Call Option - A loan provision that gives the mortgagee (the lender) the right to
call the mortgage due and payable, for any reason, after a specified period of time.
Cancellation Clause - A contract provision that grants the right to terminate one or
more obligations under the contract upon the occurrence of specified events.
Cap - The provision in an adjustable rate mortgage (ARM) that limits how much
the interest rate can increase or decrease.
Capital Improvement - A permantent improvement to real property, increasing its
value or useful life.
Cash Out Refinance - A refinance loan that provides the borrower with
funds beyond that required to pay off existing mortgages on the home.
Certificate of Title - A statement of opinion rendered by a title company or
attorney, stating that a title to real property is legally held by the current
Chain of Title - A history of all documents, including conveyances and
encumbrances, that affect title to a parcel of real property, starting with the
earliest existing document and ending with the most recent.
Change Frequency - Term sometimes used to describe the frequency of payment
or interest rate changes in an adjustable-rate-mortgage (ARM).
City/County Stamp Tax - A tax that is required in some municipalities if a
property changes hands or a new mortgage is obtained. The amount of this tax can
vary with each state, city and county. This fee is
considered a tax or other unavoidable fee.
Clear Title - A title that is free of clouds, liens, disputed interests or
legal questions as to ownership of the property.
Closing - A meeting of the parties involved in a real estate transaction
to finalize the process. In the case of a purchase, a closing usually involves
the seller, the buyer, the real estate broker and the lender. In the case of a
refinance, the closing involves the borrower and the lender. Sometimes referred
to as the settlement or the close of escrow.
Closing Costs - Fees that a home buyer must pay at closing.
Closing costs are made up of individual closing cost items such as origination
fees, escrow fees, underwriting fees and processing fees. Most closing cost
items are included as numbered items on the HUD-1 Settlement Statement.
Closing Statement - Also referred to as the HUD-1 or the settlement
statement, this is the document that provides line by line detail of the
financial details related to a specific real estate transaction such as the fees
paid by the seller and the buyer for a purchase transaction or the fees paid by
the borrower for refinances.
Cloud on Title - Any conditions such as encumbrances, liens or claims
revealed by a title search that adversely affect the title to real estate.
Clouds on a title often cannot be removed, except by a quitclaim deed release,
or court action. Compare with clear title.
Collateral - Property pledged as security for a debt. The borrower risks
loosing the collateral if the debt is not repaid according to the terms of the
Comparables - An abbreviated form of comparable properties. Comparables
are used for comparative purposes in the appraisal process and are properties
that are very similar to the property being appraised. They have been sold
recently and have approximately the same size, location and features. Comparables
help the appraiser determine the approximate fair market value of the subject
property. Often just called "comps."
Compound Interest - Interest paid on the original principal balance, and
on the accumulated and unpaid interest.
Conforming Loan - A loan that does not exceed the maximum loan amount
allowed for the most common mortgage investors. Loans that exceed this amount
are referred to as "jumbo mortgages." The cost of obtaining a jumbo mortgage
is generally higher than the cost of obtaining a conforming mortgage.
Contract - An oral or written agreement to do or not to do a certain
thing for consideration.
Conventional Mortgage - A mortgage that is not insured or guaranteed by a
Convertible ARM - An adjustable rate mortgage (ARM) that allows a borrower
to convert their mortgage to a fixed rate loan for the remainder of the loan
term if certain conditions are met.
Credit Grade - A value given to an individual to reflect their current and
past debt repayment patterns. A grade of "A" is considered to be the best.
Credit History - A record of a person�s debt history, including all open
and fully repaid obligations. A credit history helps a lender to determine
whether a potential borrower has satisfactory history of repaying debts in a
Credit Report - A record of an individual's current and past debt
repayment patterns. A credit history helps a lender to determine whether a
borrower has a history of repaying debts in a timely manner.
The credit report fee is considered to be a third party fee.
Creditor - A person or business that is owed money.