A limit on how much an adjustable rate mortgage's monthly payment or annual interest rate can increase. A cap is meant to protect the borrower from large increases and may be a payment cap, an interest cap, a life-of- loan cap or periodic cap. 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-a-loan cap restricts the amount the interest rate can increase over entire term of the loan. A periodic cap limits the amount the interest rate can change each interest rate adjustment date.
Cash to Close
Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.
Certificate of Title
A certificate issued by a title company or a written opinion rendered 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. The protection offered a homeowner under a certificate of title is not as great as that offered in a title insurance policy.
Certificate of Occupancy (CO)
Written authorization given by a local municipality that allows a newly completed or substantially completed structure to be inhabited - not to be confused with "Notice of Completion."
Certificate of Reasonable Value (CRV)
A Veteran's Administration appraisal that establishes the maximum VA mortgage loan amount for a specified property.
Certificate of Title
Document rendering an opinion on the status of a property's title based on public records.
Closed End Mortgage
A mortgage principal amount that is fixed and cannot be increased during the life of the loan.
The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day. This is a typical list:
- Documentary Stamps on Notes
- Recording Deed and Mortgage
- Escrow Fees
- Attorney's Fee
- Title Insurance
- Appraisal and Inspection
- Survey Charge
- Cost of Abstract
- Documentary Stamps on Deed
- Real Estate Commission
- Recording Mortgage
- Survey Charge
- Escrow Fees
- Attorney's Fee
The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.
A transaction in which the formalities of a real estate sale are concluded. 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 confirms the original agreement reached in the agreement of sale.
Cloud On Title
An outstanding claim or encumbrance which adversely affects the marketability of title.
One who is individually and jointly obligated to repay a mortgage loan and may or may not share ownership of the property with one or more of the borrowers.
See also: co-signer
Something of value pledged as security for a loan. In mortgage lending, the property itself serves as collateral for a mortgage loan.
Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price--6 to 7 percent on houses, 10 percent on land.
A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgage from a lender with specific terms or conditions.
A fee charged when an agreement is reached between a lender and a borrower for a loan on specific terms and conditions. Rate and points may be locked-in or may be "floating".
A formal offer by a lender stating the terms under which it agrees to loan money to a homebuyer.
Those portions of a building, land, and amenities of a PUD, condo or co-op that are used by all the unit owners, who share in the common expense of their operation and maintenance. Common areas usually include swimming pools, tennis courts, or other recreational facilities, as well as common corridors of buildings, parking lots, etc.
The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.
Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multi-unit project.
A loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.
See also: non-conforming loan
A short-term loan financing improvements to real estate, such as the building of a new home. The lender advances funds to borrower as needed while construction progresses. Upon completion of the construction, the borrower must obtain permanent financing or pay the construction loan in full.
Contract sale or deed
A contract between the purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.
In the construction industry, a contractor is one who contracts to erect buildings or portions of them. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building, bridge and dam erection, and others.
A mortgage loan not insured by HUD or guaranteed by the Veterans' Administration. It is subject to conditions established by the lending institution and State statutes. The mortgage rates may vary with different institutions and between States. (States have various interest limits.)
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.
Consumer Handbook on Adjustable Rate Mortgages
A disclosure required by the federal government to be given to any borrower applying for an adjustable rate mortgage (ARM).
A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA), or Rural Economic Community Development (RECD), (formerly Farmers Home Administration).
An adjustable rate mortgage (ARM) that allows a borrower to switch to fixed-rate mortgage during a specified period.
A person who agree to assume a debt obligation if the principal borrower defaults on the payments. A cosigner is not on the security instrument and is only responsible for the debt.
See also: co-borrower
Rules and restrictions governing the use of property.
Credit bureau repositories
An organization that complies credit history data directly from lenders and creditors to build in-file credit reports for individuals; the main repositories are Experian, Transunion, & Equifax.
A report detailing an individual's credit history.