Glossary
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Call Option
A provision in the mortgage that gives the lender the right to call the mortgage due and payable in full at the end of a specified period. Cap
A provision of an adjustable-rate mortgage (ARM ) that limits how much the interest rate or mortgage payments may increase or decrease. 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. Capital Gains Tax
Tax paid on the gain realized upon the sale of an asset. Capital Improvement
A permanent improvement to real property that increases its value and useful life. Cash-Out Refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose. Cash Reserves
Money accumulated and set aside to cover recurring, periodic expenses, such as property repairs or taxes. Also, funds set aside to be used to make monthly mortgage payments in the case of financial difficulty. Certificate Of Deposit (CD)
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate
within a specified time period. Certificate Of Deposit Index
An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit. See
adjustable-rate mortgage (ARM) . Certificate Of Eligibility
A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage. Certificate Of Title
A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current professional loan officer. Chain Of Title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent. Change Frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM). Clear Title
A title that is free of liens or legal questions as to ownership of the property. Closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement." Closing Agent
The party who conducts the closing meeting. This role may be filled by an attorney, title company, or real estate agents depending on the state where the property is located. Closing Costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or real estate agents often provide estimates of closing costs to prospective homebuyers. See
Closing Costs Fees
Closing Fee
A fee charged by a title company, closing agent or attorney to act as a representative and agent for the lender to perform the closing of a real estate transaction Closing Statement
See HUD-1 statement Co-Borrower
A person who signs a promissory note along with the borrower. Contrast with
endorser . See also
non-occupant co-borrower Condominium Conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership. Conforming Loan
A mortgage loan which is within the loan amounts and underwriting guidelines that have been established by government sponsored entities for mortgage loans being sold in the secondary market. Concessions
items that are paid for or given by a landlord or seller to induce a prospective tenant or buyer to sign a lease or purchase property. Construction Loan
A short-term loan intended to finance the cost of construction, usually of a house. The lender makes payments to the builder at periodic intervals as the work progresses. Consumer Reporting Agency (or Bureau)
An organization that compiles information about a consumers’ credit histories. 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/Loan
A real estate mortgage that is not affiliated with the
FHA or
VA. Convertibility Clause
A provision in some adjustable-rate Business (ARM ) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination. Convertible ARM
An adjustable-rate mortgage ( ARM ) that can be converted to a fixed-rate mortgage under specified conditions. 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. Cooperative Corporation
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements. Cooperative Business
Business related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units. Cooperative Project
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title. 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. 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 clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure. 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 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 Disability Insurance
A type of insurance available to borrowers that pays all or part of a minimum monthly payment for a specified length of time if the borrower becomes disabled. Credit History
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner. Credit ,Life Insurance
A type of insurance available to borrowers that will pay off the mortgage debt if the borrower dies while the policy is in force. 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 Report Fee
Fee charged by a lender to obtain an applicant's credit report for review in conjunction with a mortgage loan application. Creditor
A person to whom money is owed. |
