Glossary Terms F-J
F | G | H | I | J
FEASIBILITY ANALYSISAn analysis to determine the feasibility of a project. Details of construction costs, projected income from the project plus location and economic factors affecting the project will be required. Similar to a feasibility study by a developer conducted to decide whether to proceed with plans and required by the lender to decide whether to provide funds.
FEE SIMPLEThe highest estate or absolute right in real property.
FINAL ORDER OF CLOSUREJudgement taken against a mortgagor, extinguishing the equity of redemption.
FINANCING STATEMENTA statement filed by a creditor in a public records office identifying the parties, giving their addresses, and describing the collateral.
FIRST MORTGAGEThe mortgage agreement which has first claim on the property in the event of default.
FIRST MORTGAGE BONDBonds issued by a corporation secured upon the property and earnings of the issuing corporation.
FIXED RATE MORTGAGEThis is the usual form of mortgage where interest rate remains the same during the entire life of the loan.
FIXTURESPermanent improvements to property that may not be removed at the expiration of the term of lease or tenure.
FLAT PAYMENTAn all inclusive monthly payment that is calculated to include principal interest and taxes. Under this system there is no specific breakdown as t the amounts of the principal, interest and taxes.
FLOATING RATE OF INTERESTRate of interest which fluctuates according to prime lending rates, eg. 2% above prime rate usually chargeable on short term loans such as construction loans.
FLOOR TO CEILING LOANA permanent loan or advance made in two stages, (a) on completion of construction according to agreed upon terms and conditions, and (b) the balance advanced upon occupancy or upon cash flow requirements.
FORECLOSURERemedial court action taken by a mortgagee when default occurs on a mortgage, to cause forfeiture of the equity of redemption of the mortgagor.
FORWARD COMMITMENTLender’s commitment to make or assume a future loan.
FREEHOLDThe ownership of a tract of land on which the building(s) are located. The oldest and most common typed of ownership of real estate.
FULLY AMORTIZED LOANA mortgage loan wherein the stipulated repayments repay the loan in full by its maturity date.
FURTHER CHARGEA second or subsequent loan of money to a mortgagor by a mortgagee, either on the same or on an additional security.
G/E CAPITOLThe General Electric Capitol Corporation insures high ratio mortgages for lenders.
GALE DATEThe dates on which interest is charged or compounded on the mortgage loan.
GAP FINANCINGA loan required by a builder to obtain funds during the period between a permanent take out commitment and a construction loan. The construction lender will usually require permanent mortgage commitment to the full amount of the construction loan plus a hold back provision that only the “floor” amount will be funded at the completion of construction.
GRADUATED AMORTIZATION MORTGAGEA special method of repayment on a mortgage whereby repayments in the initial period are low and are gradually later stepped up at a higher rate. Graduated payments mortgages were devised to enable lower income families to become home owners.
GRANTA technical term used in deeds of conveyance to indicate a transfer of an interest or estate in land.
GRANTEEThe party to whom an interest in real property is conveyed (the buyer).
GRANTORThe person who conveys an interest in real estate by deed (the seller).
GROSS RENT MULTIPLIERMethod of appraising the fair market value of property by multiplying the gross rents by a factor which varies according to the type of property, and the location o the property.
GUARANTEED INCOME MORTGAGEA guarantee included in a purchase money mortgage by a seller-mortgagee that there will be a minimum cash-flow or net operating income to the purchaser mortgagee. The guarantee is limited to a short period and may be combined with a management contract whereby the seller as manager will operate the property.
GROSS DEBT SERVICE (GDS)The percentage of gross annual income required to cover payments associated with housing.
GROSS DEBT SERVICE RATIOAllowable ration of payments for principal, interest and taxes to gross income.
GROSS INCOMEThe scheduled income from the operation of the business of the management of the property, customarily stated on an annual basis.
GUARANTORA third party without interest in the property who agrees to assume responsibility for a debt in the event of default by the mortgagor.
HIGH RATIO MORTGAGEA mortgage loan which exceeds 75% of the lending value of the property, and must be insured against default of payment.
HOLD BACKAn amount of money retained by a construction lender or owner until satisfactory completion of the work performed by a contractor.
IMMEDIATE PARTICIPATION LOANA loan in which all of the partners contribute their share immediately.
INCOME BONDBonds which pay a fixed rate of interest contingent upon earnings. These bonds may originate from a reorganization because of a default on mortgage bonds.
INCOME/EXPENSE RATIORatio of operation expenses to gross income and expressed as a percentage (also known as operating ratio).
INCOME PROPERTY LOANA loan which is secured on property which already has a source of income, eg. Rents which will cover the debt service payments on the loan.
INDENTUREA document of deed, usually in duplicate, expressing certain objects between the parties.
INJUNCTIONA judicial process or order requiring the person to whom it is directed to do or refrain from doing a particular thing.
INSTRUMENTA form of written legal document.
INSURABLE VALUEThe term is used conventionally to designate the amount of insurance which may be carried on destructible portions of a property to indemnify the owner in the event of loss.
INTEREST (Rate)The profit of a loan as expressed on a percentage basis.
INTEREST ADJUSTMENTA date from which interest on the mortgage advanced is calculated for your regular payments. This date is usually one payment period before regular mortgage payments begin, as interest payable is due from the date your mortgage is advanced.
INTEREST ESCALATIONRate of interest on a loan is raised periodically during the term of the loan so as to encourage early repayment.
INTEREST ONLY LOANBorrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.
INTERIM FINANCINGInterim loans are used to bridge the gap between the construction loan and the permanent loan (hence “bridge” loans) lasting form one to three years.
INTERMEDIATE TERM LOANA short-term loan from 3 to 5 years with no or partial amortization (balloon loan).
INTESTATEA person who dies without a will, or leaves one which is defective in form, in which case the estate descends by operation of law to the next of kin.
IRREVOCABLEIncapable of being recalled or revoked; unchangeable, unalterable.
JOINT AND SEVERAL NOTEPromissory note on which there are two or more promisors who are jointly and severally liable.
JOINT TENANCYOwnership of land by two or more persons whereby, on the death of one, the survivor or survivors take the whole estate.
JUNIOR FINANCINGThis is a subordinate mortgage or loan very often given by a seller of property, second in priority to an existing loan.
