that might affect the value of the home and the stability of your and your lender’s investment and return.
Homeowner’s association
A homeowner’s association (HOA) is usually found when you purchase a condominium, townhome, or other development property. To purchase the home, you must also join the HOA and pay monthly or yearly HOA fees.
These fees can cover common area maintenance, repairs, and general upkeep. The more amenities your building offers, the higher the HOA fees typically are.
Homeowner’s insurance
When you purchase a home, it’s also necessary to purchase homeowner’s insurance to cover any losses or damages you might incur, such as natural disaster, theft, or damage.
It also protects the homeowner from liability against any accidents in the home or on the property. Insurance payments are usually included in your monthly mortgage payments.
Judicial foreclosure
Judicial foreclosures are mandatory in some but not all states. They require all foreclosures go through the court system to confirm the debt is in default before putting the property up for auction. The goal of judicial foreclosures is to protect property owners from corrupt lenders.
Jumbo loan
Conforming loan limits cap the dollar value that can be backed by government-sponsored programs. A jumbo mortgage exceeds these conforming loan limits, which are tied to local median home values.
Qualifications for these loans are more stringent and the loans themselves are manually underwritten to mitigate risk to the lender.
Lease option
A lease option is like rent-to-own for real estate. It gives the lessee the ability to lease property with the option to buy. It includes a legal agreement with a monthly rental amount due, while also including an option to buy the property for a predetermined price at any time during the length of the agreement.
Lender
In real estate, the lender refers to the individual, financial institution, or private group lending money to a buyer to purchase property with the expectation the loan will be repaid with interest, in agreed upon increments, by a certain date.
Lien
A property lien is unpaid debt on a piece of property. It’s a legal notice and denotes legal action taken by a lender to recover the debt they are owed. It can come from unpaid taxes, a court judgement, or unpaid bills and can slow down the homebuying process when unattended.
Life cap
A life cap refers to the maximum amount an interest rate on an adjustable rate loan can increase over the lifetime of the loan. A life cap is also known as an absolute interest rate or interest rate ceiling and keeps interest rates from ballooning too high over the term of the loan.
Loan officer
Residential loan officers, or mortgage loan officers, assist the homebuyer with purchasing or refinancing a home. Loan officers are often employed by larger financial institutions and help borrowers choose the right type of loan, compile their loan application, and communicate with appraisers.
Loan origination
Loan origination is the process during which a borrower submits a loan application and a financial institution or lender processes that application. There is usually an origination fee associated with this process.
Loan servicing
Loan servicing is a term for the administrative aspects of maintaining your loan, from the dispersal of the loan to the time it’s paid in full.
Loan servicing includes sending the borrower monthly statements, maintaining payment and balance records, and paying taxes and insurance. Servicing is usually carried out by the lender of the loan, typically a bank or financial institution.
Loan-to-value
The loan-to-value (LTV) ratio is the mortgage loan balance divided by the home’s value. It shows how much you’re borrowing from a lender as a percentage of your home’s appraised value.
The higher your LTV, the riskier you’ll appear during the loan underwriting process because a low down payment denotes less equity or ownership in your property making you more likely to default on your loan.
Lock-in period
The period of time in which a borrower cannot repay their loan in full without incurring a penalty fine by the lender.
Mortgage
A mortgage is the agreement between a borrower and a lender giving the lender the right to the borrower’s property if the borrower is unable to make loan payments (with interest) within an agreed upon timeline.
Mortgage banker
A mortgage banker works directly with a lending institution to provide mortgage funds to a borrower. They can only obtain funds from a specific institution and are responsible for each part of the mortgage process, including property evaluation, financial due diligence, and overseeing the application process.
Mortgage broker
A mortgage broker shops several lenders, acting as a middle man between lending institutions and the borrower. A broker can compare mortgages from several different institutions, giving the borrower a better deal.
Mortgage insurance
If a homebuyer makes a down payment of less than 20% of the purchase price of a home or is the recipient of an FHA or USDA loan, they’ll usually be required to pay mortgage insurance. It lowers the risk of a lender giving you a loan, but it also increases the cost of the loan.
