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Fair market value Fixed rate mortgage
Federal Home Loan Mortgage Corporation (Freddie Mac) Fixture
Federal Housing Administration (FHA) Foreclosure
Federal National Mortgage Association (Fannie Mae) Front ratio
Fee simple Full disclosure
FHA mortgage Functional obsolescence

Fair market value
The price that would normally be agreed upon by a buyer and seller in a fair market

The fair market value is usually determined by comparable sales in the same area.

See: Comparable sale (comp)

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Federal Home Loan Mortgage Corporation (Freddie Mac)
A somewhat government sponsored agency that buys mortgages in the secondary market

Freddie Mac buys loans from lenders and then sells them to other lenders and investors in the secondary market. This process has proven to be very successful.

See: Secondary market, Conventional mortgage

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Federal Housing Administration (FHA)
A federal agency that insures first mortgages

The FHA offers a type of mortgage insurance on first mortgages (provided that the buyer meets certain criteria) allowing the lender to loan a higher percentage of the sale price than is standard.

See: FHA mortgage

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Federal National Mortgage Association (Fannie Mae)
A private corporation that purchases first mortgages at a discounted price

Fannie Mae buys loans from lenders and sells them to investors and other lenders in the secondary market. Fannie Mae only buys loans that conform to their borrowing guidelines.

See: Secondary market, Conforming loan

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Fee simple
A synonym for ownership

Fee simple allows the owner to have unlimited control over a property. This term can be found on the deed to the home.

See: Estate

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FHA mortgage
A loan meeting certain guidelines that is guaranteed by the Federal Housing Administration

FHA mortgages require a low down payment, usually about 3% of the loan amount, which may make approval easier to obtain. FHA mortgages may also offer low interest rates. However, you can only borrow up to a certain amount, and you have to pay both an up-front fee and monthly premium for insurance. To be eligible, the buyer must plan to live in the home that is purchased.

See: Government mortgage
Compare: Conventional mortgage, VA loan

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Fixed rate mortgage
A loan with an interest rate and payment that do not change for the life of the loan

The main benefit of a fixed rate mortgage is that the payments are set, so there are no surprises. However, the interest rates on fixed rate mortgages are normally higher than the initial interest rate on an adjustable rate mortgage.

Compare: Adjustable rate mortgage

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Fixture
Personal property that is attached to real property that becomes a permanent part of the real property

Custom-made drapes or appliances made to fit a home, like a built-in microwave and a stove, are fixtures. When selling a home, fixtures must remain in the home unless notification is made in writing that the fixture will be removed.

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Foreclosure
When a lender takes legal possession of a home in order to sell it to repay a loan in default

This process varies from state to state, but in general, a foreclosure is an auction either with or without court action. The highest bidder wins the home.

See: Trustee's sale, Default, Judicial foreclosure

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Front ratio
A calculation of your total monthly housing expenses divided by your gross monthly income

Lenders use a front ratio as a guideline to see if you qualify for a loan. Acceptable front ratios vary from lender to lender. You can calculate the total monthly housing costs for a single family home by adding up the loan's principal, interest, property taxes, property insurance and if applicable mortgage insurance. For condominiums, cooperatives and PUDs, also add the cost of Home Owners' Association dues. Then, divide the total of the monthly housing costs by your gross monthly income.

Compare: Back end ratio, Loan to value ratio (LTV)

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Full disclosure
Revealing all the known facts which may assist the buyer/seller in making a decision

The broker, seller, lender and builder are required by law to make any information that may affect the buyer’s decision readily available to the buyer. The buyer must know if there are any defects in the property and (if it is a new development) the facts of the development, such as surrounding facilities. Before a broker can charge a commission, the buyer/seller must know the charge and agree to the terms.

See: Good Faith Estimate

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Functional obsolescence
The decrease in a property’s value due to outdated design or materials

The market value on a home that does not have enough electrical power to run a television, dishwasher and washing machine at the same time will decrease.

See: Appraisal/Appraiser

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