Debt Ratio
Ratio of debt to gross income, often expressed as a front (housing payment only) or back (all debt) ratio. Example: $5,000 monthly income, $1,400 housing payment, $1,700 total debt would equal debt ratios of 28%/34%.
Down Payment
Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount.
Equity
The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current mortgage and other liens. Real estate equity should be managed just like any other investment.
See your CMPS professional for details.
Escrows
The portion of the monthly payment that is not applied to principal or interest, but rather is used to pay mortgage insurance, homeowners insurance and property taxes.
Fannie Mae
Short name for the Federal National Mortgage Association. One of the main Government Sponsored Agencies which are the companies who sell mortgage backed bonds to investors. They are the ultimate source of the money that we lend. Fannie Mae protects its investors by issuing underwriting guidelines that are to be followed to ensure quality lending.
Freddie Mac
Short name for Federal Home Loan Mortgage Corporation - see above
FHA Financing
Government backed minimum down financing program which has a lower mortgage insurance premium and greater credit leeway as compared to conventional minimum down programs.
Fixed Rate Mortgage
A mortgage in which the interest rate remains constant and fixed throughout the life of the loan.
Floating
Not locking in a rate, but rather choosing to float the interest rate as the market moves up or down.
Flood Certification
Required document on all loans. Confirms if the property is in or out of a FEMA designated flood zone.