| Affinity Moving Services Glossary of Terms |
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CALL OPTION A provision in a loan that gives the lender the right to accelerate the debt, and require for full payment of the loan immediately, at the end of a specified period or for specified reason.
CAP A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.
CAPITAL (1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.
The cost of an improvement made to extend the useful life of a property or to add to its value, such as adding a room. The cost of repairing a property is not a capital expenditure. Capital expenditures are appreciated over their useful life; repairs are subtracted from income for the current year.
CAPITAL IMPROVEMENT Any structure or component erected as a permanent improvement to real property that adds to its value and useful life. See Capital Expenditure .
CAPITAL LOSS Decrease in value of a capital property (a property other than a principal residence). It may be set off against capital gains or against regular income according to the tax rules.
CARRYING CHARGES (COSTS) The expense required to maintain a property over a given period of time, including property taxes, maintenance, insurance payments, interest charges on financing, etc.
CASH AVAILABLE FOR CLOSING Borrower funds available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes or that the down payment come from certain sources, borrower's cash available for closing does not include cash reserves or money from other sources.
CASH-OUT REFINANCE A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity.
CAVEAT EMPTOR Latin, meaning "Let the Buyer beware". Maxim which applies to real estate transactions where the onus is on the Purchaser to satisfy herself as to the suitability and condition of the property she is considering for purchase. Vendor is not responsible to the Purchaser for the condition of the property and, unless he is specifically asked, does not generally have an obligation to reveal problems to the Purchaser (except where the defect is hidden, serious and could not be discovered by the Purchaser after reasonably prudent inquiries and investigations).
CC&R'S Short form for "covenants, conditions, and restrictions", which are the rules of general application governing the relations between land owners in a specific subdivision, development, condominium development or cooperative housing facility. May be registered on title.
CEILING The maximum interest rate that can accrue on a variable rate loan or adjustable rate mortgage (ARM) . See lifetime rate cap .
CERTIFICATE OF ELIGIBILITY A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) Mortgage loan.
CERTIFICATE OF INSURANCE A document, issued by the insurance company, setting out the particulars of the insurance coverage for a particular property.
CERTIFICATE OF OCCUPANCY Document issued by the local municipality indicating that a new dwelling is suitable for occupation. Generally confirms that the dwelling complies with local building, safety and health by-laws.
CERTIFICATE OF REASONABLE VALUE (CRV ) A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA loan, based on an approved appraisal.
CERTIFICATE OF TITLE A statement provided by an abstract company, title company, or attorney stating who holds title to real estate based on the public record.
CHAIN OF TITLE The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
CHATTEL An item of personal property which is not affixed to the land or building (as opposed to a fixture, an item which is a part of the land or building). Chattels are generally not included in the sale of property unless specifically included in the Agreement of Purchase and Sale .
CLAIM A right asserted against another party. One might register a claim on title to the property to which the claim applies, file a claim under an insurance policy or file a Statement of Claim in court to assert one's rights.
CLEAR TITLE A title that is marketable and is free of liens or disputed legal questions as to ownership of the property.
A meeting at which all documents are signed and all expenses are paid to transfer ownership of property. Also called "settlement."
CLOSING COST ITEM A fee or amount that a home buyer must pay at closing for a particular service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 settlement statement .
CLOSING COSTS Various expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include items such as broker's commissions, discount points, origination fees, attorney's fees, taxes, title insurance premiums, escrow agent fees, and charges for obtaining appraisals, inspections and surveys. Closing costs will vary according to the area of the country. Lenders or real estate professionals often provide estimates of closing costs to prospective homebuyers even before the HUD-1 settlement statement is delivered.
CLOSING DATE Also known a Completion Date. The date set in the Agreement of Purchase and Sale upon which the transaction is to be completed, the purchase price paid and the transfer of title registered
An accounting of funds given to both buyer and seller before real estate is sold. See HUD-1 settlement statement .
CLOUD ON TITLE An outstanding claim or lien, revealed by a title search, that adversely affects the owner's title to real estate. Usually, clouds on title cannot be removed except by a quitclaim deed , release , or court action.
CODE OF ETHICS A set of rules governing the behavior of members of the organization that has established the Code. Lawyers and real estate brokers/agents both have their own Codes.
COINSURANCE A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
COINSURANCE CLAUSE A provision in a hazard insurance policy stating the minimum amount of coverage that must be maintained - as a percentage of the total value of the property - in order for the insured to collect the full amount of a loss.
COLLATERAL An asset (such as a car or a home) that is pledged as security for 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 or promissory note.
COLLECTION The efforts used to bring a delinquent loan current and, if necessary, to file legal papers and notices to proceed with foreclosure.
COMBINED LOAN TO VALUE (CLTV ) The ratio of the total amount borrowed on all mortgages against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage and a $10,000 2nd mortgage on a home with an appraised value of $100,000, the CLTV is 90% ($80,000+$10,000 = $90,000 / $100,000 = 90%).
COMMINGLE To allow to mix, as in money belonging to two or more people deposited to the same account and used by each person regardless of the amount they have deposited.
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 (such as 5%, 6%, or 7%).
COMMITMENT FEE The fee charged by the lender to commit itself to a mortgage or loan on specific terms.
A formal notification from a lender stating that the borrower's loan has been conditionally approved and specifying the terms under which lender agrees make the loan. Also known as a "loan commitment."
COMMON AREA ASSESSMENTS Payments required of individual unit owners in a condominium or Planned Unit Development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.
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 some Western and Southwestern states, the law specifies that property acquired during a marriage is presumed to be owned jointly by the husband and wife unless acquired as separate property of one spouse or the other.
