The Learning Center

Glossary

Façade

The front outside wall of a building.

FACT Act

This law incorporates privacy regulations, identity theft protections, dispute procedures and the distribution of free annual consumer disclosures. This means that you can request a free copy of your consumer disclosure every 12 months from TransUnion, Equifax and Experian.

Fair Credit Reporting Act

A federal consumer protection regulation that controls the disclosure of credit information and establishes procedures for correcting mistakes in your credit file.

Fair Housing Act

A law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

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 willing, but not compelled, buyer would pay for a property, and the lowest price that a willing, but not compelled, seller would accept.

Fannie Mae

Formerly known as FNMA (Federal National Mortgage Association), Fannie Mae is one of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.

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 area of the U. S. Department of Housing and Urban Development (HUD) that insures low down payment mortgages granted by some lenders. The loan must meet the established guidelines of FHA in order to qualify for the insurance.

Federal Reserve Board

A group of economists and other experts who set the nation's monetary policy. Its chief tool to control inflation is the power to control interest rates.

Fee Simple

Absolute ownership of real property; 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 Mortgage

A mortgage insured by the Federal Housing Administration (FHA). FHA loans are also known as government loans. Government financing is generally best suited for individuals making minimal down payments or with less than perfect credit histories.

FICO Score

The credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well.

Finance Charge

Any fee representing the cost of credit, or the cost of borrowing. It includes not only interest, but other charges as well, such as transaction fees as defined in Regulation Z.

Finders Fee

A fee paid to a mortgage broker for finding a mortgage for a potential borrower.

Firm Commitment

A lending institution’s agreement to give a loan to a specific borrower on a specific property.

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 Rate Mortgage

A mortgage in which the monthly principal and interest payments remain the same throughout the life of the loan. The most common mortgage terms are 30 and 15 years. With a 30-year fixed rate mortgage your monthly payments are lower than they would be on a 15 year fixed rate, but the 15 year loan allows you to repay your loan twice as fast and save more than half the total interest costs.

Fixtures

Personal property or improvements that become real property when attached to the land or building in a permanent manner.

Float

A term that describes the interest rate for a loan that has not yet been guaranteed by a lender. If the lender has not yet guaranteed or locked the interest rate, it is floating and could change prior to closing.

Float-Down

Generally in exchange for payment of an up-front fee, the borrower may choose to lock-in a slightly higher than prevailing interest rate and have a one-time option to reduce the rate, or “float-down” should rates fall during the lock-in period. Under this option, both the initial locked rate and the float-down rate, if applicable, will be higher than the prevailing rate. The one-time float down option may be exercised at any time during the lock-in period, but not later than drawing of loan documents.

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.

Flood Insurance

Insurance that protects a homeowner from the cost of damages to a property due to flooding or high water. It is required by law that properties located in areas prone to flooding have flood insurance. The federal government determines whether an area is prone to flooding and considered to be in a flood plain.

Flood Plain

A designation given to land that is located in an area that is subject to flooding. Typically, lenders require that flood insurance be obtained if a property they are financing is located in a flood plain.

For Sale by Owner (FSBO)

The owner acts as the agent to avoid paying a sales commission.

Foreclosure

The legal process in which a borrower's ownership of a property is dissolved due to default. Typically, the property is sold at a public auction and the proceeds are used to pay the loan in full.

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 indexed interest rate

The current index value plus the margin for an adjustable rate mortgage (ARM). Many times, the initial rate offered by a lender for an ARM is less than the fully indexed interest rate. This means if conditions were to remain the same, the interest rate would increase on the first change date.