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Mortgage
Glossary - Mortgage and Real Estate Terms Sorted Alphabetically:
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C - caps, cash flow, cash out (second mortgage),
cash out refinance…more
CAPS - consumer safeguards for
adjustable rate mortgages that limit the amount monthly payments can
increase. An interest rate cap limits the amount the interest can change, while
a payment cap limits the increase in monthly payment to a specific dollar
amount.
CASH FLOW - the amount of money you have available after monthly
debt-servicing.
CASH OUT SECOND MORTGAGE - to turn some of your home’s equity into cash through
a home
equity loan ; this is to use the financial power in your house as an
investment vehicle in addition to a "home" for you and your family.
CASH OUT REFINANCE - a first
mortgage refinance transaction in which the amount of money received
from the new loan, exceeds the total of the money needed to repay the existing
mortgage(s) plus the closing costs of the new loan. In other words, a refinance
transaction in which the borrowers receive additional cash, which is used for
any lawful purpose.
CHAIN OF TITLE - a history of the documents which have transferred title to a
parcel of real property, from the original owner to the present owner.
CLOSING - the event of getting all paperwork appropriately recorded in the
official County Recorders office, for the County in which the real property is
located. A purchase transaction, the meeting between the buyer, seller and
lender (or their agents) where the property and funds legally change hands.
Also called settlement.
CLOSING COSTS - the costs and fees associated with obtaining your mortgage that
are assessed at the closing or settlement. "Closing Costs" normally are
itemized and charged per item (except for the origination and/or discount
POINTS), they are usually billed by outside non-affiliated vendor/suppliers to
the transaction. They often can include charges and fees for escrow, legal &
title insurance, notary, tax service and flood certification fees,
underwriting, credit report, processing, document preparation, photo
inspection, real estate appraisal, appraisal review, administration fees,
courier, wire transfer fees, recording fees, warehouse fee, insurance,
administration fees, taxes and other fees. These can easily average $2,300 or
more per transaction, depending on the type and size of your loan. There's No
Free Lunch - there's a lot of vendor/suppliers involved with residential real
estate mortgage loans.** SEE 'POINTS' AND 'GOOD FAITH ESTIMATE' **
CLOUD ON TITLE - any condition revealing in a title search that adversely
effects the title to the real property. Usually a 'cloud on title' will require
some legal action to clear up the problem, i.e.: a deed, release or other
recorded document.
COLLATERAL- the real property offered as security for a loan.
COMBINED LTV - the way a lender calculates the (C)LTV on a home equity loan; it
is based on the sum of the debts on both mortgages, compared to the fair market
value of your home. Up to 80% is common, above that percentage costs and fees
paid can be a bit higher.
COMMON AREA - an area owned by the owners or tenants of a condominium complex,
or subdivision for the common use of residents; i.e.: clubhouse, pool, green
belt areas.
COMMUNITY PROPERTY - in some 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. CO-MORTGAGOR - a second borrower, who signs
a mortgage loan with a mortgagor. The co-mortgagor's credit history, income,
assets, and debts are combined with the mortgagor's for underwriting and ration
analysis purposes. The co-mortgagor must also hold title to the property.
COMPARABLES - properties used for comparative purposes in the appraisal
process, that have similar characteristics to the subject property. Also
referred to as "comps."
CONDITIONS, COVENANTS AND RESTRICTIONS (CC&Rs) - a recorded document stating
the specific conditions that run concurrently with the land.
CONDOMINIUM - a form of real property ownership whereby the purchaser receives
title to the interior space of a unit, in a multi-unit structure and a
proportional interest in common areas. The size of each unit is measured from
the interior surfaces (exclusive of paint and other finishes of the exterior
walls, floors and ceiling (air space).
CONFORMING AND NON-CONFORMING LOANS - types of loans available to different
categories of borrowers. Conforming loans follow strict guidelines for
eligibility as to loan sizes, credit score, rates, income and residence
stability, savings and reserves habits etc. Non-conforming loans fall outside
of the eligibility guidelines established for conforming lending. These may
include
bad credit mortgage financing alternatives.
