Washington State Department of Financial Institutions

Glossary of Terms

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Radon - A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Rate Cap - The limit on the amount that the interest rate on an ARM can increase or decrease during any one adjustment period.

Ratified Sales Contract - A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspections, making repairs, closing by a certain date, and the like.

Real Estate Agent - An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Real Estate Professional - An individual who provides services in buying and selling homes. The seller pays the real estate professional a percentage of the home sale price. Unless you have specifically contracted with a buyer's agent, the real estate professional represents the interest of the property seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

Real Estate Settlement Procedures Act (RESPA) - A law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.

Realtor - A real estate agent or broker who is a member of the National Association of Realtors (NAR), and its local and state associations.

Refinance - Obtaining a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

Refinancing - Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation Mortgage - A mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

Replacement Cost - The cost to replace damaged personal property without a deduction for depreciation.

Reverse Mortgage - A non-recourse loan against home equity providing cash advances to a borrower and requiring no repayment until a future time.

Revolving Account - Line of credit that may be used repeatedly up to a certain specified limit.

Right of Rescission - A borrower's right to cancel a home loan within three business days of closing.

Risk - The possibility that you may lose some (or all) of your original investment. In general, the greater the potential gain from an investment, the greater the risk is that you might lose money.