call
option
Similar to the acceleration clause.
cap
Adjustable Rate Mortgages have fluctuating interest rates,
but those fluctuations are usually limited to a certain
amount. Those limitations may apply to how much the loan
may adjust over a six month period, an annual period,
and over the life of the loan, and are referred to as
"caps." Some ARMs, although they may have a
life cap, allow the interest rate to fluctuate freely,
but require a certain minimum payment which can change
once a year. There is a limit on how much that payment
can change each year, and that limit is also referred
to as a cap.
cash-out
refinance
When a borrower refinances his mortgage at a higher amount
than the current loan balance with the intention of pulling
out money for personal use, it is referred to as a "cash
out refinance."
certificate
of deposit
A time deposit held in a bank which pays a certain amount
of interest to the depositor.
certificate
of deposit index
One of the indexes used for determining interest rate
changes on some adjustable rate mortgages. It is an average
of what banks are paying on certificates of deposit.
Certificate
of Eligibility
A document issued by the Veterans Administration that
certifies a veteran’s eligibility for a VA loan.
Certificate
of Reasonable Value (CRV)
Once the appraisal has been performed on a property being
bought with a VA loan, the Veterans Administration issues
a CRV.
chain
of title
An analysis of the transfers of title to a piece of property
over the years.
clear
title
A title that is free of liens or legal questions as to
ownership of the property.
closing
This has different meanings in different states. In some
states a real estate transaction is not consider "closed"
until the documents record at the local recorders office.
In others, the "closing" is a meeting where
all of the documents are signed and money changes hands.
closing
costs
Closing costs are separated into what are called "non-recurring
closing costs" and "pre-paid items." Non-recurring
closing costs are any items which are paid just once as
a result of buying the property or obtaining a loan. "Pre-paids"
are items which recur over time, such as property taxes
and homeowners insurance. A lender makes an attempt to
estimate the amount of non-recurring closing costs and
prepaid items on the Good Faith Estimate which they must
issue to the borrower within three days of receiving a
home loan application.
closing
statement
See Settlement Statement.
cloud
on title
Any conditions revealed by a title search that adversely
affect the title to real estate. Usually clouds on title
cannot be removed except by deed, release, or court action.
co-borrower
IAn additional individual who is both obligated on the
loan and is on title to the property.
collateral
In a home loan, the property is the collateral. The borrower
risks losing the property if the loan is not repaid according
to the terms of the mortgage or deed of trust.
collection
When a borrower falls behind, the lender contacts them
in an effort to bring the loan current. The loan goes
to "collection." As part of the collection effort,
the lender must mail and record certain documents in case
they are eventually required to foreclose on the property.
commission
Most salespeople earn commissions for the work that they
do and there are many sales professionals involved in
each transaction, including Realtors, loan officers, title
representatives, attorneys, escrow representative, and
representatives for pest companies, home warranty companies,
home inspection companies, insurance agents, and more.
The commissions are paid out of the charges paid by the
seller or buyer in the purchase transaction. Realtors
generally earn the largest commissions, followed by lenders,
then the others.
common
area assessments
In some areas they are called Homeowners Association Fees.
They are charges paid to the Homeowners Association by
the owners of the individual units in a condominium or
planned unit development (PUD) and are generally used
to maintain the property and common areas.
common
areas
Those portions of a building, land, and amenities owned
(or managed) by a planned unit development (PUD) or condominium
project's homeowners' association (or a cooperative project's
cooperative corporation) that are used by all of the unit
owners, who share in the common expenses of their operation
and maintenance. Common areas include swimming pools,
tennis courts, and other recreational facilities, as well
as common corridors of buildings, parking areas, means
of ingress and egress, etc.
common
law
An unwritten body of law based on general custom in England
and used to an extent in some states.
community
property
In some states, especially the southwest, property acquired
by a married couple during their marriage is considered
to be owned jointly, except under special circumstances.
This is an outgrowth of the Spanish and Mexican heritage
of the area.
comparable
sales
Recent sales of similar properties in nearby areas and
used to help determine the market value of a property.
Also referred to as "comps."
condominium
A type of ownership in real property where all of the
owners own the property, common areas and buildings together,
with the exception of the interior of the unit to which
they have title. Often mistakenly referred to as a type
of construction or development, it actually refers to
the type of ownership.
condominium
conversion
Changing the ownership of an existing building (usually
a rental project) to the condominium form of ownership.
condominium
hotel
A condominium project that has rental or registration
desks, short-term occupancy, food and telephone services,
and daily cleaning services and that is operated as a
commercial hotel even though the units are individually
owned. These are often found in resort areas like Hawaii.
construction
loan
A short-term, interim loan for financing the cost of construction.
The lender makes payments to the builder at periodic intervals
as the work progresses.
contingency
A condition that must be met before a contract is legally
binding. For example, home purchasers often include a
contingency that specifies that the contract is not binding
until the purchaser obtains a satisfactory home inspection
report from a qualified home inspector.
contract
An oral or written agreement to do or not to do a certain
thing.
conventional
mortgage
Refers to home loans other than government loans (VA and
FHA).
convertible
ARM
IAn adjustable-rate mortgage that allows the borrower
to change the ARM to a fixed-rate mortgage within a specific
time.
cooperative
(co-op)
A type of multiple ownership in which the residents of
a multiunit housing complex own shares in the cooperative
corporation that owns the property, giving each resident
the right to occupy a specific apartment or unit.
cost
of funds index (COFI)
One of the indexes that is used to determine interest
rate changes for certain adjustable-rate mortgages. It
represents the weighted-average cost of savings, borrowings,
and advances of the financial institutions such as banks
and savings & loans, in the 11th District of the Federal
Home Loan Bank.
credit
An agreement in which a borrower receives something of
value in exchange for a promise to repay the lender at
a later date.
credit
history
A record of an individual's repayment of debt. Credit
histories are reviewed my mortgage lenders as one of the
underwriting criteria in determining credit risk.
creditor
A person to whom money is owed.
credit
report
A report of an individual's credit history prepared by
a credit bureau and used by a lender in determining a
loan applicant's creditworthiness.
credit
repository
An organization that gathers, records, updates, and stores
financial and public records information about the payment
records of individuals who are being considered for credit.