Multiple Listing Service (MLS)
An MLS is a suite of around 700 regional databases containing their own listings. Each database has its own listings, requires agents to pay dues for access, and allows agents to share listings across regions — without paying dues to each one. It is widely considered the most comprehensive listing service available.
Negative amortization
Amortization refers to the process of paying off a loan with regular payments so the amount you owe on the loan gradually decreases.
Negative amortization happens when the amount you owe continues to rise, regardless of regular payments, because you’re not paying enough to cover the interest.
No cash-out refinance
A no cash-out refinance is a type of loan used to improve the rate the borrower pays on the loan. It might also shorten the lifetime of a loan to benefit the borrower.
In a no cash-out refinance, the borrower refinances an existing mortgage for equal to or less than the outstanding loan balance. The goal is to lower interest rates on the loan or change certain terms of the mortgage.
No-cost mortgage
A no-cost mortgage is a type of refinancing in which the lender pays the borrower’s loan settlement costs and extends a new loan — usually in exchange for the borrower paying higher interest rates.
The mortgage lender then sells the mortgage to a secondary mortgage market for a higher price because of the high interest rate.
Note rate
The note rate is the interest rate stated on a mortgage note. It is also commonly referred to as the nominal rate or face interest rate.
Original principal balance
The original principal balance is the amount owed on a mortgage before the first payment has been made.
Origination fee
The fee a borrower pays a lender to cover the costs of processing their loan application.
Owner financing
Owner financing (also known as seller financing) takes place when a borrower finances the purchase of a home through the seller, bypassing conventional mortgage lenders and financial institutions.
Pending
A sales is considered “pending” if all contingencies have been met and the buyer and seller are moving toward closing. At this point, it’s unlikely the sale will fall through, and the buyer or seller risk losing the earnest money if they walk out on the deal at this point.
Per Diem
Per diem or “per day” fees are charged if a loan isn’t approved by the date the loan was scheduled to be completed. These charges are payable to the lender during closing.
PITI
PITI stands for principal, interest, taxes, and insurance, and refers to the sum of each of these charges, typically quoted on a monthly basis.
These costs are calculated and compared to the borrower’s monthly gross income when approving a mortgage loan. A borrowers PITI should generally be less than or equal to 28% of their gross monthly income.
Planned unit development
A planned unit development (PUD) is a housing community made up of single family residences, townhomes, and condominiums — as well as commercial units.
PUDs offer many common areas owned by the HOA and amenities beyond what normal apartment buildings or townhomes offer, including tennis courts and outdoor playgrounds.
Pre-approval
Before submitting an offer on a home (or even engaging with a real estate agent) you’ll likely be required to get pre-approved. This means a lender has checked your credit, verified your information, and approved you for up to a specific loan amount for a period of up to 90 days.
Pre-qualification
Unlike pre-approval, pre-qualification is more of an estimate of how much you can afford to spend on a home.
Prime interest rate
The prime interest rate is typically awarded to a U.S. bank’s best customers. It’s the best-available loan rate and is usually three points above the federal funds rate: the rate banks charge each other for overnight loans.
Principal
The principal of a loan is the amount of money owed on that loan. As you make monthly mortgage payments, your principal — in theory — goes down.
The amount of interest you pay on a monthly loan will affect how much of your monthly mortgage payment goes to paying down the principal. A high interest rate means you’ll pay less on the principal, meaning you’ll pay more on your loan over time.
Purchase agreement
A purchase agreement demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell that property. The document outlines the terms and conditions of a sale and holds each party legally accountable to meeting their agreement.
Purchase-money mortgage
A purchase-money mortgage, also known as owner or seller financing, is issued to the buyer by the seller of a home during the purchase transaction.
It is done to bypass a typical mortgage broker or lending channel and allows the buyer to assume the seller’s mortgage.
Quitclaim deed
A quitclaim deed is a document transferring ownership of property from one party to another. It transfers the title of the property — but only transfers what the seller actually owns.
If two people own a home jointly, one person could only transfer their half of the property via quitclaim. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.
