|
C
| call
option |
| A provision in
a loan that gives the lender the right to accelerate the debt, and
require for full payment of the loan immediately, at the end of a
specified period or for specified reason. |
| |
| cap |
| A provision of
an adjustable-rate mortgage (ARM) that limits how much the interest
rate or loan payments may increase or decrease. In upward rate
markets, it protects the borrower from large increases in the
interest rate or monthly payment. See lifetime payment cap, lifetime
rate cap, periodic payment cap, and periodic rate cap. |
| |
| capital |
| (1) Money used
to create income, either as an investment in a business or an income
property. (2) The money or property comprising the wealth owned or
used by a person or business enterprise. (3) The accumulated wealth
of a person or business. (4) The net worth of a business represented
by the amount by which its assets exceed liabilities. |
| |
| capital
expenditure |
| The cost of an
improvement made to extend the useful life of a property or to add
to its value, such as adding a room. The cost of repairing a
property is not a capital expenditure. Capital expenditures are
appreciated over their useful life; repairs are subtracted from
income for the current year. |
| |
| capital
improvement |
| Any structure
or component erected as a permanent improvement to real property
that adds to its value and useful life. See Capital Expenditure.
|
| |
| cash
available for closing |
| Borrower funds
available to cover down payment and closing costs. If lending
guidelines require the borrower to have cash reserves at the time
the loan closes or that the down payment come from certain sources,
borrower's cash available for closing does not include cash reserves
or money from other sources. |
| |
| cash-out
refinance |
| A refinance
transaction in which the new loan amount exceeds the total of the
principal balance of the existing first mortgage and any secondary
mortgages or liens, together with closing costs and points for the
new loan. This excess is usually given to the borrower in cash and
can often be used for debt consolidation, home improvement, or any
other purpose. The borrower effectively borrows against the home
equity. |
| |
| ceiling |
| The maximum
interest rate that can accrue on a variable rate loan or adjustable
rate mortgage (ARM). See lifetime rate cap. |
| |
| certificate
of eligibility |
| A document
issued by the federal government certifying a veteran's eligibility
for a Department of Veterans Affairs (VA) loan. |
| |
| Certificate
of Reasonable Value (CRV) |
| A document
issued by the Department of Veterans Affairs (VA) that establishes
the maximum value and loan amount for a VA loan, based on an
approved appraisal. |
| |
| certificate
of title |
| A statement
provided by an abstract company, title company, or attorney stating
who holds title to real estate based on the public record.
|
| |
| chain of
title |
| The history of
all of the documents affecting title to a parcel of real property,
starting with the earliest existing document and ending with the
most recent. |
| |
| clear
title |
| A title that is
marketable and is free of liens or disputed legal questions as to
ownership of the property. |
| |
| closing |
| A meeting at
which all documents are signed and all expenses are paid to transfer
ownership of property. Also called "settlement." |
| |
| closing cost
item |
| A fee or amount
that a home buyer must pay at closing for a particular service, tax,
or product. Closing costs are made up of individual closing cost
items such as origination fees and attorney's fees. Many closing
cost items are included as numbered items on the HUD-1 settlement
statement. |
| |
| closing
costs |
| Various
expenses (over and above the price of the property) incurred by
buyers and sellers in transferring ownership of a property. Closing
costs normally include items such as broker's commissions, discount
points, origination fees, attorney's fees, taxes, title insurance
premiums, escrow agent fees, and charges for obtaining appraisals,
inspections and surveys. Closing costs will vary according to the
area of the country. Lenders or real estate professionals often
provide estimates of closing costs to prospective homebuyers even
before the HUD-1 settlement statement is delivered. |
| |
| closing
statement |
| An accounting
of funds given to both buyer and seller before real estate is sold.
See HUD-1 settlement statement. |
| |
| cloud on
title |
| An outstanding
claim or lien, revealed by a title search, that adversely affects
the owner's title to real estate. Usually, clouds on title cannot be
removed except by a quitclaim deed, release, or court action.
|
| |
| coinsurance |
| A sharing of
insurance risk between the insurer and the insured. Coinsurance
depends on the relationship between the amount of the policy and a
specified percentage of the actual value of the property insured at
the time of the loss. |
| |
| coinsurance
clause |
| A provision in
a hazard insurance policy stating the minimum amount of coverage
that must be maintained - as a percentage of the total value of the
property - in order for the insured to collect the full amount of a
loss. |
| |
| collateral |
| An asset (such
as a car or a home) that is pledged as security for the repayment of
a loan. The borrower risks losing the asset if the loan is not
repaid according to the terms of the loan contract or promissory
note. |
| |
| collection |
| The efforts
used to bring a delinquent loan current and, if necessary, to file
legal papers and notices to proceed with foreclosure. |
| |
| Combined
Loan to Value (CLTV) |
| The ratio of
the total amount borrowed on all mortgages against a property
compared to the appraised value of the property. For example, if you
have an $80,000 1st mortgage and a $10,000 2nd mortgage on a home
with an appraised value of $100,000, the CLTV is 90%
($80,000+$10,000 = $90,000 / $100,000 = 90%). |
| |
| commission |
| The fee charged
by a broker or agent for negotiating a real estate or loan
transaction. A commission is generally a percentage of the price of
the property or loan (such as 3%, 5%, or 6%). |
| |
| commitment
letter |
| A formal
notification from a lender stating that the borrower's loan has been
conditionally approved and specifying the terms under which lender
agrees make the loan. Also known as a "loan commitment."
