Glossary of Terms: F

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Fair Market Value:
The price a home would sell for, assuming both the buyer and seller are knowledgeable of its worth and there is no pressure to buy or sell. In real estate, the fair market value is usually determined by an appraisal.

FHA Loan:
A loan by the Federal Housing Administration (FHA) open to all qualified home purchasers. There are some limits to the size of FHA loans; however, they are generous enough to handle moderate‐priced homes almost anywhere in the country.

FHA Mortgage Insurance: Requires a small fee paid at closing or this fee is broken up into the monthly payment of the FHA loan to insure the loan. This fee can be up to 3% of the loan amount.

FICO:
An acronym for Fair Isaac Company, Inc., which developed the credit scoring model that assesses credit risk. This is the most commonly used credit score.

Finance Charge:
The cost of consumer credit expressed as a dollar amount.

First Mortgage:
A primary mortgage on a property that has priority over all other claims to title. Fixed-rate Mortgage (FRM): A home loan with a predetermined interest rate which will remain the same over the life of the loan.

Float Period:
A period of time occurring when a loan is accepted and the rate is locked-in. Until this rate is locked-in, the interest rate and points on the loan will fluctuate.

Foreclosure:
A legal proceeding in which the property securing debt is sold to pay the defaulting borrower’s debt.

 

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