Definitions and explainations of mortgage terminology.
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Mortgage Glossary
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Discount Points or Points - Amounts paid to the lender based on a percentage of the loan amount to lower or "buy down" the interest rate. Each point represents one percent of the loan amount. For example, one point on a $100,000 mortgage is 1% of $100,000, or $1,000. Paying one point on a 30 year fixed mortgage might buy down your interest rate 1/8 (.125) of one percent. Discount points are used to calculate your Annual Percentage Rate. |
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Mortgage Glossary
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Fannie Mae (FNMA) – The nickname for Federal National Mortgage Association. Fannie Mae is a federally chartered, shareholder-owned company that is the nation’s largest source of financing for home mortgages. They purchase residential mortgages, then sell and insure securities, called Mortgage-Backed Securities (MBS), based on those mortgages to investors. Loans that fall within Fannie Mae's underwriting guidelines, and therefore may be bought and securitized by Fannie Mae, are called conforming loans. |
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Mortgage Glossary
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Federal Housing Administration (FHA) - An agency of the U.S. Department of Housing and Urban Development (HUD). They primarily insure residential mortgage loans made by private lenders. Borrowers pay the premiums for this government backed mortgage insurance. Borrowers with FHA insured loans can have a down payment of as little as 3% of the purchase price of their home. FHA's programs are designed to make home ownership more reachable by middle to lower income borrowers Maximum loan amounts are periodically adjusted and vary by region. |
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Mortgage Glossary
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Fixed Rate means that the interest rate is "fixed" or, does not change, for the term of the mortgage. All else equal, the interest rate on fixed rate mortgages is higer than the initial rate for an adjustable rate mortgage. |
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Mortgage Glossary
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National Flood Insurance is available to any property owner whose local community participates in the national program by adopting and enforcing flood plain management. Federally regulated lenders are required to compel borrowers to purchase flood insurance in certain designated areas. Lenders also must disclose to borrowers if their structure is located in a flood hazard area. |
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Mortgage Glossary 
