Table Of ContentFederal Trade Commission ftc.gov
The Real Estate Marketplace Glossary:
How to Talk the Talk
Buying
a home can be
exciting. It also can
be somewhat daunting, even
if you’ve done it before. You will deal
with mortgage options, credit reports, loan
applications, contracts, points, appraisals, change
orders, inspections, warranties, walk-throughs, settlement
sheets, escrow accounts, recording fees, insurance, taxes ... the
list goes on. No doubt you will hear and see words and terms you’ve
never heard before. Just what do they all mean?
The Federal Trade Commission, the agency that promotes competition
and protects consumers, has prepared this glossary to help you
better understand the terms commonly used in the real estate
and mortgage marketplace.
A
Annual Percentage Rate (APR): How much Appraisal: A professional analysis used
a loan costs annually. The APR includes the to estimate the value of the property. This
interest rate, points, broker fees and certain includes examples of sales of similar prop-
other credit charges a borrower is required erties.
to pay.
Appraiser: A professional who conducts an
Annuity: An amount paid yearly or at other analysis of the property, including examples
regular intervals, often at a guaranteed of sales of similar properties in order to de-
minimum amount. Also, a type of insurance velop an estimate of the value of the prop-
policy in which the policy holder makes erty. The analysis is called an “appraisal.”
payments for a fixed period or until a stated
age, and then receives annuity payments Appreciation: An increase in the market
from the insurance company. value of a home due to changing market
conditions and/or home improvements.
Application Fee: The fee that a mortgage
lender charges to apply for a mortgage to Arbitration: A process where disputes are
cover processing costs. settled by referring them to a fair and neu-
Glossary
tral third party (arbitrator). The disput- Automated Underwriting: An auto-
ing parties agree in advance to agree mated process performed by a technol-
with the decision of the arbitrator. There ogy application that streamlines the
is a hearing where both parties have an processing of loan applications and
opportunity to be heard, after which the provides a recommendation to the lender
arbitrator makes a decision. to approve the loan or refer it for manual
underwriting.
Asbestos: A toxic material that was
once used in housing insulation and
B
fireproofing. Because some forms of as-
bestos have been linked to certain lung
diseases, it is no longer used in new
Balance Sheet: A financial statement
homes. However, some older homes may
that shows assets, liabilities, and net
still have asbestos in these materials.
worth as of a specific date.
Assessed Value: Typically the value
Balloon Mortgage: A mortgage with
placed on property for the purpose of
monthly payments based on a 30-year
taxation.
amortization schedule, with the unpaid
balance due in a lump sum payment at
Assessor: A public official who estab-
the end of a specific period of time (usu-
lishes the value of a property for taxa-
ally 5 or 7 years). The mortgage contains
tion purposes.
an option to “reset” the interest rate to
the current market rate and to extend
Asset: Anything of monetary value that
the due date if certain conditions are
is owned by a person or company. As-
met.
sets include real property, personal
property, stocks, mutual funds, etc.
Balloon Payment: The final lump sum
payment that is made at the maturity
Assignment of Mortgage: A document
date of a balloon mortgage.
evidencing the transfer of ownership of a
mortgage from one person to another.
Bankruptcy: Legally declared unable to
pay your debts. Bankruptcy can severely
Assumable Mortgage: A mortgage loan
impact your credit and your ability to
that can be taken over (assumed) by the
borrow money.
buyer when a home is sold. An assump-
tion of a mortgage is a transaction in
Before-Tax Income: Income before tax-
which the buyer of real property takes
es are deducted. Also known as “gross
over the seller’s existing mortgage; the
income.”
seller remains liable unless released by
the lender from the obligation. If the
Biweekly Payment Mortgage: A mort-
mortgage contains a due-on-sale clause,
gage with payments due every two weeks
the loan may not be assumed without
(instead of monthly).
the lender’s consent.
Bona fide: In good faith, without fraud.
Assumption: A homebuyer’s agreement
to take on the primary responsibility
Bridge Loan: A short-term loan secured
for paying an existing mortgage from a
by the borrower’s current home (which
home seller.
is usually for sale) that allows the pro-
ceeds to be used for building or closing
Assumption Fee: A fee a lender charges
on a new house before the current home
a buyer who will assume the seller’s ex-
is sold. Also known as a “swing loan.”
isting mortgage.
