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Realty and Mortgage Terms and Definitions



Façade - The front outside wall of a building.

Face Interest Rate - The percentage interest rate that is shown on the actual loan note or document.

Factory Orders - Economic indicator that measures the total volume of orders placed with U.S. factories. Also includes inventory and order backlog components, which can offer insight into inflation and growth in the manufacturing sector. Frequency: monthly. Source: Commerce Department.

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 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, and the lowest price that a willing, but not compelled, seller would accept.

Fannie Mae - FNMA (Federal National Mortgage Association) 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 downpayment mortgages granted by some lenders.  The loan must meet the established guidelines of FHA in order to qualify for the insurance.

Federal Open Market Committee (FOMC) - Policy committee in the Federal Reserve System that sets short-term monetary policy objectives for the Fed. The committee is made up of the seven governors of the Federal Reserve Board, plus five of the 12 presidents of the Federal Reserve Banks.

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 Co-insured Mortgage - A mortgage for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the borrower’s default.

FHA Mortgage - A mortgage insured by the Federal Housing Administration (FHA). FHA loans are also known as government mortgages.

FICA - Tax taken out of an individual's income for social security.

Finance Charge - The total dollar amount credit will cost.

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.

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.

FSBO - For Sale By Owner. a home that is offered for sale without the use of a real estate agent.

Full Factual - A credit report that most mortgage lenders use to qualify applicant loans. It combines information from two or more national credit reporting bureaus.

Fully Amortized ARM - An adjustable-rate mortgage (ARM) with monthly payments that are sufficient to liquidate the remaining principal balance over the amortization term.