FHA loans glossary

The Federal Housing Administration, part of HUD, which insures qualifying mortgages.

Why it matters for FHA loans: “An FHA cash-out refinance replaces your current mortgage (FHA or not) with a new FHA-insured loan larger than what you owe, paying you the difference.” From FHA Cash-Out Refinance: How It Works

Appears in 4 guides: FHA Cash-Out Refinance: How It Works, FHA Cash-Out Occupancy and Seasoning Explained, FHA Cash-Out Appraisal and Property Standards and more

An independent opinion of market value used by the lender.

Why it matters for FHA loans: “Full appraisal by an FHA-roster appraiser.” From FHA Cash-Out Refinance: How It Works

Appears in 3 guides: FHA Cash-Out Refinance: How It Works, FHA Cash-Out Appraisal and Property Standards, FHA Cash-Out Refinance: The Process From Application to Funding

A refinance where the new loan exceeds the payoff and the borrower receives the difference.

Why it matters for FHA loans: “Because a cash-out refinance on your primary residence is secured by your home, you generally have a three-business-day right to cancel after signing.” From FHA Cash-Out Refinance: The Process From Application to Funding

Appears in 2 guides: FHA Cash-Out Refinance: How It Works, FHA Cash-Out Refinance: The Process From Application to Funding

The loan amount divided by the property value.

Why it matters for FHA loans: “Maximum loan-to-value: FHA sets a cash-out cap that is lower than the purchase limit.” From FHA Cash-Out Refinance: How It Works

Appears in 2 guides: FHA Cash-Out Refinance: How It Works, FHA Cash-Out Appraisal and Property Standards

The five-page form you receive at least three business days before closing showing final loan terms and costs.

Why it matters for FHA loans: “At least three business days before closing, you receive a Closing Disclosure.” From FHA Cash-Out Refinance: The Process From Application to Funding

Appears in 1 guide: FHA Cash-Out Refinance: The Process From Application to Funding

The standardized three-page form a lender must provide within three business days of application.

Why it matters for FHA loans: “Within three business days of a complete application, you receive a Loan Estimate.” From FHA Cash-Out Refinance: The Process From Application to Funding

Appears in 1 guide: FHA Cash-Out Refinance: The Process From Application to Funding

The right to cancel certain refinances of a primary residence within three business days after closing.

Why it matters for FHA loans: “After the rescission period ends, the loan funds.” From FHA Cash-Out Refinance: The Process From Application to Funding

Appears in 1 guide: FHA Cash-Out Refinance: The Process From Application to Funding

The company that collects payments and manages the loan after closing.

Why it matters for FHA loans: “Watch for a refund of your old escrow balance and a final statement from the previous servicer, and set up payments with the new servicer.” From FHA Cash-Out Refinance: The Process From Application to Funding

Appears in 1 guide: FHA Cash-Out Refinance: The Process From Application to Funding

The yearly cost of credit including interest and certain finance charges, disclosed under the Truth in Lending Act.

Monthly debt payments divided by gross monthly income.

A lender’s commitment to hold a rate and price for a set period.