Mortgage Glossary

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The front outside wall of a building.
Face Interest Rate
The percentage interest rate that is shown on the actual loan note or document.
Factory Orders
Economic indicator that measures the total volume of orders placed with U.S. factories. Also includes inventory and order backlog components, which can offer insight into inflation and growth in the manufacturing sector. Frequency: monthly. Source: Commerce Department.
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 Rent
The amount that a property would command if it were currently available to rent or lease.
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.
FDIC insured
E-LOAN is a subsidiary of Banco Popular North America (BPNA). E-LOAN and BPNA combine account balances for insurance purposes. The Federal Deposit Insurance Corporation (FDIC) insures the total balances up to the maximum allowed by law.
Federal Funds Rate
Interest rate charged by banks, with excess reserves at a Federal Reserve district bank, to banks needing overnight loans to meet reserve requirements. The federal funds rate is the most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate, which are periodically changed by banks and by the Federal Reserve Board, respectively.
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.
Federal Open Market Committee  (FOMC)
Policy committee in the Federal Reserve System that sets short-term monetary policy objectives for the Fed. The committee is made up of the seven governors of the Federal Reserve Board, plus five of the 12 presidents of the Federal Reserve Banks.
Fee Simple
The greatest possible interest a person can have in real estate.
Fee Simple Estate
An unconditional, unlimited estate of inheritance that represents the greatest possible interest in land that can be enjoyed.
FHA Co-insured Mortgage
A mortgage for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the borrower's default.
FHA mortgage
A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.
Finance Charge
The total dollar amount credit will cost.
Finder's Fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
Firm Commitment
A lending institution's agreement to give a loan to a specific borrower on a specific property.
First Adjustment
When you can expect the first rate adjustment in your ARM loan.
First Mortgage
A mortgage that is the first loan recorded in the public record and generally the primary loan against a property.
Fixed Installment
The monthly payment due on a mortgage loan which includes both principal and interest.
Fixed Second Mortgage
See home equity loan.
Fixed-Rate Mortgage  (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan.
Fixtures
Personal property or improvements that become real property when attached to the land or building in a permanent manner.
Float
Float Down Option
"An option to choose a lower rate within 30 days before the closing of your loan and "float down" to a lower rate than the previously locked-in rate. This allows you to pick the best rate within that time period."
Flood Certification
An inspection to determine if a property is located in an area prone to flooding also known as a flood plain. The federal government determines whether an area is in a flood plain. Lenders generally rely on the flood certification to determine if flood insurance will be required in order to obtain a mortgage. For our comparison purposes, the cost of the flood certification is considered to be a third party fee, though you may find that all lenders do not pass this fee on to the borrower.
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.
Forfeiture
The loss of money, or anything else of value, due to a breach of legal obligation or contract.
Freddie Mac
FHLMC (Federal Home Loan Mortgage Corporation) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
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.