Façade

Outside front wall of a house.

Fallout

Fallout refers to mortgage applications(forms) which were withdrawn by people, who have either changed their mind or found a better deal.

Fair Market Value

Market value of real estate property. In case owner sold his property, it would be the price both buyer and seller agreed upon.

Fee Simple / Fee Simple Estate

Complete ownership of the property. For example, Ron paid out his mortgage, paid all the costs associated with his house and now has complete ownership to that property.

Fee Simple Defeasible

Ownership of the property, where ownership is granted under certain conditions. For example, Alice may be granted ownership to the land as long as she uses that land for farming purposes. In another words she’s been granted fee simple defeasible.

FICO Score

FICO Score refers to the score given out by credit agencies(Equifax, Transunion) in a credit report. Mortgage lenders require FICO for mortgage approval purposes. FICO takes into account credit history, frequency with which applicants use credit and a number of other factors. FICO website.

Fiduciary

Representative who acts in the best interests of the party he is representing. For example, a mortgage broker will act in the best interest of the borrower. A real estate agent will act in the best interest of the buyer / seller he is representing.

Fiduciary Duty

A duty where a person or a company has to represent client’s best interests. For example, I hired Evelyn as my real estate agent. Her job is to represent my best interests or in other words to carry out Fiduciary Duty. Those who carry out Fiduciary Duty are called Fiduciaries.

Field Changes

Building modifications made on the spot.      

Filled land

Ground which was raised by adding soil on top of it.

Filing Extension

Filing Extension refers to tax filing process. It is the additional time given to file a tax return.

Finance Charge / Final price

Total cost of a new mortgage. It includes: brokerage fees, loan interest, commitment fees and other charges. Finance charge must be disclosed by law.

Finance Broker / Mortgage Broker

A broker(agent) who takes care of a mortgage loan for his customer. This includes documentation, arrangements with lenders and other associated tasks.

Finder Fee

Finder fee is a fee paid to a real estate agent who finds suitable property for his client and client buys it.

Filing Fee

Fees that are charged by a courthouse for processing documents associated with the sale of real estate property. This includes: deed transfer, mortgage documentation, etc.

Firm Commitment

A promise by the lender to lend money to the borrower, for a specific amount in a specific period of time. For example, Ron wants to buy house. He went to his bank and the bank promised to give him a mortgage to purchase that house.

Firm Offer

Offer, with certain conditions, valid for a limited period of time. For example, Kate is selling her house for $600.000. Cathy makes an offer to Kate, to buy that house for $550.000 and gives her two weeks to think. Cathy also states - if Kate doesn’t take it in two weeks, she will not buy it, making a firm offer.

First Lien / First Mortgage

First debt on a property. For example, a piece of land belonged to Ron who inherited it from his ancestors, who owned that land for generations. Ron sold that land to a private construction firm. That construction firm took a loan from YYY bank to finance the purchase, putting a first lien on that property.

First Time Buyer

A buyer who never bought a house before, hence never had a mortgage.

First Rate Adjustment

First rate adjustment refers to an adjustable rate mortgage(ARM). In an adjustable rate mortgage, interest rates adjust every month(also 6 months or more) according to the market. Once a borrower gets a new ARM, he has fixed interest rate until a certain date when the interest rate adjusts. The first time this happens is called first rate adjustment.

For example, Alice got herself a new adjustable rate mortgage. It is going to change interest rates every month as per contract. First time it changes is going to be first rate adjustment.

Interested in Adjustable Rate Mortgages? Visit Canada Mortgages Website. http://www.mortgagescanada.ca/index.html

Fiscal Deficit

When government spends more then it makes. It is able to do so by borrowing money from other countries or international banks. Good example is United states with over – $ 10,000,000,000,000 (trillion) of debt.

Fiscal Policy

Attempt by a government to change course of the economy by changing taxes or government spending.

Fiscal Surplus

An indicator which measures government savings/spending. Fiscal surplus indicates whether the government is spending too much or is saving too much.

Fit-out / Fit Out

Tenant adjustments, upgrades and improvements to commercial property. For example, I rent an apartment. I may change the bathroom or flooring to my taste(if allowed), making a fit-out.

Fixed Assets

Assets which are in use and are not for sale. For example, Ron has a car which he uses in his business to transport materials. It is not for sale since it is an asset he has to have in order to operate his business, meaning it is a fixed asset.  

