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GLOSSARY
Flexible payment ARM
A flexible payment ARM, also known as an option ARM, is an adjustable-rate mortgage that gives the borrower a choice of payment levels each month. These levels might range from a minimum payment that is less than the month's interest, up to a 30-year, fully amortizing payment. If the borrower chooses to make the minimum payment, the unpaid interest is added into the loan balance and begins accruing interest in the next month.
Flexible spending account
A flexible spending account, or FSA, is a tax-advantaged deposit account offered by employers to their employees. Employees are allowed to contribute a certain amount of pre-tax wages to the account, which is then used to pay for qualified expenses (such as dependent care or medical expenses).
Flexible spending account - FSA
A flexible spending account, or FSA, is a tax-advantaged deposit account offered by employers to their employees. Employees are allowed to contribute a certain amount of pre-tax wages to the account, which is then used to pay for qualified expenses (such as dependent care or medical expenses).
Flipping
Flipping is the practice of buying real estate properties and then selling them at a profit. Generally, flipping involves making improvements to the property to generate the necessary value increase, but some investors might choose to hold the property and wait for it to appreciate naturally before selling.
Float
The amount of time the bank takes to clear or reject a check for payment.
Float period
The time between when you accept a loan and when you lock-in your rate. During this time the interest rate and points on your loan will fluctuate with the market.
Floating
Floating, in general usage, means variable or not fixed. In lending, floating (as in floating rate) is sometimes used to describe a loan that has an adjustable interest rate. In timeshare ownership, floating describes ownership rights that aren't limited to a designated week or weeks of the year; the owner has the right to use the property for the specified length of time, but the exact dates of usage aren't defined.
Floating debt
Floating debt is short-term borrowing that's continuously renewed. This is an alternative to long-term financing that a company might use if it expects market interest rates to move down over time. If rates do go down, the company has the ability to lower its interest costs. The risk is that rates will go up instead, forcing the company to take the higher market rates.
Floating lien
A floating lien is a legal claim that applies to a group of assets, rather than a specific asset. Floating liens are used when the composition of the collateral is expected to change through the course of regular activities. An example would be a lien against a company's accounts receivable, which change daily as customers are invoiced and payments are received.
Floating rate
Floating rate is used synonymously with adjustable rate; both terms describe an interest rate that may vary over the life of a debt.
Floating time
Floating time describes a type of timeshare ownership where the owner can exercise the use rights at any time throughout the year, as long as it's available. The alternative is fixed-time ownership, where the owner is limited to using the property during specific dates.
Flood certification fee
This fee is required by the federal law in order to obtain flood certification insurance if your property lies in a flood zone. This fee is included in the closing costs.
Flood insurance
Insurance coverage for damage to physical property due to floods. It is necessary for properties located in federally termed flood areas.
Flood plain
A flood plain is low-lying land that's known to become submerged in water occasionally due to inclement weather and/or overflow of a nearby body of water.
Floor
A floor, in general usage, is the lower surface in a structure. In finance, a floor is the lowest possible value for a certain transaction. Adjustable-rate loans, for example, often have an interest rate floor, which is the minimum interest rate charged on the debt, regardless of what happens to the underlying index.