Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
F
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.
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 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.
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 Amortized ARM
An adjustable-rate mortgage (ARM) with monthly payments that are sufficient to liquidate the remaining principal balance over the amortization term.
G
Gain
An increase in monetary or property value.
Gap Loan
Short-term financing, usually to cover a gap in time between a person’s purchase of a home and that person’s later receipt of funds, usually from the sale of their previous home. Sometimes called a bridge loan or swing loan.
Garden Apartment
An apartment housing complex where the tenants have free access to a lawn or garden area.
Gated Community
A private, fenced-in housing development, sometimes employing security guards.
Government mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA) or, is insured by the Federal Housing Administration (FHA). Compare with conventional mortgage.
Government National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created in 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by FNMA. Commonly called Ginnie Mae.