Mortgage glossary

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Fair Housing Act: a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers. FFI mortgage glossary.

Fee Simple: absolute title; the highest possible interest in a property.

Fees: The costs that are associated with getting a mortgage loan that include servicing fees, loan origination fees, title fees, appraisal fees, home inspection fees, and more. The VA also charges a fee for using their Home Loan Guarantee Program.

FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages. FFI mortgage glossary.

Final reminder: a letter requesting payment and sent to a customer who is in arrears before legal proceedings start.

First Mortgage: a loan used to finance the purchase of a home. The primary lien against a property.

First mortgage payment: this is higher than the normal monthly payments, because the lender doesn’t collect it until after the loan starts. So, as well as the normal monthly amount, the first payment will include an interest payment for the rest of the month in which the loan began. FFI mortgage glossary.

Fixed-rate mortgage: a mortgage loan with an interest rate that does not change during the entire term of the loan.

Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Forbearance: the lender's postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.

Foreclosure: a legal process by which property that is mortgaged as security for a loan may be sold to pay a defaulting borrower's loan.

Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers. FFI mortgage glossary.

Freehold: outright ownership of the property and the land on which it stands.

Funding Fee: The name of the fee that the VA charges when a veteran uses their Home Loan Guarantee Program. This fee is generally around 2% to 3% depending on if it is your first VA loan or not. Disabled veterans may be exempt from this fee.

Further advance: an additional loan by the lender to the borrower, which may be for any purpose and secured by the existing mortgage deed.