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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Call (Demand) Option: clause in a loan agreement that lets the lender request the balance of the loan at any time during the life of the loan.
Cancellation Clause: clause that explains the conditions under which a party may terminate an agreement.
Cap: the limit on the amount that the monthly payment and interest rate can increase on an adjustable rate mortgage.
Capacity: ability to repay mortgage debt.
Capital: money used to create additional wealth, such as money invested in rental property.
Capital Expenditure: cost of making improvements on property.
Capital Gains: profit from the sale of real estate or other long term investments.
Capital Gains Tax: tax on the profit from the sale of real estate or other long term investments.
Capital Improvement: any improvement that increases the value of a property.
Cash-Out Refinancing: refinancing a mortgage with a loan amount that is greater than the amount due on the loan being refinanced. The borrower receives additional cash that can be used for any purpose.
Cash Reserves: a cash amount determined by the lender that is sometimes required to be held in reserve in addition to the down payment and closing costs.
Caveat Emptor: legal principle derived from the Latin phase, meaning "let the buyer beware."
CC&R's (Covenants, Conditions, and Restrictions): rules and regulations for a particular housing development.
CD-Indexed (Certificate of Deposit) ARM: adjustable rate mortgage in which the initial interest rate and payments adjust every six months after an initial six-month period according to changes in the market interest rates on six-month negotiable CDs.
Certificate of Deposit: document written by a bank or other financial institution that is evidence of a deposit.
Certificate of Deposit Index: index that is used to determine interest rate changes for certain ARM plans.
Certificate of Eligibility: document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Occupancy: document issued by local government to a builder, stating that the building has met all building codes and is suitable for habitation.
Certificate of Reasonable Value (CRV): document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
Certificate of Title: statement provided by an abstract company, title company, or attorney that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.
Chain of Title: official record detailing the ownership history of a property
Change Frequency: interest rate change schedule on an adjustable rate mortgage.
Change Orders: amendments to a construction contract after construction begins in order to make unplanned changes to the work. Changes must first be approved by the lender.
Chattel: another name for personal property.
Clear Title: property that does not have any liens, defects, or other legal encumbrances recorded against it.
Closing: final step in the purchase or refinance of a property, in which documents are signed and recorded and the property is transferred to the new owner.
Closing Agent: coordinates the various closing activities, such as preparing and recording the closing documents and disbursing funds.
Closing Costs: various expenses related to the sale of real estate, including loan, title, escrow, and appraisal fees.
Closing Date: date on which a loan transaction is completed.
Cloud on Title: conditions revealed by a title search that adversely affect the title to real estate.
Coinsurance: sharing of insurance risk between the insurer and the insured. Coinsurance depends on the ratio 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: provision in a hazard insurance policy that states the amount of coverage that must be maintained for the insured to collect the full amount of a loss.
Collateral: asset that guarantees 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.
Collection: steps taken by a lender to obtain overdue payments on a loan.
Co-Maker: person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment.
Commercial Banks: banks that originate and service mortgage loans. In some cases, commercial banks may have mortgage banking subsidiaries that perform this function. Banks may choose to hold a loan in their own portfolio or sell the loan to an investor.
Commercial Property: an area zoned for business.
Commission: 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.
Commitment: promise from a lender to make a loan, under certain terms. Commitments are issued for a limited period of time.
Commitment Fee: amount a lender may charge for issuing a commitment to lend.
Commitment Letter: formal offer by a lender stating the terms under which it agrees to lend money to a home buyer.
Common Area: area within a housing complex or tract that is owned by all residents and is maintained using common funds.
Common Area Assessments: fees paid by the owners of a condominium or home in a planned unit development to operate and maintain common areas.
Common Interest Development: compilation of individually-owned units that share usage of and responsibility for common areas.
Common Law: unwritten body of law based on general custom in England and used to an extent in the United States.
Community Land Trust Mortgage Option: alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.
Community Property: classification in certain states of property owned jointly by a husband and wife.
Comparable: property with similar characteristics used to compare with a subject property for the purpose of determining the fair market value of the subject property.
Compound Interest: interest paid on the original principal balance and on the accrued and unpaid interest.
Condemnation: determination that a building is not fit for use or is dangerous and must be destroyed.
Condition of the Home: potential homeowners should know of major problems in a home before they make an offer. As a potential buyer, you should carefully examine all elements of the home. Both the seller and the real estate agent can be held liable if they do not disclose any defects they know about in the home.
Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.
Condominium Conversion: changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
Condominium Hotel: 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: loan that meets the qualifications to be purchased by Fannie Mae or Freddie Mac.
Construction Contract: terms and conditions of any major renovation job as stated in a formal, legally binding contract between you and your contractor. The lender you choose will likely want to review this contract before you sign it.
Construction Loan: short-term loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Construction to Permanent Loan: converting a construction loan to a traditional mortgage loan after construction is complete.
Consumer Credit: credit owed that is not secured by real estate.
Contingency: condition that must be met before a contract is legally binding.
Contingency for Clear Title: contingency in a purchase contract that the purchase is subject to your receiving clear title to the property.
Contingency for Financing: contingency in a purchase contract specifies that if you do not get the mortgage financing you need to purchase the house at the terms you want, the offer is void and you will be refunded your deposit.
Contingency for Personal Property: contingency in the purchase contract specifies what appliances, fixtures, and other personal property must remain in the home.
Contingencies for Repairs: contingency in a purchase offer that the offer is dependent on the proper functioning of electrical, heating, cooling, plumbing, and mechanical systems.
Contingency Reserve: amount of funds held in a reserve account to cover the cost of any unforeseen repairs or deficiencies are found during renovation. Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account.
Contract: oral or written agreement between two or more parties.
Contract to Purchase: contract between the seller and buyer of a home detailing the price and terms of the transaction.
Contractor: person who oversees a construction project and handles aspects such as scheduling workers and ordering supplies.
Conventional Mortgage: a private sector loan, one that is not guaranteed or insured by the U.S. government.
Convertibility Clause: provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
Convertible ARM: adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
Conveyance: transfer of a property’s title from one party to another.
Conveyance Tax: tax on the transfer of real property.
Cooperative Corporation: 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 Mortgages: mortgages 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: 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.
Co-Signer: second party who signs a promissory note and assumes responsibility for payment of the loan. A co-signer is fully responsible for the debt in the event the borrower does not repay the debt.
Cost of Funds Index (COFI): 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.
Counteroffer: response to an offer to purchase property, usually requesting a change in the terms set forth in the buyer’s offer.
Covenant: clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
Credit: money lent to a borrower in exchange for a commitment to repay the loan within a certain timeframe.
Credit Bureau: company whose function is to collect credit data and issue credit reports. A credit bureau will generally access credit information held by a credit repository.
Credit Bureau Score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.
Credit History: history of an individual's debt payment; lenders use this information to gouge a potential borrower's ability to repay a loan.
Credit Life Insurance: type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.
Creditor: individual or institution to whom a debt is owed.
Credit Rating: credit worthiness assigned to an individual based on current credit, credit history, and financial standing.
Credit Report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.
Credit Reporting Agency: organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources. The three main credit reporting agencies are Equifax, Experian, and Trans Union. You can order a copy of your credit report (a nominal fee may apply) via telephone at: Equifax: (800) 685-1111/Trans Union: (800) 916-8800/Experian: (800) 682-7654
Credit Repository: large company that gathers financial and credit information from multiple sources about individuals who have applied for credit.
Credit Union: financial institution that is owned and run by its members. It is a nonprofit, cooperative institution that offers members a place to save and borrow.
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