Glossary
Broker: An individual or firm that acts Certificate of Deposit: A document is-
as an agent between providers and users sued by a bank or other financial institu-
of products or services, such as a mort- tion that is evidence of a deposit, with the
gage broker or real estate broker. See issuer’s promise to return the deposit plus
also “Mortgage Broker” earnings at a specified interest rate within
a specified time period.
Building Code: Local regulations that
set forth the standards and require- Certificate of Eligibility: A document is-
ments for the construction, maintenance sued by the U.S. Department of Veterans
and occupancy of buildings. The codes Affairs (VA) certifying a veteran’s eligibility
are designed to provide for the safety, for a VA-guaranteed mortgage loan.
health and welfare of the public.
Chain of Title: The history of all of the
Buydown: An arrangement whereby documents that have transferred title to
the property developer or another third a parcel of real property, starting with the
party provides an interest subsidy to earliest existing document and ending
reduce the borrower’s monthly payments with the most recent.
typically in the early years of the loan.
Change Orders: A change in the original
Buydown Account: An account in construction plans ordered by the prop-
which funds are held so that they can be erty owner or general contractor.
applied as part of the monthly mortgage
payment as each payment comes due Clear Title: Ownership that is free of
during the period that an interest rate liens, defects, or other legal encumbranc-
buydown plan is in effect. es.
Closing: The process of completing a
C
financial transaction. For mortgage
loans, the process of signing mortgage
documents, disbursing funds, and, if
Cap: For an adjustable-rate mortgage
applicable, transferring ownership of
(ARM), a limitation on the amount the
the property. In some jurisdictions, clos-
interest rate or mortgage payments may
ing is referred to as “escrow,” a process
increase or decrease. See also “Lifetime
by which a buyer and seller deliver legal
Payment Cap,” “Lifetime Rate Cap,” “Pe-
documents to a third party who completes
riodic Payment Cap,” and “Periodic Rate
the transaction in accordance with their
Cap”
instructions. Also see “Settlement”
Capacity: Your ability to make your
Closing Agent: The person or entity that
mortgage payments on time. This de-
coordinates the various closing activities,
pends on your income and income
including the preparation and recordation
stability (job history and security), your
of closing documents and the disburse-
assets and savings, and the amount of
ment of funds. (May be referred to as an
your income each month that is left over
escrow agent or settlement agent in some
after you’ve paid for your housing costs,
jurisdictions.) Typically the closing is con-
debts and other obligations.
ducted by title companies, escrow compa-
nies or attorneys.
Cash-out Refinance: A refinance trans-
action in which the borrower receives
Closing Costs: The fees charged in con-
additional funds over and above the
nection with a mortgage loan transaction.
amount needed to repay the existing
Money paid by a buyer (and/or seller or
mortgage, closing costs, points, and any
other third party, if applicable) to effect
subordinate liens.
Glossary
the closing of a mortgage loan, generally owners, who share in the common expens-
including, but not limited to a loan origi- es of their operation and maintenance.
nation fee, title examination and insur- Common areas include swimming pools,
ance, survey, attorney’s fee, and prepaid tennis courts, and other recreational
items, such as escrow deposits for taxes facilities, as well as common corridors of
and insurance. buildings, parking areas, means of ingress
and egress, etc.
Closing Date: The date on which the
sale of a property is to be finalized and a Comparables: An abbreviation for “com-
loan transaction completed. Often, a real parable properties,” which are used as a
estate sales professional coordinates the comparison in determining the current
setting of this date with the buyer, the value of a property that is being appraised.
seller, the closing agent, and the lender.
Condominium: A real estate project in
Closing Statement: See “HUD-1 Settle- which each unit owner holds title to an
ment Statement” individual unit in a building, and an undi-
vided interest in the common areas.
Co-borrower: Any borrower other than
the first borrower whose name appears Concession: Something given up or
on the application and mortgage note, agreed to in negotiating the sale of the
even when that person owns the prop- house. For example, the sellers may agree
erty jointly with the first borrower and to help pay for closing costs.
shares liability for the note.
