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Glossary

Rate

The percentage of interest paid to borrow money from a lender. See Interest Rate.

Rate Cap

The limit on how much the interest rate on an adjustable rate mortgage (ARM) loan can change during an adjustment period, or over the life of the loan. For example, suppose a lender offers a rate cap of 1% and the current interest rate is 6%. Based on the cap, the interest rate will stay between 5% and 7% at each adjustment. A lender will provide this information for each of its adjustable rate mortgage products.

Rate Float

When an interest rate has not been secured by a rate lock or rate protection, it will fluctuate—or "float"—according to market conditions.

Rate Lock

A lender's commitment to provide a loan at a specified interest rate as long as the loan closes by a specified expiration date. Some lenders will offer a rate lock extension, though an additional fee might be charged.

Rate Protection

Protection against an increase in an interest rate between the time you apply for a loan and closing. Usually, there is a cap added to the rate. The cap represents the maximum rate you will pay as long as the loan closes on time, even if rates increase. If rates drop, you will have a one-time option to lock in at a lower rate.

Real Estate Agent

A person who is licensed to sell real estate.

REALTOR

A real estate agent, broker or associate who is a licensed member of the National Association of Realtors, and its local and state associations. Realtors are trained to assist clients in the purchase and sale of properties.

Recording Fees

Money paid to your mortgage company for entering a record of the new title to your home into the public records. Recording fees are generally part of your closing costs.

Refinancing

Paying off one loan with the proceeds from a new loan using the same property as security. Consider refinancing when you can gain a lower interest rate, shorten the term of your loan, or want to get cash out of your property's equity.

RESPA (Real Estate Settlement Procedures Act)

A federal law that, among other things, requires lenders to disclose all settlement costs. It gives you the legal right to review estimated closing costs after you apply for a loan, and again at or before settlement. It also requires lenders to tell you about other business relationships it has with companies that may provide you with services.

Reverse Mortgage

A type of loan that can provide income to people who own their home or have considerable equity. The lender makes periodic payments to the homeowner, using the equity as collateral. At the end of the loan, the lender usually sells the home. Many retired people consider reverse mortgages as a way to supplement their fixed income.

Right of Rescission

Your legal right to cancel a refinance on your primary residence, bridge loan or home equity loan for any reason, for three business days after you have signed the loan contract. As required by federal law, the loan will not be finalized and no money will be issued until the rescission period has ended.