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F

Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by credit reporting agencies.

Fair Market Value
The value of a property in terms of what it can be sold for in the open market.

Fannie Mae or Federal National Mortgage Association (FNMA)
A Washington, D.C. based private company that supports home lending by purchasing loans from participating mortgage lenders -- not from consumers -- and issuing mortgage backed securities. Originally created by the U.S. government in 1938 to purchase government insured mortgages, and still retains its federal charter as a government sponsored enterprise (GSE). Fannie Mae is the nation's largest mortgage investor and is traded on the New York stock exchange.

Federal Housing Administration (FHA)
An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.

Federal Housing Administration (FHA) Insured Loan
A loan that is insured by the Federal Housing Administration (FHA), which is part of the the U.S. Department of Housing and Urban Development (HUD).

Federal Housing Administration (FHA) Mortgage Insurance
A fee, usually less than 4% of the loan amount, payed at closing or is added to the amount payed monthly to insure an FHA loan.

Federal Mortgage or Government Mortgage
A mortgage loan insured or guaranteed by the government, such as the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or The Department of Agriculture's Rural Housing Service (RHS).

Federal Reserve Board (Fed)
The central bank of the United States.

FICO Score
FICO stands for Fair Isaac & Co. -- the firm that developed the most often used credit scoring method. See Credit Rating.

Finance Company
A company that makes loans to individuals or businesses but does not receive deposits from the public.

Fixed-Rate Loan
The loans interest rate and monthly payments remain the same throughout the life of the loan agreement. Typically, these loans come with a repayment period of 15, 20, or 30 years.

Fixed-Period Adjustable-Rate Mortgage

See Hybrid Adjustable-Rate Mortgage.

FOMC Meeting
Federal Open Market Committee meeting.

Foreclosure
The legal process by which a property that is mortgaged as security for a loan is sold and the proceeds of the sale applied to the amount owed. This usually occurs after the borrower fails to adhere to the terms of the mortgage.

G

Good Faith Estimate (GFE)
A document required by the Real Estate Settlement and Procedures Act (RESPA) that includes an estimate of the settlement costs (also called closing costs) the borrower must a pay at closing.

Government Mortgage
See Federal Mortgage.

Ginnie Mae or Government National Mortgage Association (GNMA)
A corporation owned by government within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies, such as the FHA or VA.

Growing-Equity Mortgage (GEM)
A fixed-rate mortgage in which the monthly payments increase according to a schedule, the additional funds gradually decrease the life of the loan and the size of the debt.

H

Hazard Insurance
A type of insurance that provides compensation for damage sustained by the property from fire, vandalism, wind, or natural disasters.

Home Equity Conversion Mortgage (HECM)
see Reverse Mortgage.

Home Equity Line of Credit (HELOC)
A home equity line of credit is like a credit card, which allows you to borrow against the limit set by the lender. Once you repay the principal amount owed, that money can be borrowed again.

Homeowner's Insurance
Insurance coverage that combines hazard insurance with personal liability protection, etc.

HUD-1 Settlement Statement
A document listing all closing costs on a real estate purchase or refinance. Also known as the "settlement sheet" or "closing statement."

Hybrid Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) usually begin with a low fixed rate for an initial period, typically three to ten years, and then adjusts higher or lower every six months or annually for the remainder of the loans life.

I

Interest
See Annual Percentage Rate (APR).

Interest rate
The actual note rate.

J

Jumbo Loan
a loan that exceeds the maximum mortgage limit of the two primary Government Sponsored Enterprises (GSE), Fannie Mae and Freddie Mac.
The current (Nov, 2005) conforming maximums are: $333,700 for a 1 unit property, $427,150 for a 2 unit property, $516,300 for a 3 unit property and $641,650 for a 4 unit property. These maximums apply to all states except Alaska and Hawaii. These loans are also called "nonconforming loans." Jumbo loans usually have interest rates between 1/4% to 5/8% higher than conforming mortgages

L

Lien
A claim on a piece of property that allows a lender to take possesion of that property in order to satisfy a debt.

Loan term
The life of the loan or the amount of time the borrower has before repayment is required.

Loan-To-Value Ratio (LTV)
The mortgage loan amount in relation to the appraised value of the property, which is normally expressed as a percentage.
For example, if your house is worth $100,000 and you have made mortgage payments consistently over the years, so now you owe $70,000. That would make your loan to value to ratio is %70 ($70,000 is %70 of $100,000).

Lock-in
An agreement that ensures that the interest rate of the loan applicant will remain the same for a certain period of time before closing.