MORTGAGE DICTIONARY

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RATE CAP:
A limit of how much an interest rate can change in a variable of adjustable rate mortgage either in a given period or over the life of the loan.

RATE COMMITMENT:
A written promise by a lender to lend money to a borrower at a stated rate of interest -- usually time limited.

RATE LOCK-IN:
See "rate commitment". A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

RECAST PAYMENT:
Adjustment of the periodic payment on an adjustable or variable rate mortgage to ensure that the mortgage will be paid out by maturity date.

RECASTING:
Adjusting the terms of a loan agreement in light of new developments (i.e. lower rates, possible default).

RECOURSE:
The right of a lender to pursue a borrower personally for moneys owed.

REDEEM:
To bring mortgage payments up-to-date after the lender has begun default proceedings. Once a borrower (or other lien holder) redeems, the mortgage is back in good standing and the relationship continues as before the default.

REDEMPTION PERIOD:
The length of time during which the borrower may redeem a mortgage.

REDUCTION CERTIFICATE:
A mortgage statement setting out the amount owing on the loan as of a given date. May be used for discharges or assumptions.

REFINANCE:
To replace an existing and perhaps mature mortgage with a new mortgage on the same property. New mortgage may have different terms than the old one.

RELEASE CLAUSE:
A term of a mortgage which allows the borrower to pay out the loan and have the mortgage removed from title.

RENEWAL OPTION:
A right which arises out of a term in a contract and takes effect at or near the termination date of a contract; the party who enjoys the right may choose to continue the agreement on terms as set out in the option clause or to treat the contract as at an end upon the termination date.

REPAYMENT PLAN:
A schedule arranged between a lender and borrower to set out how a debt is to be paid out.

REQUIRED CASH:
Collective term for the total sum of money required to complete a transaction, including purchase price, taxes, legal fees, mortgage fees, etc.

RESCISSION:
The act of treating a contract as being at an end as a result of the failure, breach or misconduct of another party.

RESERVE PRICE:
The amount set prior to an auction which must be met in the bidding for a particular item before the item will be sold. Also known as "reserve bid".

RETIRE (A DEBT):
To fulfill one's obligations under a loan or mortgage so that the lender has no further claims against the borrower.

REVERSE ANNUITY MORTGAGE (RAM):
A type of mortgage where the equity in the home serves as security for periodic payments made by the lender to the borrower. Mortgage is generally paid out upon the sale of the property.

ROLLOVER LOAN:
A loan where the amortization period is much longer than the term and the borrower is allowed to refinance at the end of the term at the interest rate then applicable.

RULE OF 72'S:
To calculate the number of years it will take to double money while earning compound interest, divide the interest rate into 72. Money invested at 10 percent compound interest will take 7.2 years to double.