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Mortgage Loan
Mortgage Terms:
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.
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. (top)
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. (top)
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 condolminium 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.
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