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Glossary

Fair Credit Reporting Act

A federal law that, among other things, gives you the right to see your credit reports from credit reporting agencies, and allows you to examine and correct information.

Fair Housing Act

A Federal law that prohibits discrimination in the sale, rental, and financing of housing on the basis of race, color, national origin, religion, sex, family status, or disability.

Fair Market Value

The price that a willing buyer and seller agree upon in the open market when given comprehensive information about a home's worth.

Fannie Mae

The Federal National Mortgage Association (FNMA) — a privately-held corporation created by Congress to help make mortgages more available and more affordable. Fannie Mae purchases and sells mortgages to and from lenders on the secondary mortgage market, and is the nation's largest source of home mortgage funding.

Federal Housing Administration (FHA)

U.S. agency that sets standards for underwriting mortgages and insures residential mortgage loans from private lenders. A division of the Department of Housing and Urban Development (HUD).

Federal Housing Administration (FHA) Mortgage

An FHA-insured and guaranteed mortgage loan designed to make purchasing a home more affordable, especially for the first-time homebuyer. FHA loans feature lower down payments and higher qualifying ratios than most conventional mortgages. There are some limits to the amount of money that can be borrowed.

First Mortgage

A mortgage that is the primary lien on a property, and is the first to be paid.

Fixed Interest Rate

An interest rate that does not change for the entire term of the loan.

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the entire term of the loan. The monthly payments on the principal and the interest are fixed for the life of the loan.

Float Rate

See Rate Float.

Flood Insurance

Special hazard coverage from a reputable flood insurance provider — required for properties located in specially designated flood hazard areas, but generally recommended for all properties.

Foreclosure

A legal proceeding in which the lender takes possession of a property and sells it at public auction if the homeowner neglects to make mortgage payments.

Freddie Mac

The Federal Home Loan Mortgage Corporation (FHLMC) — a stockholder-owned corporation created by Congress that buys mortgages from lenders and resells them as securities on the secondary mortgage market. Considered a sister agency — and competitor — to Fannie Mae.

Funding of a Loan

The mortgage lender issues an agreed-upon amount of money to the seller of a property or a homeowner who is refinancing. Funding frequently takes place at closing.