| Term |
Definition |
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Caps (Interest)
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Consumer safeguards which limit the amount the interest rate on an
adjustable rate mortgage may change per year and/or the life of the loan.
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Caps (Payment)
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Consumer safeguards which limit the amount monthly payments on an
adjustable rate mortgage may change.
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Cash-out Refinance
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Refinancing transaction in which the money the borrower receives from the
new loan exceeds the total amount he uses to repay the existing first
mortgage, closing costs, points; and satisfy any outstanding subordinate
mortgage liens. In other words, a refinance transaction in which
the borrower receives additional cash he can use for any purpose.
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CD indexed
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These ARMs are indexed to Certificate of Deposits (CDs).
Adjustments occur every six months, with a per adjustment cap of
1 percent and a lifetime cap of 6 percent.
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Certificate of Title
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A certificate issued by a title company or a written opinion
by an attorney that the seller has good marketable and insurable title to
the property which he is offering for sale.
A certificate of title offers no protection against any hidden defects in the
title which an examination of the records could not reveal.
The issuer of a certificate of title is
liable only for damages due to negligence.
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Closing
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The meeting between the buyer, seller and lender where
the property and funds legally change hands. Also called settlement.
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Closing Costs
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Includes a loan origination fee, points, appraisal fee,
title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs
assessed at settlement. The closing costs usually are about 2 percent to 6 percent of the
mortgage amount.
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Closing Day
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The day on which the formalities of a real estate sale are
finished. The certificate of title, abstract, and deed are generally prepared for the closing by an
attorney and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are
paid. The final closing merely reiterates the original agreement reached in the agreement of
sale.
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Cloud (On Title)
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An outstanding claim which negatively affects the
marketability of title.
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Collateral
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Property offered to support a loan that can be seized if you default.
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Commission
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The fee charged by or paid to a broker, agent or auto sales rep for
negotiating a real estate, car sale or loan transaction.
A commission is generally a percentage of the sales price.
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Commitment
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An agreement, often in writing, between a lender and a borrower to loan
money at a future date subject to the stated conditions.
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Competitive Market Analysis (CMA)
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A report prepared by a real estate agent that determines a house's market value. The agent compares the house's attributes to similar properties in the area that
have recently sold or are still on the market. The CMA is often used to establish the listing price.
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Compounded Interest
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Interest is computed on the principal balance of a mortgage plus
accrued interest.
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Condemnation
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A determination by a governmental agency that a
particular building is unsafe or unfit for use.
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Condominium
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Individual ownership of a unit and an individual interest
in the common areas and facilities which serve the project.
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Conduit
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Secondary market entity that purchases loans from originators.
Conduits provide expertise to evaluate, price, purchase, and service
nonconforming loans.
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Conforming Loan
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Any loan that meets the criteria and limits set forth by the largest
buyers of loans, Fannie Mae or Freddie Mac.
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Construction Loan
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A short term interim loan for financing the cost of construction. The
lender advances funds to the builder as the work progresses.
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Contractor
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A person who contracts to
erect buildings. There are also contractors for each phase of construction:
heating, electrical, plumbing, air conditioning, road building and
others.
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Conventional Loan
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A mortgage not insured by FHA or guarantee by the VA or Farmers Home
Administration (FmHA).
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Conventional Mortgage
|
Any mortgage which is not insured or guaranteed by a government agency
such as HUD/FHA, VA, or the Farmers Home Administration.
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Conversion Option
|
A conversion option allows you to convert an ARM to a fixed rate mortgage.
You will likely pay a higher rate or more points to have this option.
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Cooperative Housing
|
An apartment building or a group of dwellings owned by a corporation,
the stockholders of which are the residents of the dwellings. It is operated for their benefit by
their elected board of directors. In a cooperative, the corporation or association owns title to
the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit
in the building or property owned by the cooperative. While the resident does not own his unit, he
has an absolute right to occupy his unit for as long as he owns the stock.
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Correspondent
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An entity that typically sells the Mortgages it originates to other lenders.
The Correspondent performs some or all of the loan processing functions such
as taking the loan application, ordering credit reports, appraisals, title
reports, and verifying the borrower's income and employment. The
Correspondent may or may not have delegated underwriting and typically
funds the loans at settlement. The Mortgage is closed in the Correspondent's
name and the Correspondent may or may not service the Mortgage.
The Correspondent could commission a Mortgage Broker to perform some of the
processing functions.
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Cosigner
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Another person who signs your loan and assumes equal responsibility for it.
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Cost of Funds
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These ARMs are indexed to the actual costs of what banks pay to borrow
money. Rates can adjust every month, six months, or every year.
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Credit
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The right granted by a creditor to pay in the future in order to buy
or borrow in the present; also, a sum of money owed to a person or business.
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Credit Bureau
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An agency that keeps your credit record.
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Credit Card
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Any card used from time to time to borrow money or buy goods
or services on credit.
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Credit History
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The record of how you've borrowed and repaid debts.
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Credit Ratio
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The ratio, expressed as a percentage, which results when a borrower's
monthly payment obligation on long-term debts is divided by his or her net
income (FHA/VA loans) or gross monthly income (Conventional loans).
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Credit Report
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Report of an individual's credit history that a credit reporting company
(CRC) or credit repository prepares that you use to determine a borrower's
creditworthiness.
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Credit Reporting Company
|
Company that collects information received from more than one credit
repository, merges all the information, and reports it in one form;
merged credit reports.
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Credit Repository
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Company that collects information on an individual's credit history and
reports it in one form, the in-file credit report.
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Credit Scoring System
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Statistical system used to rate credit applicants according to
various characteristics relevant to creditworthiness.
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Credit Warranty
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Guarantee or promise by the seller of the loan relating to the
creditworthiness of the borrower(s). The seller warrants that the
borrower has the willingness to repay and there is evidence of an
acceptable credit reputation.
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Creditor
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A person or business from whom you borrow or to whom you owe money.
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Credit-related Insurance
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Health, life, or accident insurance designed to pay the outstanding
balance of debt.
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Creditworthiness
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Past and future ability to repay debts.
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Current Index Value
|
Your current index value is the index that is used to figure your interest
adjustment on ARMs.
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