MORTGAGE DICTIONARY

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EFFECTIVE GROSS INCOME:
1. For borrowers, the actual amount of money earned from stable sources over a set period (i.e. a month) before taxes and expenses are deducted.
2. For rental properties, the amount of income the property will produce if leased at market value before costs, taxes, upkeep and discounts for vacancy are deducted.

EFFECTIVE RATE:
The actual rate (or interest or return) once all factors are accounted for (factors include compounding of interest or costs of earning the return).

ENTITLEMENT:
1. The legal right to a benefit or program.
2. Name for the VA home loan benefit.

EQUITY:
The difference, in dollars, between the market value of a property and the principal owing on debts secured against the property. The amount of money the owner will be able to keep from a sale transaction once the mortgages are paid out. Also known as "owner's interest".

EQUITY BUILDUP:
The increase over time of the owner's interest in a property, the difference between the value of the property and the amount owed on the mortgage.

EQUITY LOAN:
A loan to a home owner secured against the equity the owner enjoys in the property.

EQUITY OF REDEMPTION:
The right a borrower has to pay out in full a mortgage against a property that has gone into foreclosure or power of sale proceedings, thus redeeming the property.

ESCROW COLLECTIONS:
Moneys taken in by the agent and set aside for future payments as required by the contract (i.e., in a mortgage situation, for taxes, insurance, etc. on the property). Also known as "escrow deposits", "impounds" or "reserves".

ESCROW DEPOSIT:
Similar to "escrow collections", the deposit of funds for the purpose of future payments required under the contract.

ESCROW DISBURSEMENTS:
The payment out of escrow funds of taxes, insurance, etc. as required by the contract. Also known as "escrow payments".

ESCROW REIMBURSEMENT:
The return to the borrower of left over funds held in escrow once the debt has been paid out.

EXCULPATORY CLAUSE:
The term of a mortgage giving the borrower the right simply to surrender the property to the lender as payment for the loan without personal liability to the borrower for any shortfall.