Condominium: A unit in a multiunit
Collateral: An asset that is pledged as building. The owner of a condominium
security for a loan. The borrower risks unit owns the unit itself and has the right,
losing the asset if the loan is not repaid along with other owners, to use the com-
according to the terms of the loan agree- mon areas but does not own the common
ment. In the case of a mortgage, the col- elements such as the exterior walls, floors
lateral would be the house and property. and ceilings or the structural systems
outside of the unit; these are owned by
Commission: The fee charged for ser- the condominium association. There are
vices performed, usually based on a usually condominium association fees for
percentage of the price of the items sold building maintenance, property upkeep,
(such as the fee a real estate agent earns taxes and insurance on the common areas
on the sale of a house). and reserves for improvements.
Commitment Letter: A binding offer Construction Loan: A loan for financing
from your lender stating the amount of the cost of construction or improvements
the mortgage, the number of years to to a property; the lender disburses pay-
repay the mortgage (the term), the in- ments to the builder at periodic intervals
terest rate, the loan origination fee, the during construction.
annual percentage rate and the monthly
charges. Contingency: A condition that must be
met before a contract is legally binding.
Common Areas: Those portions of a For example, home purchasers often in-
building, land, or improvements and clude a home inspection contingency; the
amenities owned by a planned unit sales contract is not binding unless and
development (PUD) or condominium until the purchaser has the home inspect-
project’s homeowners’ association (or a ed.
cooperative project’s cooperative corpo-
ration) that are used by all of the unit Conventional Mortgage: A mortgage loan
that is not insured or guaranteed by the
Glossary
federal government or one of its agen- not these debts were paid back on time
cies, such as FHA, VA or RHS. Contrast or “as agreed.” Credit institutions have
with “Government Mortgage.” created a detailed document of your
credit history called a credit report.
Conversion Option: A provision of
some adjustable-rate mortgage (ARM) Credit Life Insurance: A type of insur-
loans that allows the borrower to ance that pays off a specific amount of
change the ARM to a fixed-rate mort- debt or a specified credit account if the
gage at specified times after loan origi- borrower dies while the policy is in force.
nation.
Credit Report: A document used by the
Convertible ARM: An adjustable-rate credit industry to examine your use of
mortgage (ARM) that allows the bor- credit. It provides information on money
rower to convert the loan to a fixed-rate that you’ve borrowed from credit institu-
mortgage under specified conditions. tions and your payment history.
Cooperative (Co-op) Project: A project Credit Score: A numerical value that
in which a corporation holds title to a ranks a borrower’s credit risk at a given
residential property and sells shares to point in time based on a statistical eval-
individual buyers, who then receive a uation of information in the individual’s
proprietary lease as their title. credit file that has been proven to be
predictive of loan performance.
Cost of Funds Index (COFI): An in-
dex that is used to determine interest Creditor: A person to whom money is
rate changes for certain adjustable-rate owed.
mortgage (ARM) plans. It is based on
the weighted monthly average cost of Creditworthy: Your ability to qualify for
deposits, advances, and other borrow- credit and repay debts.
ings of members of the Federal Home
Loan Bank of San Francisco .
D
Counter-offer: An offer made in re-
sponse to a previous offer. For example,
Debt: Money owed from one person or
after the buyer presents their first offer,
institution to another person or institu-
the seller may make a counter-offer
tion.
with a slightly higher sale price.
Debt-to-Income Ratio: The percent-
Credit: The ability of a person to bor-
age of gross monthly income that goes
row money, or buy good by paying over
toward paying for your monthly hous-
time. Credit is extended based on a
ing expense, alimony, child support, car
lender’s good opinion of the person’s
payments and other installment debts,
financial situation and reliability.
and payments on revolving or open-end-
ed accounts such as credit cards.
Credit Bureau: A company that gath-
ers information on consumers who use
Deed: The legal document transferring
credit. These companies sell that infor-
ownership or title to a property
mation to credit lenders in the form of a
credit report.
Deed-in-Lieu of Foreclosure: The
transfer of title from a borrower to the
Credit History: A record of credit use
lender to satisfy the mortgage debt and
comprised of a list of individual con-
avoid foreclosure. Also called a “volun-
sumer debts and a record of whether or
tary conveyance.”
Glossary
Deed of Trust: A legal document in Easement: A right to the use of, or ac-
which the borrower transfers the title to cess to, land owned by another.
a 3rd party (trustee) to hold as security
for the lender. When the loan is paid in Employer-Assisted Housing: A program
full the trustee transfers title back to in which companies assist their employ-
the borrower. If the borrower defaults on ees in purchasing homes by providing
the loan the trustee will sell the property assistance with the down payment, clos-
and pay the lender the mortgage debt. ing costs, or monthly payments.
