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Floor - To - Area Ratio (FAR): The relationship between the total amount of floor space in a multi - story building and the base of that building. FAR's are dictated by zoning laws and vary from one neighborhood to another, in effect stipulating the maximum number of stories a building may have.
Foreclosure: The process by which a lender takes back a property on which the mortgagee had defaulted. A servicer may take over a property from a borrower on half of a lender. A property usually goes in to the process of foreclosure if payments are no more than 90 days past due.
Forward Commitment: A written promise from a lender to provide a loan at a future time.
Freddie Mac (Federal Home Loan Mortgage Corporation): Entity buys loans from conventional lenders and packages them for sale to investors as securities.
Government Loans: One of two loan types called FHA or VA loan. These loans are partially backed by the government and can help veterans and low-to-moderate income families afford homes. The advantages of these types of loans in that they often have a lower interest rate, are easier to qualify for, have lower down-payment requirements, and can be assumed by someone else if the home is sold. Many mortgage bankers can obtain these type of loans for you.
Graduated Payment Mortgages: A type of mortgage where the monthly payments start low but increases by a fixed amount each year for the first five years. The payment shortfall or negative amortization is added to the principal balance due on the loan. The advantages if this type of loan is a lower monthly payment at the beginning of the loan term. This disadvantages are typically a slightly higher rate than traditional fixed rate mortgage loan and lenders usually require a larger down payment. In addition, the negative amortized amount increases the balance due on the total loan which can be a problem if the value of the home declines.
Gross Income: Total income, before deducting taxes and expenses. The scheduled (total) income, either actual or estimated, derived from a business or property.
Growing Equity Mortgage: A type of mortgage where the monthly payments start low but increase by a fixed amount each year for the entire life of the loan as compared to five years with a Graduate Payment Mortgage. The advantage of this type of loan is that the loan can usually be paid off in a short duration than a traditional fixed rate loan. This disadvantage of this loan is that the payment continues to go up irrelevant of the income of the borrower.
Hard Equity: High interest rate financing.
Housing Ratio: One of several financial calculations performed by your lender when applying for a conventional loan to determine if you can afford a particular monthly payment. The housing ratio(also known as the income ratio) is your total monthly payment including taxes and insurance divided by your total monthly income. Typically acceptable housing ratios for Conventional Loans are 28 - 33% and FHA Loans are 29 - 31%.
HUD: Housing and Urban Development, a federal government agency.
Index: An economic indicator, usually a published interest rate, that determines changes in the interest rate of an adjustable - rate mortgage. ARM rates are adjusted to reflect changes in the index. The margin is the amount a lender adds to the index to establish the actual interest rate on an ARM.
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