| Term |
Definition |
| 10 year fixed |
A loan with the same
interest rate and payment over the entire 10 year life of the loan.
As one of the shorter loan terms available, 10 year fixed loans
offer lower lifetime interest payments than similar loans with
longer terms, but you also have a higher monthly payment. |
| 15 year fixed |
You generally pay a lower
interest rate with a 15 year loan. You will pay less interest and
build equity quickly. |
| 20 year fixed |
The 20 year fixed loan is a
good way to have fixed payments and shorten the term of your loan.
You will build equity faster, pay less interest, and own your home
sooner. Your monthly payments will be higher since the term is
shorter. |
| 25 year fixed |
A loan with the same
interest rate and payment over the entire 25 year life of the loan.
As one of the longer loan terms available, 25 year fixed loans offer
lower payments, but you will pay more in interest over the life of
this loan than a similar loan with a shorter term. |
| 30 year fixed |
The 30 year fixed is one of
the most popular loans. Many people like the fixed interest rate and
lower monthly payments. But since the term of the loan is long, you
will pay more interest over the life of the loan. |
| 40 year fixed |
A loan with the same
interest rate and payment over the entire 40 year life of the loan.
As one of the longer loan terms available, 40 year fixed loans offer
lower payments, but you will pay more in interest over the life of
this loan than a similar loan with a shorter term. |
| Fannie Mae |
A tax-paying corporation
created by Congress that purchases and sells conventional
residential mortgages as well as those insured by FHA or guaranteed
by VA. This institution, which provides funds for one in seven
mortgages, makes mortgage money more available and more affordable.
Also Referred to as Federal National Mortgage Association. |
| Farmers Home
Administration (FmHA) |
Provides financing to
farmers and other qualified borrowers who are unable to obtain loans
elsewhere. |
| Federal Home Loan
Mortgage Corporation (FHLMC) |
Also called Freddie Mac, is
a quasi-governmental agency that purchases conventional mortgages
from insured depository institutions and HUD-approved mortgage
bankers. |
| Federal Housing
Administration (FHA) |
A division of the
Department of Housing and Urban Development. Its main activity is
the insuring of residential mortgage loans made by private lenders.
FHA also sets standard for underwriting mortgages. |
| Federal National
Mortgage Association (FNMA) |
Also known as Fannie Mae. A
tax-paying corporation created by Congress that purchases and sells
conventional residential mortgages as well as those insured by FHA
or guaranteed by VA. This institution, which provides funds for one
in seven mortgages, makes mortgage money more available and more
affordable. |
| FHA Loan |
A loan insured by the
Federal Housing Administration open to all qualified home
purchasers. While there are limits to the size of FHA loans, they
are generous enough to handle moderate-priced homes almost anywhere
in the country. |
| FHA Mortgage Insurance
|
Requires a small fee (up to
3 percent of the loan amount) paid at closing or a portion of this
fee added to each monthly payment of an FHA loan to insure the loan
with FHA. On a 9.5 percent $75,000 30-year fixed-rate FHA loan, this
fee would amount t o either $2,250 at closing or an extra $31 a
month for the life of the loan. In addition, FHA mortgage insurance
requires an annual fee of 0.5 percent of the current loan amount,
the more years the fee must be paid. |
| Finance Charge |
The total dollar amount
credit will cost. |
| Financing Concessions
|
Funds originating from an
interested party to the transaction used to reduce the mortgage
interest rate, subsidize the borrower's monthly payment, contribute
to the financing charges (such as discount points, loan fees,
commitment and/or origination fees), and pay borrower expenses (such
as application fees, homeowner association fees, appraisal fees,
transfer taxes, tax stamps, attorney fees, surveys, closing costs,
and title insurance). |
| Fixed Rate Mortgage |
A mortgage on which the
interest rate is set for the term of the loan. |
| Fixed Rate Mortgages
|
Characteristics of a fixed
rate mortgage: A rate that does not change during the life of the
loan. A consistent payment. Less risk because of payment stability.
|
| Float Period |
The float period refers to
the time between when you accept a loan and when you lock-in your
rate. During this time the interest rate and points on your loan
will fluctuate with the market until you lock. |
| Foreclosure |
A legal procedure in which
property securing debt is sold by the lender to pay a defaulting
borrower's debt. |
| Freddie Mac |
Is a quasi-governmental
agency that purchases conventional mortgages from insured depository
institutions and HUD-approved mortgage bankers. Also Referred to as
Federal Home Loan Mortgage Corporation.
|