COMPARABLES (COMPS ) An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
COMPOUND INTEREST Interest paid on the principal balance and on the accrued and unpaid interest.
CONCESSIONS Sacrifices made by a party to convince another party to enter a contract
CONDEMNATION (1) Declaration that a building is unfit for use or is dangerous and must be destroyed; (2) Taking of private property for a public use (such as a park, street or school) through an exercise of the right of eminent domain .
CONDITION(S) Clauses in the Agreement which must be fulfilled before the Agreement becomes firm and binding. If the condition is not fulfilled, the Agreement will usually become null and void and any deposit paid returned to the Purchaser. CONDITIONAL OFFER An offer to purchase a property which is contingent on the fulfillment of certain conditions before it becomes firm and binding. Also known as "Conditional Sales Contract".
A real estate project in which each unit owner has title to a unit in a multi-unit building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
CONDOMINIUM CONVERSION Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
CONDOMINIUM OWNERS ASSOCIATION An organization made up of unit owners in a condominium development established to govern relations between the owners and to administer the rules, by-laws and covenants of the condominium
CONFORMING Complying with the requirements of a certain statute, by-law or organization
CONFORMING LOAN A home loan with a maximum loan amount of $322,700 that is eligible for purchase by FNMA and FHLMC .
CONSIDERATION The value, asset, service, information etc. which is offered to another party in a contract in exchange for that party's agreeing to enter the contract. A contract is not binding if each party does not offer at least some consideration to the other party(ies).
CONSTRUCTION LOAN A short-term, interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses.
CONSTRUCTIVE NOTICE The legal principle that deems that a person has knowledge of a certain fact once that fact is made a part of a public record. The registration of a lien on title to a property represents constructive notice to all persons interested in that property of that lien, whether they have investigate the title records or not.
CONSUMER REPORTING AGENCY (OR BUREAU ) An organization that prepares reports that lenders use to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from creditors such as mortgage lenders, credit card companies, department stores, etc.
CONTINGENCY A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
CONTRACT A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A legally binding contract must include consideration passing between the parties, an intention on the part of all parties to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of clarity such that the terms of the contract may be interpreted, understood and enforced by a court..
Also known as a Land Contract or Land Installment Contract. Transfer of a property where the title remains in the Vendor's name until the Purchaser makes the final payment to the Vendor of the Purchase Price.
CONTRACT OF SALE Also known as Agreement of Purchase and Sale , Offer to Purchase, Contract of Purchase. The written agreement between the Vendor and Purchaser for the sale of property which contains all of the terms, conditions and financial details of the transaction.
CONTRACTOR A tradesman who works in the construction industry under a contract with the owner of the property. See also " sub-contractor ".
CONVENTIONAL LOAN A home loan that is not insured or guaranteed by the federal government. Contrast with government loan. Can be for conforming or non-conforming loan amounts.
CONVERSION 1. a change in the use of a property, or in the way a property is owned (i.e. from private to condominium ownership)
CONVERSION CLAUSE A provision in a variable rate mortgage ( adjustable rate mortgage ) which allows the borrow to change the mortgage to a fixed rate mortgage upon the occurrence of certain events.
CONVERTIBILITY CLAUSE A provision in some adjustable rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed rate loan at specified times during the life of the loan.
CONVERTIBLE ARM An adjustable rate mortgage (ARM) that can be converted to a fixed rate loan under specified conditions.
COOPERATIVE (CO-OP) A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
CORPORATE RELOCATION Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.
CO-SIGNER A person who signs a promissory note along with the borrower. A co-maker's signature helps to assure that the loan will be repaid. The borrower and the co-maker are jointly responsible for the repayment of the loan.
COST OF FUNDS INDEX (COFI ) An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco . See adjustable-rate mortgage (ARM).
CO-TENANCY When more than one person owns a piece of property. Title will be held by the owners as Joint Tenants (each owns the land equally and, in the event of the death of one of the owners, the survivors continue to share title equally by right of survivorship) or as Tenants in Common (each owner has title to a specific percentage of the land and may sell, mortgage, or bequeath her interest to a third party without consent of the other owners).
COUNTEROFFER An answer to an offer. If a prospective Purchaser presents an offer to purchase a property to the owner of the property, that owner may accept the offer as it stands, reject it outright or respond with a "counteroffer" which changes certain terms of the original offer. Making a counteroffer, at law, entails rejection of the original offer. The Purchaser may then counteroffer back, making changes to the owner's counteroffer. Sometimes, the process of counteroffering is referred to as "signing back" the offer.
COVENANT A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure of the property.
CREATIVE FINANCING An arrangement for the financing of the purchase of a property which is outside the normal practice of residential financing.
CREDIT An agreement in which a borrower receives money or something of value in exchange for a promise to repay the lender on specified terms at a later time.
CREDIT HISTORY An evaluation of an individual's capacity and history of debt repayment. A credit history helps a lender to determine whether a potential borrower is likely to repay a loan in a timely manner.
CREDIT LIFE INSURANCE A type of insurance that pays off a loan if one of the borrowers dies while the policy is in force.
CREDIT LIMIT The maximum amount that can be borrowed under the home equity line of credit.
A person to whom money is owed (opposite of a Cebtor ).
CREDIT RATING An expression of creditworthiness based upon present financial condition and past credit history.
CREDIT REPORT A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See merged credit report.
CREDIT REPOSITORY (CREDIT BUREAU) An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.
CREDIT SCORING Credit scores are numerical values that rank individuals according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, and other factors. According to Fannie Mae--one of the major investors in home loans, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan.
CUMULATIVE INTEREST Total interest accrued
CURTAILMENT A payment that reduces the principal balance of a loan.
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