COVENANT - a legally enforceable promise or restriction in a mortgage. For
example, the borrower may covenant to keep the property in good repair, and
adequately insured against fire and other casualties. A breach of a covenant in
a mortgage usually creates a default as defined by the mortgage and can be the
basis for foreclosure. CONVEY - the act of transferring title to real property
from one party to another.
COOPERATIVE (CO-OP) - in real estate, a form of multiple ownership in which a
corporation or business trust entity holds title to a property (usually an
apartment complex), and grants occupancy rights to shareholder tenants through
proprietary leases. Also called co-ops in many areas. CREDIT RATING - a level
assigned to you in determining your eligibility for loans based on your record
of payment on financial obligations, your income level, and the amount of
available collateral.
CREDIT REPORT - a report that documents a borrower's credit history and current
status, published by three credit repositories. Pursuant to the Federal Fair
Credit Reporting Act (formerly Title VI CCCP) borrowers can obtain a copy of
their credit report from the credit repository facility (NOT from a lender or
loan agent/ broker) and examine their own credit report. A borrower has rights
to view their own individual and personal report run only through the credit
repositories, not a potential credit grantor. No one in the lending cycle is
lawfully allowed to give you a copy of it or let you view it. Contact the
"bureaus" (800/685-1111, 800/682-7654, 800/888-4213), they have toll-free
telephone numbers, websites, and they're responsive. PLUS if there are errors,
only they can fix them - and by law they MUST. CREDIT SCORES - the three major
credit repositories Experian, TransUnion, and Equifax have a score ranking
level assigned to each customer in their credit files. This "score" is their
version of who's more, and who's a less risky loan candidate. All three are
different, different amounts, different numbers, and they are compiled from
different ingredients. The "math" they use is their conclusion as to the "risk
in advancing credit to a particular individual" -- their opinions differ. These
scores can change daily, and sometimes in a major way at month end as well. If
you heard one of your three "numbers" (scores) from somebody last week,
although it could still be "close" to that number now, actually it means
nothing today to a new lender! Most lenders and loan brokers utilize the middle
score out of the three (but many of the newer funding programs use the "primary
repository" instead), for the primary income earner (the potential loan
individual who earns the most money). After more than 30 years of computerized
study (visit the inventor of FICO "scores") and millions of borrowers tested
and tracked, it has been scientifically shown that a medium score at 600, means
the lender will lose money on one out of every eight loans it makes. A score of
700 for example, means the lender will lose money on one out of every 1,293
loans it makes! If YOU were a lender and had the opportunity to make all that
"interest" (or not), what score would you want from customers that YOU made
loans to with your own money??
CREDITWORTHINESS - your credit history, which contains information about your
borrowing habits and money-management skills, and which determines a lender's
decision about what level "risk," or credit grade, to assign you - or even
whether the loan should be made.
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A
- adjustable rate mortgage, adjustment interval, amortization, annual
percentage rate (APR)…more
B – balloon mortgage, bankruptcy, basis point, beneficiary…more
D - debt consolidation, debt service, debt reduction plan, debt-to-income
ratio…more
E - earned and unearned income, earnest money, easement, economic life…more
F - Fair Credit Reporting Act, fair market value, Fannie Mae…more
G - good faith estimate, grace period, gradual payment mortgage (GPM),
grantee…more
H - home equity, home improvement loan, Home Mortgage Disclosure Act
(HMDA)…more
I - index, in file credit report, inflation, initial interest rate, ingress and
egress…more
L - lender buy-down mortgage, liability insurance, LIBOR, loan application…more
M - manufactured home, market value, maximum loan amount, mechanic’s lien…more
N - negative amortized (Neg/AM), Neg AM Loans, negative cash flow, net
worth…more
O - obsolescence, off-site improvements, on-site improvements, ordinary
income…more
P – par, partial payment, partnership, party wall, payment shock…more
Q – quality control, quit claim deed, quote…more
R – rate shopper, real property, real estate loans, reconciliation…more
S – sales contract, satisfaction or mortgage, seasoned mortgage, second
mortgage…more
T – tax lien, tenancy in common, tenant, term, title, title insurance…more
U – underwriting, unencumbered property, uniform commercial code (UCC)…more
V – VA (Department of Veterans Affairs) Mortgage, vacancy rate, VA funding
fee…more
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