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REAL ESTATE GLOSSARY
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CALLABLE DEBT
A debt security in where the issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity date.
CALL OPTION
A provision in the mortgage that gives the mortgagee (the lender) the right to call the mortgage due and payable at the end of a specified period for whatever reason.
CAP
Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.
CAPE COD COLONIAL
A single-story house style made popular in New England. Often characterized by a steep roof with gables.
CAPITAL
Accumulated goods and money which is most often used to generate additional income.
CAPITAL GAIN
Profit earned from the sale of real estate. A seller may defer taxes on the capital gain of his/her primary residence by buying a higher priced residence within 2 years.
CAPITAL EXPENDITURE
The cost of an improvement made to extend the useful life of a property or to add to its value.
CAPITAL IMPROVEMENT
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
CARRYBACK LOAN
A loan in which a seller agrees to finance a buyer in order to complete a property sale.
CASH FLOW
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).
CASH-OUT REFINANCE
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.
CAULKING
A pliable material used to seal cracks or openings such as around windows.
CAVEAT EMPTOR
Buyer beware. The buyer must inspect the property and satisfy himself it is adequate for his needs. The seller is under no obligation to disclose defects but may not actively conceal a known defect or lie if asked.
CERTIFICATE OF DEPOSIT
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period. See adjustable rate mortgage (ARM).
CERTIFICATE OF DEPOSIT INDEX
An index based on the interest rate of six month CD's. Used to set interest rates on some Adjustable Rate Mortgages.
CERTIFICATE OF ELIGIBILITY
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, businesses, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (Request for Certificate of Eligibility)
CERTIFICATE OF OCCUPANCY
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.
CERTIFICATE OF REASONABLE VALUE (CRV)
An appraisal performed by an VA approved appraiser which establishes the property's current market value. This value establishes the ceiling on the maximum VA mortgage loan principal.
CERTIFICATE OF OCCUPANCY
Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan.
CERTIFICATE OF TITLE
A written opinion by an attorney setting forth the status of title to the property as shown on the public records. The certificate does not certify as to matters not of record and affords no protection unless the author was negligent.
CERTIFIED GENERAL APPRAISER
Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.
CERTIFIED RESIDENTIAL APPRAISER
A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.
CHAIN OF TITLE
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
CHATTEL
Another name for personal property.
CIRCUIT BREAKERS
Electrical devices which automatically open electrical circuits if they are overloaded.
CLEAR TITLE
Ownership of property that is not encumbered by any counter-claim or lien.
CLOSING
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement." At this meeting, ownership of the property is transferred from the seller to the buyer.
CLOSING COSTS
All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.
CLOSING STATEMENT
The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.
CLOUD ON TITLE
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.
CO-BORROWER
A second person sharing obligation on the loan and title on the property.
COLLATERAL
An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
COLLECTION
The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.
CO-MAKER
A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.
COMMON LAW
An unwritten body of law based on general custom in England and used to an extent in the United States.
COMMISSION
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
COMMITMENT
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 mortgages from a lender with specific terms or conditions.
COMMITMENT LETTER
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."
COMMON AREA ASSESSMENTS
Fees which are charged to the tenets or owners of properties to cover the costs of maintaining areas shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.
COMMON AREAS
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
COMMUNITY PROPERTY
In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.
COMPARABLES
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property who's value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.
COMPOUND INTEREST
Interest paid on the original principal balance and on the accrued and unpaid interest.
CONCESSIONS
Additional value granted by a buyer or seller to entice another party to complete a deal.
CONDEMNATION
The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.
CONDENSATION
The transition of water vapor to liquid. Typically forms in areas of high humidity.
CONDITIONAL COMMITMENT
A written document provided by a lender agreeing to make a loan provided certain conditions are met prior to closing.
CONDOMINIUM
A development where individual units are owned, but common areas and amenities are shared equally by all owners.
CONDOMINIUM CONVERSION
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
CONDOMINIUM HOTEL
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
CONDUIT
The pipe through which electric wiring is run.
CONFORMING LOAN
A loan for up to and including $417,000 in the continental United States (Alaska and Hawaii limits are higher).
CONSIDERATION
Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.
CONSTRUCTION LOAN
A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.
CONTIGUOUS
Connected to or touching along an unbroken boundary.
CONTINGENCY
Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer the requires a complete home inspection before it becomes official.
CONTRACT
A legally binding agreement, oral or written, between two parties.
CONTRACT SALE OR DEED
A real estate installment selling arrangement where the buyer may occupy the property but the seller retains the title until the agreed upon sales price has been paid. Also known as an installment land contract.
CONVENTIONAL LOAN
A mortgage not insured by FHA or guaranteed by the VA.
CONVENTIONAL MORTGAGE
A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).
CONVERSION
The right of a borrower to convert an adjustable or balloon loan into a fixed loan. The Conversion Option column on Moving.com balloon tables indicates the right of a borrower to convert this balloon loan. The possible options are as follows...
CONVERTIBLE ARM
A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.
CONVERTIBILITY CLAUSE
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
COOPERATIVE (CO-OP)
A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.
COOPERATIVE CORPORATION
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.
COOPERATIVE PROJECT
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.
COOPERATIVE MORTGAGES
Mortgages related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units.
CORPORATE RELOCATION
A situation where a person's employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee's primary residence.
COST OF FUNDS INDEX (COFI)
An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.
COVENANT
A written agreement or restriction on the use of land or promising certain acts. Homeowner Associations often enforce restrictive covenants governing architectural controls and maintenance responsibilities. However, land could be subject to restrictive covenants even if there is no homeowner's association.
CONVEYANCE
The transfer of title of real from one party to another.
CREDIT
A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.
CREDIT HISTORY
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.
CREDIT LIFE INSURANCE
A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.
CREDIT LOAN
A credit loan is a mortgage that is issued on only the financial strength of a borrower, without great regard for collateral.
CREDIT-LOSS RATIO
The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.
CREDITOR
A person to whom money is owed.
CREDIT RATING
Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower.
CREDIT-RELATED EXPENSES
The sum of foreclosed property expenses plus the provision for losses.
CREDIT-RELATED LOSSES
The sum of foreclosed property expenses plus charge-offs.
CREDIT REPORT
A detailed report of an individuals credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.
CREDIT REPORTING AGENCY (or BUREAU)
An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.
CREDIT REPOSITORY
Large companies that gather and store financial and credit information about individuals who apply for credit.
CUL-DE-SAC
A dead-end street. One with only one entrance/exit.
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