Encumbrance A lien , charge or liability against a property. A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. The right of public agencies to take land for public use. The value of a homeowner's unencumbered interest in real estate. Equity is the difference between the home's fair market value and the unpaid balance of the mortgage and any outstanding liens .
Equity increases as the mortgage is paid down or as the property enjoys appreciation .
The portion of a homeowner's monthly mortgage payment that is held by the loan servicer to pay for taxes and insurance. Also known as reserves. The loan servicer holds the escrow funds separately from money meant to pay off principal and interest. A consumer protection law that regulates the disclosure of consumer credit reports by credit reporting agencies and establishes procedures for correcting mistakes on a person's credit record. A fair price for a home based on recent sales of properties of similar size and quality in the neighborhood.