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Mortgage Glossary Terms: F-G

May 12th, 2004 · No Comments

Farmers Home – Administration Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. (FMHA)

Federal Home Loan Mortgage Corporation – Also called Freddie Mac, is a quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD-approved mortgage bankers. (FHLMC)

Federal Housing Administration – 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. (FHA)

Federal National Mortgage Association – 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. (FNMA)

Fee Simple – The most common form of ownership where the vestee owns both the land and the structures.

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.

FHLMC (FREDDIE-MAC) – Federal Home Loan Mortgage Corporation.

Fixed-Rate Mortgage – A mortgage on which the interest rate is set for the term of the loan.

Flood Insurance – A mandatory insurance for some homeowners whose property is built in a designated flood zone.

FNMA – (FANNIE-MAE) – Federal National Mortgage Association.

Foreclosure – A legal procedure in which property securing debt is sold by the lender to pay a defaulting borrower’s debt.

Free and Clear – This means the property is completely paid for and has no liens attached.

Functional Obsolescence – A detraction from the property value due to the design or material being less functional than the norm.

GFE – Good Faith Estimate of Buyers Loan Charges.

Government National Mortgage Association (GNMA) – Also known as Ginnie Mae, provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA.

Graduated Payment Mortgage (GPM) – A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

Grant Deed – A Grant Deed is the most common form of title transfer deed. A Grant Deed contains warranties against prior conveyances or encumbrances.

Gross Monthly Income – The total amount the borrower earns per month, before any expenses are deducted.

Guarantee – A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Category: Mortgage