Click on a link below
for an alphabetized list of Real Estate and Mortgage
Terms.
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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 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
An 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.
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.
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.
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
An 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.
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.
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