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Call Option
A provision in the mortgage that gives the
mortgagee the right to call (accelerate) the
mortgage due and payable at the end of a
specified period for whatever reason.
Cap
A provision of an adjustable-rate
mortgage (ARM) that limits how much the interest rate
or mortgage payments may increase or decrease.
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 the refinance transaction the borrower receives additional cash that can be used
for any purpose.
Caveat Emptor
"Let the buyer beware."
The buyer must examine the goods or property and buy at his own risk, except for
latent defects.
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.
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 Reasonable Value (CRV)
A document issued by the Department of
Veterans Affairs (VA) that establishes the
maximum value and loan amount for a
VA mortgage.
Certificate of Sale
A document issued to a buyer at a judicial sale, such as a
foreclosure of a
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 owner.
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.
Clear Title
A title that is free of
liens or legal questions as
to ownership of the property.
Closing
The final accounting of a sale normally given by escrow
to the buyer and seller.
In some areas, a meeting at which a sale of a property is finalized by the buyer signing the
mortgage
documents and paying closing costs.
This event is also called "settlement".
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
Realtors®.
Closing Statement
A document that provides an itemized listing of the funds that were paid at
closing.
Items that appear on the statement include real estate
commissions, loan fees,
points, and initial
escrow (impound) amounts.
Each type of expense goes on a specific numbered line on the sheet.
The totals at the bottom of the statement define the seller's net proceeds and the
buyer's net payment at closing.
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 a
quitclaim 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
An asset (such as a car or a home) 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
The efforts used to bring a delinquent mortgage
current and to file the necessary notices to proceed with
foreclosure when necessary.
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.
Commitment Letter
A formal offer by a lender stating the terms under which it
agrees to lend money to a home buyer.
Also known as a "loan commitment".
Common Area Assessments
Levies against 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.
Common Law
An unwritten body of law based on general custom in England and used to an extent
in the United States.
Community Property
In some western and southwestern states, a form of ownership under which property
acquired during a marriage is presumed to be owned jointly unless acquired as
separate property of either spouse.
Comparable Sales
Comparables are properties that are similar to the property under consideration.
They have approximately 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 original principal balance and on the accrued and unpaid interest.
Condition(s)
Provisions(s) in a contract that some or all terms of the
contract will be altered or
cease to exist upon a certain event.
Condition Precedent
A condition that must be met or fulfilled before title
can be transferred.
Conditional Offer
Purchase contract tendered to the seller that stipulates one or more requirements to be
satisfied before the buyer is obligated to buy.
Conditional Sale Contract
A contract for the sale of property where
title
remains vested in the seller and delivery
is to be made to the buyer when conditions of the
contract have been met or fulfilled.
Conditions, Covenants, and Restrictions (CCRs)
Rules written into the deed or bylaws that define
how the property may be used.
For example, they prevent property owners from making changes to their individual properties
that could result in an unattractive setting that could adversely affect the other owners.
Condominium
A real estate project in which each unit owner has title
to a unit in a 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.
Conforming Loan
A mortgage loan that is eligible for purchase by FNMA or FHLMC.
Consideration
Something of value.
Most often money but can be other objects or thing of value.
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 certain things.
Conventional Mortgage
A mortgage that is not insured or guaranteed
by the federal government.
Savings and loan associations and banks offer conventional loans.
Conventional loans also feature a fixed interest rate
and a fixed amorization term.
Convertibility Clause
A 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
An adjustable-rate
mortgage (ARM) that can be converted to a
fixed-rate mortgage under specified conditions.
Conveyance
A written document that transfers title
from one person to another person.
A deed,
bill of sale and an
assignment are all
conveyances.
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.
Corporate Relocation
Arrangements under which an employer moves an employee to another area as part of the
employer's normal course of business.
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.
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 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 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 credit worthiness.
Credit Repository
An organization that gathers, records, updates, and stores financial and public records and
information about the payment records of individuals who are being considered for
credit.
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