| Term |
Definition |
| Caps (Interest) |
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. |
| Caps (Payment) |
Consumer safeguards which
limit the amount monthly payments on an adjustable rate mortgage may
change. |
| Cash-out Refinance |
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. |
| CD indexed |
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. |
| Certificate of Title
|
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. |
| Closing |
The meeting between the
buyer, seller and lender where the property and funds legally change
hands. Also called settlement. |
| Closing Costs |
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. |
| Closing Day |
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.
|
| Cloud (On Title) |
An outstanding claim which
negatively affects the marketability of title. |
| Collateral |
Property offered to support
a loan that can be seized if you default. |
| Commission |
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. |
| Commitment |
An agreement, often in
writing, between a lender and a borrower to loan money at a future
date subject to the stated conditions. |
| Condemnation |
A determination by a
governmental agency that a particular building is unsafe or unfit
for use. |
| Condominium |
Individual ownership of a
unit and an individual interest in the common areas and facilities
which serve the project. |
| Conduit |
Secondary market entity
that purchases loans from originators. Conduits provide expertise to
evaluate, price, purchase, and service nonconforming loans. |
| Conforming Loan |
Any loan that meets the
criteria and limits set forth by the largest buyers of loans, Fannie
Mae or Freddie Mac. |
| Construction Loan |
A short term interim loan
for financing the cost of construction. The lender advances funds to
the builder as the work progresses. |
| Contractor |
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. |
| Conventional Loan |
A mortgage not insured by
FHA or guarantee by the VA or Farmers Home Administration (FmHA).
|
| Conventional Mortgage
|
Any mortgage which is not
insured or guaranteed by a government agency such as HUD/FHA, VA, or
the Farmers Home Administration. |
| 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. |
| 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. |
| Correspondent |
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. |
| Cosigner |
Another person who signs
your loan and assumes equal responsibility for it. |
| Cost of Funds |
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. |
| Credit |
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. |
| Credit Bureau |
An agency that keeps your
credit record. |
| Credit Card |
Any card used from time to
time to borrow money or buy goods or services on credit. |
| Credit History |
The record of how you've
borrowed and repaid debts. |
| Credit Ratio |
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). |
| Credit Report |
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. |
| 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. |
| Credit Repository |
Company that collects
information on an individual's credit history and reports it in one
form, the in-file credit report. |
| Credit Scoring System
|
Statistical system used to
rate credit applicants according to various characteristics relevant
to creditworthiness. |
| Credit Warranty |
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. |
| Creditor |
A person or business from
whom you borrow or to whom you owe money. |
| Credit-related
Insurance |
Health, life, or accident
insurance designed to pay the outstanding balance of debt. |
| Creditworthiness |
Past and future ability to
repay debts. |
| Current Index Value |
Your current index value is
the index that is used to figure your interest adjustment on ARMs.
|