Fixed Expenses

Real estate property expenses that stay the same, no matter who lives there. For example: property taxes, electricity, gas and water.

Fixed Installment

Monthly mortgage payment which does not change. It is usually the case in a fixed rate mortgage. Once the borrower picks a term(10, 15, 20, 25, 30 years) payments become fixed and do not change.

Fixed Rate Mortgage / FRM / Fixed-rate option

A type of mortgage with an interest rate that does not change or “float” as an adjustable rate mortgage. Fixed Rate mortgage locks into an interest rate for a term agreed between the lender and the borrower. The terms can be: 10, 15, 20, 25, 30, 35 years and more. Once the borrower decides on the term, lender takes current interest rate and locks it for the borrower, for a specific period of time.

For example, Julia got a Fixed Rate Mortgage from her lender for 25 years. Current rates are 6%. She can lock that rate for the duration of her mortgage, which is 25 years or pick a shorter term.

With longer terms(25 years) Julia will pay higher interest rates, since her bank is taking the risk of rates going up and not charging Julia. 

With shorter term, interest rates will be lower.

Fixed-Markup UML / Fixed-Markup Upfront Mortgage Lender

A Mortgage Lender who discloses his wholesale mortgage rate. Lenders, like other institutions borrow money from central banks. They also have to pay interest rates to central banks. In order to make profit, they rise interest rates for everyday borrowers. The interest that they pay to the central bank is what is known as the Fixed-Markup or wholesale mortgage rate.

For example, YYY lender borrowed money from a MMM central bank at 4% interest rate. YYY gave a mortgage to a home buyer at 6% interest with that money. The Fixed mark-up in that case will be 4%, since that is the rate at which YYY lender borrowed money from central bank.

Fixer-upper

Property that requires a lot of renovation work and which is selling for less because of it.

Fixture

Piece of additional property attached to a building, that originally was not there.  For example, Ron built an extra garage attaching it to his house. Ron can enter into that garage from his house, meaning that he made a fixture.

Flat Fee

Fixed charge that broker may request, instead of commission.

Flex Space

Commercial Property which has a both offices and industrial facilities. For example, General Motors property will have both the auto manufacturing plants and offices in one location.

Flexible Payment ARM / Flex ARM

Sometimes referred to as an exotic mortgage. Flex ARM allows borrowers to choose payment options from various types of mortgages.

• Interest only payment
• Negative amortization
• 30 year fixed mortgage
• 20 year fixed mortgage

Every month, a bank statement comes in, offering borrowers those options.

Interest Only Payment: Pay only the interest rates, with no money going towards reducing principal(total amount borrowed).

Negative Amortization: Pay only the interest rates. A statement specifies an amount of money to be paid, anything short of that amount is added to the principal, which is then put under additional interest.

30 Year Fixed: Pay a monthly amount as if you had a 30 year, fixed rate mortgage (interest+principal)

20 Year Fixed: Pay a monthly amount as if you had a 20 year, fixed rate mortgage (interest+principal)

Bank/Lender does all the calculations each month. Flex ARMs provide people with various options and may be useful to people who want flexibility in their monthly payments.

Are you interest in Flex ARM mortgage? Let Canada Mortgages help. http://www.mortgagescanada.ca/index.html

Float

Lenders adjust their interest rates according to the prime rate released by the Bank of Canada. The difference between the prime rate and the interest rate offered by the banks is called “float”. For example, current prime rate is 4%. Banks added 2% on top of it and charge 6% to new borrowers. The difference of 2% is called “float”

Float-down

Float-down is similar to the lock(fixed rate), however, it has a different option. With a lock, borrower guarantees to pay the same rate even if the rates go down and lender guarantees to charge the same rate if the rates go up. Float-down is similar, however with float-down borrowers can decrease their interest rates while being in a lock.

Suppose Jill had a fixed rate mortgage at 6% interest rate, fixed(locked) for 10 years. She decided to sign up for the float-down.
Interest rates went down to 5%. Since Jill has a float down, she can get this new rate of 5% instead of 6% and stay locked with it for the rest of her term.

Float down is a very beneficial option, but it comes at high price to the borrowers, which is usually percentage of the total mortgage.