Rate lock
A rate lock allows borrowers to lock in an advantageous interest rate before a real estate transaction closes. A rate lock allows the borrower to lock in that interest rate for a specific period of time protecting them from market fluctuations.
Real estate agent
A real estate agent is licensed to negotiate and coordinate the buying and selling of real estate transactions. Most real estate agents must work for a realtor or broker with additional training and certification.
Real estate owned
Real estate owned (REO) refers to property owned by a bank, government agency, or other lender. Homes typically become real estate owned after an unsuccessful foreclosure auction or short sale.
Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide disclosures to borrowers informing them of real estate transactions, settlement services, and relevant consumer protection laws.
Its goal is to regulate settlement costs, prohibit specific practices such as kickbacks, and limits the use of escrow accounts.
Refinance
Refinancing replaces an existing loan with a new one. Debt is not eliminated when a borrower refinances. Instead, it typically offers better terms, including a lower interest rate, lower monthly mortgage payments, or a faster loan term.
Right of first refusal
If a third party buyer offers to buy or lease a property owner’s asset, the right of first refusal ensures the property holder is allowed a chance to buy or lease the asset under the same terms offered by the third party before the property owner accepts the third-party offer.
Right of ingress or egress
The right of egress is a person’s legal right to exit a property. The right of ingress is the right to enter a property. It is generally used in rental or easement situations in which the tenant or person to which easement has been granted needs access to a shared driveway, a private road to the property, etc.
Right of survivorship
The right of survivorship is employed most often when there is joint ownership or tenancy of a property. It ensures that the surviving owner automatically receives the deceased owner’s share of the property becoming the sole owner of the property.
Sale-leaseback
A sale leaseback occurs when a buyer closes on a home and then leases back tenancy to the seller. This usually occurs when the seller needs more time to vacate the home, in which case, the buyer becomes a sort of landlord and receives payment from the seller for every day they remain in the home.
Second mortgage
A second mortgage is when a property owner borrows against the value of their home. They are also commonly referred to as HELOCs and draw on the market value of the home to provide the borrower with funds to use however they wish. They are granted in a lump sum or a line of credit that can be paid back using rate choices that help plan payments.
Secured loan
A secured loan is backed by the borrower’s assets, including cars, a second home, or other large items that can be used as payment to a lender if the borrower is unable to pay back the loan.
Seller carry-back
A seller carry-back is financing in which the seller acts as a bank or financial institution financing some or all of the transaction. The buyer will sign a promissory note agreeing to pay a specific amount (like a mortgage) to the seller, and the seller transfers the title to the new owner.
If the buyer is unable to make their monthly payments at any time, the seller can legally foreclose and take back the property.
Servicer
A mortgage servicer manages the daily administrative work around a loan, including processing loan payments, responding to borrower inquiries, and tracking principal and interest paid.
Short sale
A short sale occurs when a homeowner sells their property for less than what’s owed on the mortgage. A short sale allows the lender to recoup some of the loan that’s owed to them but must be approved by the lender before the seller moves forward.
Title
A home’s title represents the rights to the property. Those rights are transferred from the seller to the buyer during a real estate transaction and give the buyer legal rights to the property upon closing.
Transfer of ownership
In real estate, transfer of ownership refers to transfer of a property’s deed and title from the seller to the buyer at closing.
Transfer tax
Transfer tax is a transaction fee charged upon the transfer of a property’s title. It is imposed by the state, county, and municipal authority where the transaction is taking place and is based on the property’s value and classification.
Typically, the seller is responsible for paying real estate transfer tax, unless otherwise agreed upon during the transaction.
Treasury index
The treasury index is published by the Federal Reserve Board and based on the average yield of Treasury securities. Financial institutions often use this index as the basis for mortgage notes.
Under contract
A home is “under contract” when a seller has accepted an offer from a buyer but the transaction has not yet closed.
VA mortgage
Service members, veterans, and eligible surviving spouses can receive home loan guarantees provided by private lenders. The Department of Veteran’s Affairs guarantees a portion of the loan, which leads to more favorable terms for the borrower.