Default: Failure to fulfill a legal obliga- Encroachment: The intrusion onto
tion. A default includes failure to pay on another’s property without right or per-
a financial obligation, but may also be a mission.
failure to perform some action or ser-
vice that is non-monetary. For example, Encumbrance: Any claim on a property,
when leasing a car, the lessee is usually such as a lien, mortgage or easement.
required to properly maintain the car.
Equal Credit Opportunity Act (ECOA):
Delinquency: Failure to make a pay- A federal law that requires lenders to
ment when it is due. The condition of a make credit equally available without
loan when a scheduled payment has not regard to the applicant’s race, color, reli-
been received by the due date, but gen- gion, national origin, age, sex, or marital
erally used to refer to a loan for which status; the fact that all or part of the ap-
payment is 30 or more days past due. plicant’s income is derived from a public
assistance program; or the fact that the
Depreciation: A decline in the value of applicant has in good faith exercised any
a house due to changing market condi- right under the Consumer Credit Protec-
tions or lack of upkeep on a home. tion Act.
Discount Point: A fee paid by the bor- Equity: The value in your home above
rower at closing to reduce the interest the total amount of the liens against
rate. A point equals 1 percent of the loan your home. If you owe $100,000 on your
amount. house but it is worth $130,000, you
have $30,000 of equity.
Down Payment: A portion of the price
of a home, usually between 3-20%, not Escrow: An item of value, money, or
borrowed and paid up front in cash. documents deposited with a third party
to be delivered upon the fulfillment of
Due-on-sale Clause: A provision in a a condition. For example, the deposit
mortgage that allows the lender to de- by a borrower with the lender of funds
mand repayment in full of the outstand- to pay taxes and insurance premiums
ing balance if the property securing the when they become due, or the deposit of
mortgage is sold. funds or documents with an attorney or
escrow agent to be disbursed upon the
closing of a sale of real estate.
E
Escrow Account: An account that a
mortgage servicer establishes on behalf
Earnest Money Deposit: The deposit
of a borrower to pay taxes, insurance
to show that you’re committed to buy-
premiums, or other charges when they
ing the home. The deposit will not be
are due. Sometimes referred to as an
refunded to you after the seller accepts
“impound” or “reserve” account.
your offer, unless one of the sales con-
tract contingencies is not fulfilled.
Glossary
Escrow Analysis: The accounting that loans to it and to service loans on Fan-
a mortgage servicer performs to deter- nie Mae’s behalf.
mine the appropriate balances for the
escrow account, compute the borrower’s Fannie Mae/Freddie Mac Loan Limit:
monthly escrow payments, and deter- The current 2004 Fannie Mae/Freddie
mine whether any shortages, surpluses Mac loan limit for a single-family home
or deficiencies exist in the account. is $333,700 and is higher in Alaska ,
Guam , Hawaii , and the U.S. Virgin
Eviction: The legal act of removing Islands. The Fannie Mae loan limit is
someone from real property. $427,150 for a two-unit home; $516,300
for a three-unit home; and $641,650 for
Exclusive Listing: A written contract a four-unit home. Also referred to as the
that gives a licensed real estate agent “conventional loan limit.”
the exclusive right to sell a property for
a specified time. Federal Housing Administration
(FHA): An agency within the U.S. De-
Executor: A person named in a will and partment of Housing and Urban Devel-
approved by a probate court to adminis- opment (HUD) that insures mortgages
ter the deposition of an estate in accor- and loans made by private lenders.
dance with the instructions of the will.
FHA-Insured Loan: A loan that is in-
sured by the Federal Housing Adminis-
F
tration (FHA) of the U.S. Department of
Housing and Urban Development (HUD).