Flood Insurance

Insurance that covers property damage in case it gets flooded.

Flood Plain

Land that stands a high chance of being flooded.

Floor-to-area Ratio / Floor to Area Ratio

Ratio between total square footage on any given floor in a building to the base of that building. The bigger the ratio, the more floors you can build.

Flying Freehold

A part of a property which is extended over someone else’s property. For example, a part of the kitchen maybe be overextended over the neighbors roof, making it a flying freehold. 

For Sale By Owner / FSBO

Property which is on sale by owner of the property.

Forbearance / Forbearance agreement

Lenders decision to give borrower extra time to make up for missed payments and hold off new payments. For example, Kate missed a payment to her lender and is now a $1000 short. Her lender may hold off the next statement and give Kate a chance to catch up, giving her forbearance.

Foreclosure

When borrower misses payments and fails to follow the contract, lender has a right to take away borrowers property and sell it, in order to cover the unpaid mortgage.

Foreign Currency

Currency(money) from another country, which can be exchanged for local money.

Foreign Currency Surcharge

When a purchaser uses his credit card in another country, credit card companies charge a fee for currency conversion which is called foreign currency surcharge. For example, Alina from US, went to Italy and used her VISA credit card to buy shoes. She will be charged Foreign Currency Surcharge since US dollars on VISA will have to be converted to EURO.

Foreign Exchange / Foreign Exchange Market / FX

Foreign exchange is the biggest money market in the world. It is the place where currency is traded for one another. Central Banks, Brokers, corporations, governments, private investors and other financial institution – all engage in currency exchange process.

Foreign Exchange Rate

Price at which money is exchanged in another country. For example, one Canadian Dollar can buy 0.67 EURO in Canada and one EURO can buy 1.4 Canadian dollars in Europe.

Forfeiture

Loss of property because of failure to meet contract obligations. For example, George fails to pay for his mortgage. George’s lender may take away his property due to non payment, meaning that George will experience forfeiture.

Foyer

Lobby(hall).

Franchise

The right given by a company to another company, to market it’s products or services. For example, YYY company may allow AAA company to sell products made by YYY.

Franchise Fees

Fees associated with franchise privileges. When a company allows another company to sell under its name - it is giving that company franchise privileges. Corporations charge franchise fees for this privilege, which may be a percentage of gross sales, flat charges or stock shares.

Fresh Start

When a person goes through bankruptcy, that person is given a fresh start. He/she has no debt and people refer to it as a fresh start.

Freeloader

Credit card holder who pays off credit card each month in full – paying no interest.

Fringe Benefit

Life, health, dentist and other insurance policies provided by an employer.

Front-end Ratio / Front Ratio

Ratio Between Monthly bills and monthly income.

Monthly housing expenses include – mortgage, electricity, food, water, etc.

Front-end fee

Mortgage broker income, received from a borrower as opposed to a lender. Income may be a flat fee or a commission from a mortgage. Back-end fee is broker income received from a lender.

Full Income Verification

Full verification of stated income. Mortgages with verified income come at cheaper interest rates than those that do not require income verification.

Fully Amortized Adjustable-rate Mortgage / Fully Amortized Adjustable Rate Mortgage

Amortization: time it takes to pay for a mortgage(15 years, 30 years, etc)
Adjustable Rate Mortgage: mortgage with an adjustable interest rate, which adjusts every month or more.

Fully Amortized Adjustable-rate Mortgage refers to an adjustable rate mortgage which is fully repaid.

Fully Amortizing Payment

Amortization: time it takes to pay for a mortgage(15 years, 30 years, etc)
Amortization Payment: payment that goes towards reducing principal and interest rate each month.

Fully amortizing payment refers to the payment which, if maintained unchanged will pay out a mortgage.

Fully Indexed Interest Rate

Interest rates are tied to an index. Whenever the index goes up, so do the rates. Whenever index goes down, so do the rates. On top of the index, banks charge their own rates. For example, if index is 3%, banks may add 3%, making end mortgage cost 6% in interest. Fully indexed rate refers to the rate that borrowers get when they apply for a mortgage. In the case of our example it is 6%.

Full Structural Survey

Complete inspection of a property. It includes: defects, walls, insulation, drainage, timber, woodwords and more.

Futures

Investment securities, used it stock trading.