|
| |
| common area
assessments |
| Payments
required of individual unit owners in a condominium or planned unit
development (PUD) project for additional capital to defray
homeowners' association costs and expenses and to repair, replace,
maintain, improve, or operate the common areas of the project.
|
| |
| 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 Western
and Southwestern states, the law specifies that property acquired
during a marriage is presumed to be owned jointly by the husband and
wife unless acquired as separate property of one spouse or the
other. |
| |
| community
secondsŪ |
| An alternative
financing option for low- and moderate-income households under which
an investor purchases a first mortgage that has a subsidized second
mortgage behind it. The second mortgage may be issued by a state,
county, or local housing agency, foundation, or nonprofit
organization. Payment on the second mortgage is often deferred and
carries a very low interest rate (or no interest rate at all). Part
or all of the second mortgage debt may be forgiven depending on how
long the buyer remains in the home. |
| |
| comparables
(comps) |
| An abbreviation
for "comparable properties"; used for comparative purposes in the
appraisal process. Comparables are properties like the property
under consideration; they have reasonably the same size, location,
and amenities and have recently been sold. Comparables help the
appraiser determine the approximate fair market value of the subject
property. |
| |
| compound
interest |
| Interest paid
on the principal balance and on the accrued and unpaid
interest. |
| |
| condemnation |
| (1) Declaration
that a building is unfit for use or is dangerous and must be
destroyed; (2) taking of private property for a public use (such as
a park, street or school) through an exercise of the right of
eminent domain. |
| |
| condominium |
| A real estate
project in which each unit owner has title to a unit in a multi-unit
building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas.
|
| |
| condominium
conversion |
| Changing the
ownership of an existing building (usually a rental project) to the
condominium form of ownership. |
| |
| condominium
hotel (condotel) |
| 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. |
| |
| conforming
loan |
| A home loan
with a maximum loan amount of $288,000 that is eligible for purchase
by FNMA and FHLMC. |
| |
| construction
loan |
| A short-term,
interim loan for financing the cost of home construction. The lender
makes payments to the builder at periodic intervals as the work
progresses. |
| |
| consumer
reporting agency (or bureau) |
| An organization
that prepares reports that lenders use to determine a potential
borrower's credit history. The agency obtains data for these reports
from a credit repository as well as from creditors such as mortgage
lenders, credit card companies, department stores, etc.
|
| |
| 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 do something. |
| |
| conventional
loan |
| A home loan
that is not insured or guaranteed by the federal government.
Contrast with government loan. Can be for conforming or
non-conforming loan amounts. |
| |
| convertibility clause |
| A provision in
some adjustable rate mortgages (ARMs) that allows the borrower to
change the ARM to a fixed rate loan at specified times during the
life of the loan. |
| |
| convertible
ARM |
| An adjustable
rate mortgage (ARM) that can be converted to a fixed rate loan under
specified conditions. |
| |
| cooperative
(co-op) |
| A type of
multiple ownership in which the residents of a multi-unit housing
complex own shares in the cooperative corporation that owns the
property, giving each resident the right to occupy a specific
apartment or unit. |
| |
| corporate
relocation |
| Arrangements
under which an employer moves an employee to another area as part of
the employer's normal course of business or under which it transfers
a substantial part or all of its operations and employees to another
area because it is relocating its headquarters or expanding its
office capacity. |
| |
| co-signer |
| A person who
signs a promissory note along with the borrower. A co-maker's
signature helps to assure that the loan will be repaid. The borrower
and the co-maker are jointly responsible for the repayment of the
loan. |
| |
| Cost of
Funds Index (COFI) |
| An index that
is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the
weighted-average cost of savings, borrowings, and advances of the
11th District members of the Federal Home Loan Bank of San
Francisco. See adjustable-rate mortgage (ARM). |
| |
| covenant |
| A promise in a
mortgage or deed that requires or prevents certain uses of the
property that, if violated, may result in loss or foreclosure of the
property. |
| |
| credit |
| An agreement in
which a borrower receives money or something of value in exchange
for a promise to repay the lender on specified terms at a later
time. |
| |
| credit
history |
| An evaluation
of an individual's capacity and history of debt repayment. A credit
history helps a lender to determine whether a potential borrower is
likely to repay a loan in a timely manner. |
| |
| credit life
insurance |
| A type of
insurance that pays off a loan if one of the borrowers dies while
the policy is in force. |
| |
| credit
limit |
| The maximum
amount that can be borrowed under the home equity line of
credit. |
| |
| credit
rating |
| An expression
of creditworthiness based upon present financial condition and past
credit history. |
| |
| 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. See
merged credit report. |
| |
| credit
repository (credit bureau) |
| 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. |
| |
| credit
scoring |
| Credit scores
are numerical values that rank individuals according to their credit
history at a given point in time. Your score is based on your past
payment history, the amount of credit you have outstanding, the
amount of credit you have available, and other factors. According to
Fannie Mae--one of the major investors in home loans, credit scores
have proven to be very good predictors of whether a borrower will
repay his or her loan. |
| |
| creditor |
| A person to
whom money is owed. |
| |
| cumulative
interest |
| Total interest
accrued |
| |
|