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.
CAPITAL IMPROVEMENT
Any structure or component erected as a permanent improvement to real property, which adds to its value and useful life.
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."
CASH RESERVE
The portion of assets that a borrower will have after the loan closing. Cash reserves may be required as part of the loan process to ensure the borrower has financial flexibility after the transaction.
CASH TO CLOSE
Liquid assets that are readily available to be used to pay the closing costs involved in closing a mortgage transaction.
CARRYING COSTS
Cost incurred to maintain a property (taxes, interest, insurance, utilities, and so on).
Closing: The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.
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.
CHANGED CIRCUMSTANCE
Under certain limited circumstances as defined by HUD, the lender may issue a revised Good Faith Estimate (GFE) prior to settlement/closing to disclose a change in loan fees.
CHATTEL
Personal property.
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 recorder’s 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 DATE
The approximate date your loan transaction is completed, or closed.
CLOSING STATEMENT
A form used at closing that gives an account of the funds received and paid at the closing, including the sales price, closing costs, escrow deposits for taxes, hazard insurance, and mortgage insurance.
CLOUD ON TITLE
An irregularity in the chain of title that could affect the interest of the owner.
CLUE (COMPREHENSIVE LOSS UNDERWRITING EXCHANGE)
CLUE is the insurance industry’s national database that assigns individuals a risk score. CLUE also has an electronic file of a properties insurance history. These files are accessible by insurance companies nationally. These files could impact the ability to sell property as they might contain information that a prospective buyer might find objectionable, and in some cases not even insurable.
CO-BORROWER
An additional individual who is both obligated on the loan and is on title to the property.
CODE OF ETHICS AND STANDARDS OF PRACTICE
Adopted in 1913 by the National Association of Realtors®, the Code of Ethics assist members in understanding the difference between 'right' and 'wrong' and in applying that understanding to their professions. The Articles of the Code of Ethics are broken down into three parts; duties to clients & customers, duties to the public, and duties to Realtor®.
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
The compensation paid to the listing brokerage by the seller for selling the property. A buyer agency agreement may require the buyer to pay a commission to his or her agent.
COMMISSION SPLIT
The percentage split of commission compensation between the real estate sales brokerage and the real estate sales agent or broker.
COMMITMENT (LOAN)
A binding pledge made by the lender to the borrower to make a loan, at certain (or maximum) loan terms within a given period of time for a given purpose, subject to various stated conditions.
COMMITMENT LETTER
A formal letter sent by a lender stating the terms and conditions under which the lender agrees to loan money to a potential borrower.
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.
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
As distinguished from law created by legislatures (statutory law), the common law is that law which is founded in ancient customs and practices as interpreted by the Courts.
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 PROPERTIES
Properties used for comparative purposes in the appraisal process that have been recently sold and have characteristics similar to property being appraised, thereby indicating the approximate fair market value of the subject property.
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."
COMPARATIVE MARKET ANALYSIS
A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.
COMPENSATING FACTORS
Positive characteristics of a borrower's credit, employment, or savings history which may be used to offset high debt-to-income ratios in the underwriting process.
COMPETITIVE MARKET ANALYSIS (CMA)
The analysis used to provide market information to the seller and assist the real estate broker in securing the listing.
CONCESSION
A discount or other incentive given by a landlord or seller to a prospective tenant or buyer to induce them to sign a lease or purchase property.
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 ASSOCIATION
An association of all owners in a condominium.
CONDOMINIUM BUDGET
A financial forecast and report of a condominium association’s expenses and savings.
Condominium by-laws: Rules passed by the condominium association used in administration of the condominium property.
CONDOMINIUM DECLARATIONS
A document that legally establishes a condominium.
CONDOMINIUM RIGHT OF FIRST REFUSAL
A person or an association that has the first opportunity to purchase condominium real estate when it becomes available or the right to meet any other offer.
CONDOMINIUM RULES AND REGULATION
Rules of a condominium association by which owners agree to abide.
CONFORMING LOAN
Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA, also known as “Fannie Mae”) or the Federal Home Loan Mortgage Corporation (FHLMC, also known as “Freddie Mac”). These agencies generally purchase first mortgages up to loan amounts mandated by Congressional directive.
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.
CONTIGUOUS
Parcels of property that are adjoining.
CONTINGENCY
A provision in a contract requiring certain acts to be completed before the contract is binding.
Continue to show: When a property is under contract with contingencies, but the seller requests that the property continue to be shown to prospective buyers until contingencies are released.
CONTRACT FOR DEED
A sales contract in which the buyer takes possession of the property but the seller holds title until the loan is paid. Also known as an installment sale contract.
CONVENTIONAL MORTGAGE
A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages. Also, refers to home loans other than government loans (VA and FHA).
CONVERTIBLE ARM
An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
COOPERATING COMMISSION
A commission offered to the buyer’s agent brokerage for bringing a buyer to the selling brokerage’s listing.
COOPERATIVE (CO-OP)
A building of two or more dwelling units that is owned by a corporation made up of people in the building. The right to occupy a unit is obtained by buying shares of stock in the corporation and signing an occupancy agreement known as a “proprietary lease”.
CORPORATE CLIENT
The company with whom the third-party relocation company has an agreement to handle the relocating employees.
COST APPROACH TO VALUE
A means of valuation where the worth of a property is determined by computing the replacement value of improvements, depreciation, and the value of the land.
COVENANT
A clause in a contract that obligates or restricts the parties and which, if violated, can result in legal action.
COUNTER OFFER
The response to an offer or a bid by the seller or buyer after the original offer or bid.
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 ALERT VERIFICATION REPORTING SYSTEM (CAIVRS)
CAIVRS is a HUD‐maintained online information system that enables both government and participating lenders to learn when a potential borrower has previously defaulted on a federally‐assisted loan.
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.
CREDIT LIMIT
The maximum amount that you can borrow under the home equity loan or line.
CREDITOR
A person to whom money is owed.
CREDIT REPORT
Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.
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.
CREDIT SCORE
A score assigned to a borrower’s credit report based on information contained therein.
CURB APPEAL
The visual impact a property projects from the street.