Fair Credit Reporting Act: A consumer
First Mortgage: A mortgage that is the
protection law that regulates the disclo-
primary lien against a property.
sure of consumer credit reports by credit
reporting agencies and specifies proce-
First Time Home Buyer: A person with
dures for challenging errors on a credit
no ownership interest in a principal
record.
residence during the three-year period
preceding the purchase of the security
Fair Market Value: The price at which
property.
property would be transferred between
a willing buyer and willing seller, each
Fixed-Period Adjustable-Rate Mort-
of whom has a reasonable knowledge of
gage: An adjustable-rate mortgage
all pertinent facts and is not under any
(ARM) that offers a fixed rate for an ini-
compulsion to buy or sell.
tial period, typically three to ten years,
and then adjusts every six months, an-
Fannie Mae: A New York stock ex-
nually, or at another specified period, for
change company. It is a public company
the remainder of the term.
that operates under a federal charter
and is the nation’s largest source of
Fixed-Rate Mortgage: A mortgage with
financing for home mortgages. Fannie
an interest rate that does not change
Mae does not lend money directly to
during the entire term of the loan.
consumers, but instead works to en-
sure that mortgage funds are available
Flood Certification Fee: A fee charged
and affordable, by purchasing mortgage
by independent mapping firms to identi-
loans from institutions that lend directly
fy properties located in areas designated
to consumers.
as flood zones.
Fannie Mae-Seller/Servicer: A lender
Flood Insurance: Insurance that com-
that Fannie Mae has approved to sell
pensates for physical property damage
Glossary
resulting from flooding. It is required for Government National Mortgage As-
properties located in federally designated sociation (Ginnie Mae): A govern-
flood hazard zones. ment-owned corporation within the
U.S. Department of Housing and Urban
Foreclosure: A legal action that ends Development (HUD) that guarantees
all ownership rights in a home when the securities backed by mortgages that are
homebuyer fails to make the mortgage insured or guaranteed by other govern-
payments or is otherwise in default un- ment agencies. Popularly known as Gin-
der the terms of the mortgage. nie Mae.
Forfeiture: The loss of money, property, Gross Monthly Income: The income
rights, or privileges due to a breach of a you earn in a month before taxes and
legal obligation. other deductions. It may also include
rental income, self-employed income,
Fully Amortized Mortgage: A mortgage income from alimony, child support,
in which the monthly payments are de- public assistance payments, and retire-
signed to retire the obligation at the end ment benefits.
of the mortgage term.
Ground Rent: Payment for the use of
land when title to a property is held as
G
a leasehold estate (that is, the borrower
does not actually own the property, but
has a long-term lease on it).
General Contractor: A person who over-
sees a home improvement or construc-
Growing-Equity Mortgage (GEM): A
tion project and handles various aspects
fixed-rate mortgage in which the month-
such as scheduling workers and order-
ly payments increase according to an
ing supplies.
agreed-upon schedule, with the extra
funds applied to reduce the loan balance
Gift Letter: A letter that a family mem-
and loan term.
ber writes verifying that s/he has given
you a certain amount of money as a gift
and that you don’t have to repay it. You H
can use this money towards a portion
of your down payment with some mort-
gages. Hazard Insurance: Insurance coverage
that compensates for physical damage to
Good-Faith Estimate: A form required a property from fire, wind, vandalism, or
by the Real Estate Settlement and Pro- other covered hazards or natural disas-
cedures Act (RESPA) that discloses ters.
an estimate of the amount or range of
charges, for specific settlement services Home Equity Conversion Mortgage
the borrower is likely to incur in connec- (HECM): A special type of mortgage-
tion with the mortgage transaction. developed and insured by the Federal
Housing Administration (FHA) that
Government Mortgage: A mortgage enables older home owners to convert
loan that is insured or guaranteed by a the equity they have in their homes into
federal government entity such as the cash, using a variety of payment options
Federal Housing Administration (FHA) or to address their specific financial needs.
guaranteed by the U. S. Department of Sometimes called a reverse mortgage.
Veterans Affairs (VA), or the Rural Hous-
ing Service (RHS).
Glossary
Home Equity Line of Credit: A type I
of revolving loan, that enables a home
owner to obtain multiple advances of
the loan proceeds at his or her own Income Property: Real estate developed
or purchased to produce income, such
discretion, up to an amount that rep-
as a rental unit.
resents a specified percentage of the
borrower’s equity in the property.
Index: A number used to compute
the interest rate for an adjustable-rate
Home Inspection: A professional
mortgage (ARM). The index is generally
inspection of a home to determine the
a published number or percentage, such
condition of the property. The inspec-
as the average interest rate or yield on
tion should include an evaluation of
U.S. Treasury bills. A margin is added to
the plumbing, heating and cooling
the index to determine the interest rate
systems, roof, wiring, foundation and
that will be charged on the ARM. This
pest infestation.
interest rate is subject to any caps on
the maximum or minimum interest rate
Homeowner’s Insurance: A policy
that may be charged on the mortgage,
that protects you and the lender from
stated in the note.
fire or flood, which damages the struc-
ture of the house; a liability, such as
an injury to a visitor to your home; Individual Retirement Account (IRA):
A tax-deferred plan that can help you
or damage to your personal property,
build a retirement nest egg.
such as your furniture, clothes or ap-
pliances
Inflation: An increase in prices.
