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home :: Mortgage Terms
Glossary C
Mortgage Terms Glossary
C
Cap: a limit, such as that placed on an
adjustable rate mortgage, on how much a monthly payment or interest
rate can increase or decrease. A payment cap is a limit on the
monthly payment. An interest cap is a limit on the amount of the
interest rate. A life-of-loan cap restricts the amount the interest
rate can increase over the entire term of the loan. An annual cap
limits the amount the interest rate can increase over a twelve-month
period.
Cash reserves: a cash amount sometimes
required to be held in reserve in addition to the down payment and
closing costs; the amount is determined by the lender.
Certificate of reasonable value (CRV):
a Veterans Administration appraisal that establishes the maximum VA
mortgage loan amount for a specified property.
Certificate of title: a document
provided by a qualified source (such as a title company) 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.
Closed-end mortgage: a mortgage
principal amount that is fixed and cannot be increased during the
life of the loan. See also: open-end mortgage.
Closing: also known as settlement, this
is the time at which the property is formally sold and transferred
from the seller to the buyer; it is at this time that the borrower
takes on the loan obligation, pays all closing costs, and receives
title from the seller.
Closing costs: customary costs above
and beyond the sale price of the property that must be paid to cover
the transfer of ownership at closing; these costs generally vary by
geographic location and are typically detailed to the borrower after
submission of a loan application.
Cloud: a claim to the title of a
property that, if valid, would prevent a purchaser from obtaining a
clear title.
Collateral: something of value pledged
as security for a loan. In mortgage lending the property itself
serves as collateral for a mortgage loan.
Commission: an amount, usually a
percentage of the property sales price, that is collected by a real
estate professional as a fee for negotiating the transaction.
Commitment fee: a fee charged when a)
an agreement is reached between a lender and a borrower for a loan
at a specific rate and points and b) the lender guarantees to lock
in that rate.
Co-mortgagor: one who is individually
and jointly obligated to repay a mortgage loan and shares ownership
of the property with one or more borrowers. See also: co-signer.
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.
Conforming loan: a loan that conforms
to Federal National Mortgage Association (FNMA) or Federal Home Loan
Mortgage Corporation (FHLMC) guidelines. See also: non-conforming
loan.
Construction loan: a short-term loan
financing improvements to real estate, such as the building of a new
home. The lender advances funds to the borrower as needed while
construction progresses. Upon completion of the construction the
borrower must obtain permanent financing or repay the construction
loan in full.
Consumer handbook on adjustable rate mortgages
(C.H.A.R.M.): a disclosure required by the federal government
to be given to any borrower applying for an adjustable rate mortgage
(ARM).
Conventional loan: a private sector
loan, one that is not guaranteed or insured by the U.S. government.
Convertible mortgage: an adjustable
rate mortgage (ARM) that allows a borrower to switch to a fixed-rate
mortgage at a specified point in the loan term.
Co-signer: a person who is obligated to
repay a mortgage loan should the borrower default but who does not
share ownership in the property. See also: co-mortgagor.
Cooperative (Co-op): residents purchase
stock in a cooperative corporation that owns a structure; each
stockholder is then entitled to live in a specific unit of the
structure and is responsible for paying a portion of the loan.
Covenants: rules and restrictions
governing the use of property.
Credit history: history of an
individual's debt payment; lenders use this information to gauge a
potential borrower's ability to repay a loan.
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 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.
CRV: See certificate of reasonable
value.
Curtailments: the borrower's privilege
to make payments on a loan's principal before they are due. Paying
off a mortgage before it is due may incur a penalty if so specified
in the mortgage's prepayment clause.
Related
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Residential Mortgage Loans
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