The mortgage industry has many unique and confusing terms and acronyms. We hope these descriptions help you to better understand the lending process.
Team Souther Glossary
There are 5 names in this directory beginning with the letter G.
Good Faith Estimate (GFE)
This recently streamlined document gives borrowers an estimate of their closing costs and settlement fees. Some charges cannot change from the Good Faith Estimate to the final settlement statement. The GFE gives borrowers a good feel for their closing costs, origination fees, points and other charges.
Government-Sponsored Enterprises (GSEs)
These are federal financial services corporations, with Fannie Mae and Freddie Mac being the most familiar. Fannie Mae securitizes mortgages in the secondary market. Freddie Mac purchases, pools and sells mortgages to investors.
Graduated Payment Mortgage (GPM)
A fixed-rate mortgage where borrowers start with a low monthly payment that rises 7.5 percent each year for the first five years of the loan before leveling off. GPMs are aimed at borrowers who anticipate income gains as the loan term progresses. These also require veterans to come up with a down payment and generate negative amortization.
Growing Equity Mortgage (GEM)
Another fixed-rate mortgage where borrowers have higher monthly payments over time. There is no negative amortization with a GEM. As the payments increase, borrowers begin to pay off the principal directly, shaving interest and years off the loan term.