| Fair Credit Reporting Act |
| A
consumer protection law that regulates the disclosure of consumer credit
reports by consumer/credit reporting agencies and establishes procedures
for correcting mistakes on one's credit record. |
|
| fair
market value |
| The
highest price that a buyer, willing but not compelled to buy, would pay,
and the lowest a seller, willing but not compelled to sell, would accept. |
|
| Fannie
Mae |
| A
congressionally chartered, shareholder-owned company that is the nation's
largest supplier of home mortgage funds. |
|
| Fannie
Mae's Community Home Buyer's Program |
| An
income-based community lending model, under which mortgage insurers and
Fannie Mae offer flexible underwriting guidelines to increase a low- or
moderate-income family's buying power and to decrease the total amount
of cash needed to purchase a home. Borrowers who participate in this model
are required to attend pre-purchase home-buyer education sessions. |
|
| Federal
Housing Administration (FHA) |
| An
agency of the U.S. Department of Housing and Urban Development (HUD).
Its main activity is the insuring of residential mortgage loans made by
private lenders. The FHA sets standards for construction and underwriting
but does not lend money or plan or construct housing. |
|
| fee
simple |
| The
greatest possible interest a person can have in real estate. |
|
| FHA
mortgage |
| A
mortgage that is insured by the Federal Housing Administration (FHA).
Also known as a government mortgage. |
|
| finder's
fee |
| A
fee or commission paid to a mortgage broker for finding a mortgage loan
for a prospective borrower. |
|
| first
adjustment |
| When
you can expect the first rate adjustment in your ARM loan. |
|
| first
mortgage |
| A
mortgage that is the primary lien against a property. |
|
| fixed-rate
mortgage (FRM) |
| A
mortgage in which the interest rate does not change during the entire
term of the loan. |
|
| fixed
second mortgage |
| See
home equity loan. |
|
| flood
insurance |
| Insurance
that compensates for physical property damage resulting from flooding.
It is required for properties located in federally designated flood areas. |
|
| foreclosure |
| The
legal process by which a borrower in default under a mortgage is deprived
of his or her interest in the mortgaged property. This usually involves
a forced sale of the property at public auction with the proceeds of the
sale being applied to the mortgage debt. |
|
| fully amortized ARM |
| An
adjustable-rate mortgage (ARM) with a monthly payment that is sufficient
to amortize the remaining balance, at the interest accrual rate, over
the amortization term. |
|
| good
faith estimate |
| An
estimate of charges which a borrower is likely to incur in connection
with a settlement. |
|
| hazard
insurance |
| Insurance
protecting against loss to real estate caused by fire, some natural causes,
vandalism, etc., depending upon the terms of the policy. |
|
| home
equity line of credit |
| a
credit line that is secured by a second deed of trust on a house. Equity
lines of credit are revolving accounts that work like a credit card, which
can be paid down or charged up for the term of the loan. The minimum payment
due each month is interest only. |
|
| home
equity loan |
| a
loan secured by a second deed of trust on a house, typically used as a
home improvement loan. |
|
| housing
ratio |
| The
ratio of the monthly housing payment in total (PITI - Principal, Interest,
Taxes, and Insurance) divided by the gross monthly income. This ratio
is sometimes referred to as the top ratio or front end ratio. |
|
| HUD |
| The
U.S. Department of Housing and Urban Development. |
|
| index |
| A
published interest rate to which the interest rate on an Adjustable Rate
Mortgage (ARM) is tied. Some commonly used indices include the 1 Year
Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI). |
|
| Impound
Account |
| An
impound account is an account established by the lender to pay a borrower's
tax and insurance costs. The borrower's monthly mortgage payment is then
increased to cover these costs, with the additional amount being held
in the impound account and disbursed by the lender when the payments are
due. Lenders typically prefer this arrangement because it reduces the
possibility of a lapse in tax or insurance payments that could diminish
the value of the lender's investment (your house). Therefore, while it
is often possible to opt out of an impound account, it will result in
additional charges. |
|
| jumbo
mortgage |
| The
current loan limit for a conforming loan is $300,700. Loan amounts of
$300,701 and above are considered non-conforming or jumbo mortgages and
are usually subject to higher pricing. |
|
