Debt consolidation - The process of bringing together multiple loans into a single loan. The primary advantages are to lower interest expense and to remove the hassle of sending payments out to multiple lenders.

Deferred interest - Interest amount that is put off from the total interest amount to be paid every month towards loan payment. The shortfall in interest is added to the principal loan amount (this is a negatively amortizing loan situation).

Delinquency - This term refers to unpaid monthly loan payments. If payment is not made within the 30 days period, the lender has the right to report the lack of payment to credit bureaus.

Down payment - This is the amount initially paid by a borrower when taking a loan. It is calculated as the difference between the property sales price and the loan amount. First mortgages usually go up to 20% of the sales price.

Due-on-sale clause - A clause in the loan agreement which states that in the event the property is sold the loan balance must be repaid to the lender. Under this situation, the borrower cannot transfer responsibility of the loan or the existing terms and interest rates of the mortgage to another buyer.

Effective rate - This rate represents the interest cost for a borrower, and it is measured in terms of the actual time horizon of the loan compared to the term of the loan. The effective rate is usually higher than the APR since most loans do not stay for the entire term.

Equity - The difference between the current value of a property and the amount of loans outstanding.

Escrow - A 3rd party account which holds payments that are due to other parties. Escrow is used during settlement or closing to ensure that all parties get their payments (sellers, buyers, agents, local governments, loan brokers, title companies, insurance companies, appraisers, lawyers, etc, etc, etc….

Flexible Payment ARM - This is a new class of hybrid loans that employ the following features: 1) It is usually an ARM (interest rates vary usually monthly), 2) The borrower has a choice of payments – the lowest often is an amount that negatively amortizes, a payment that is at the interest only level and a payment that pays off the loan as with the same amortization schedule as a 30 year term. You should not use this type of loan unless you want a negatively amortizing loan as you are otherwise paying for this flexibility.

Fannie Mae - Fannie Mae has a federal charter and operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. They play an important behind the scenes role in the capital markets.

Fees - The total charges to be paid by a borrower up-front when taking a loan.

FHA mortgage - A mortgages which is insured by the Federal Housing Administration. It gives home-buyers the advantage of buying a home with a lower down payment than other loan types.

FICO Score - This is a score developed by Fair Isaac Corporation and is used by mortgage lenders to assess if a borrower is credit worthy or not. The score is Calculated from credit reports.

Financing points - Upfront payment (1 Percentage = 1 Point) to drive down the monthly payment. When comparing loans you have to compare points and interest rates.

First mortgage - The mortgage that has priority in claims against the property when the borrower fails to make regular payments on the loan.

Fixed rate mortgage (FRM) - A mortgage in which the interest rate is set at one rate during the entire loan period.

Float - The time taken by a bank to clear or reject a check for payment.

Float-down - This term is also called caps and it refers to the rate at which a mortgage is locked, after which the interest rate on the mortgage cannot rise, but can fall as a result of reduction in interest rate.

Foreclosure - This term refers to a process, by which property purchased through a home loan is sold off because the borrower has defaulted on loan payments. The money received by way of sale is used to pay off the mortgage debt

Forbearance agreement - This is an agreement between the borrower and the lender by which the lender will not proceed to foreclose the mortgage in exchange for a commitment by the borrower to a payment plan that will remove the borrower’s default on mortgage payments.

Freddie Mac - This is a government agency that buys residential mortgages from originators, which are then bundled and then sold to investors. This gives money to lenders to support new homebuyers. The mortgages that are purchased by this agency have to conform to guidelines. It are these guidelines that govern the lending process.

Front-end fee - Fees paid by the borrower to the mortgage broker.