Glossary Letter: F

A fixed interest rate is a rate on a loan or mortgage that remains constant throughout the term of the loan. Unlike variable rates, which can fluctuate with market conditions, a fixed rate provides predictable monthly payments and stability for borrowers. This stability can simplify budgeting and financial planning.  Offering fixed interest rates can attract… Continue reading Fixed Interest Rate

A first mortgage is the primary loan taken out to purchase a property, secured by the property itself. It has priority over any subsequent mortgages or liens, meaning it must be repaid before other claims in the event of foreclosure. First mortgages typically have lower interest rates compared to second mortgages due to their primary… Continue reading First Mortgage

A Federal Housing Administration (FHA) loan is a government-backed mortgage designed to help borrowers with lower credit scores or smaller down payments, qualify for a home loan. These loans offer competitive interest rates and lower down payment requirements, making homeownership more accessible.  FHA loans are important for expanding borrower eligibility and managing risk, as the… Continue reading Federal Housing Administration (FHA) Loan

Fair Market Value (FMV) is the estimated price at which a property or asset would sell in an open and competitive market. It represents the value agreed upon by a willing buyer and seller, both knowledgeable and acting in their own interests. FMV is used in various financial contexts, including loan management, to determine collateral… Continue reading Fair Market Value (FMV)

Foreclosure is the legal process by which a lender takes possession of a property used as collateral for a loan that is in default. This happens when the borrower has consistently failed to make their loan payments. Foreclosure allows the lender to recoup the money they loaned by selling the property. The proceeds from the… Continue reading Foreclosure

A FICO Score is a credit scoring model widely used by lenders to assess an individual’s creditworthiness. Developed by the Fair Isaac Corporation (FICO), this three-digit number ranges from 300 to 850 and provides a snapshot of a person’s credit risk at a specific point in time. Higher scores indicate lower credit risk, making borrowers… Continue reading FICO Score

A loan forbearance is a temporary postponement in a borrower’s regular loan payments. Loan forbearance is not automatic. Borrowers must apply for deferment through the lender. It is granted for a predetermined period under specific circumstances, typically when a borrower experiences temporary financial hardship.  Loan management software helps facilitate the deferment process, track the forbearance… Continue reading Forbearance

Form 1098, also known as the Mortgage Interest Statement, is a document used by taxpayers in the United States to report the amount of mortgage interest and related expenses paid on a mortgage during the tax year. Lenders are required to provide this form to borrowers who have paid $600 or more in mortgage interest… Continue reading Form 1098