Homeowner’s Warranty (HOW): In-
surance offered by a seller that covers Initial Interest Rate: The original inter-
est rate for an adjustable-rate mortgage
certain home repairs and fixtures for a
(ARM). Sometimes known as the “start
specified period of time.
rate.”
Homeowners’ Association: An or-
ganization of homeowners residing Inquiry: A request for a copy of your
credit report. An inquiry occurs every
within a particular area whose prin-
time you fill out a credit application
cipal purpose is to ensure the provi-
and/or request more credit. Too many
sion and maintenance of community
inquiries on a credit report can hurt
facilities and services for the common
your credit score.
benefit of the residents.
Housing Expense Ratio: The percent- Installment: The regular periodic pay-
ment that a borrower agrees to make to
age of your gross monthly income that
a lender.
goes toward paying for your housing
expenses.
Installment Debt: A loan that is repaid
in accordance with a schedule of pay-
HUD-1 Settlement Statement: A fi-
ments for a specified term (such as an
nal listing of the costs of the mortgage
automobile loan).
transaction. It provides the sales price
and down payment, as well as the to-
tal settlement costs required from the Interest: The cost you pay to borrow
money. It is the payment you make to
buyer and seller.
a lender for the money it has loaned to
you. Interest is usually expressed as a
percentage of the amount borrowed.
10 Glossary
Interest Accrual Rate: The percentage L
rate at which interest accumulates or
increases on a mortgage loan.
Late Charge: A penalty imposed by the
lender when a borrower fails to make a
Interest Rate Cap: For an adjust-
scheduled payment on time.
able-rate mortgage, a limitation on the
amount the interest rate can change per
adjustment or over the lifetime of the Lease-Purchase Option: An option
sometimes used by sellers to rent a
loan, as stated in the note.
property to a consumer, who has the op-
tion to buy the home within a specified
Interest Rate Ceiling: For an adjust-
period of time. Typically, part of each
able-rate mortgage (ARM), the maximum
rental payment is put aside for the pur-
interest rate, as specified in the mort-
pose of accumulating funds to pay the
gage note.
down payment and closing costs.
Interest Rate Floor: For an adjustable-
rate mortgage (ARM), the minimum in- Liabilities: A person’s debts and other
financial obligations.
terest rate, as specified in the mortgage
note.
Liability Insurance: Insurance coverage
that protects property owners against
Investment Property: A property pur-
claims of negligence, personal injury or
chased to generate rental income, tax
property damage to another party.
benefits, or profitable resale rather than
to serve as the borrower’s primary resi-
dence. Contrast with “second home.” LIBOR-Index: An index used to deter-
mine interest rate changes for certain
ARM plans, based on the average inter-
J est rate at which international banks
lend to or borrow funds from the London
Interbank Market.
Judgment Lien: A lien on the property
of a debtor resulting from the decree of a
Lien: A claim or charge on property for
court.
payment of a debt. With a mortgage,
the lender has the right to take the title
Jumbo Loan: A loan that exceeds the
to your property if you don’t make the
mortgage amount eligible for purchase
mortgage payments.
by Fannie Mae or Freddie Mac. Also
called “nonconforming loan.”
Lifetime Cap: For an adjustable-rate
mortgage (ARM), a limit on the amount
Junior Mortgage: A loan that is subor-
that the interest rate or monthly pay-
dinate to the primary loan or first-lien
ment can increase or decrease over the
mortgage loan, such as a second or third
life of the loan.
mortgage.
Liquid Asset: A cash asset or an asset
K that is easily converted into cash.
Loan Origination: The process by which
Keogh Funds: A tax-deferred retire- a lender makes a loan which may in-
ment-savings plan for small business clude taking a loan application, process-
owners or self-employed individuals who ing and underwriting the application,
have earned income from their trade or and closing the loan.
business. Contributions to the Keogh
plan are tax-deductible.
