Understand the most important lending and mortgage terms. Mortgages can be confusing for the first time home buyer, so let us help explain. Below you'll find explanations for most of the mortgage industry terms.

What is Call option? A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever…
What is Caps? Limits on changes in ARM interest rates or monthly payments, either in an adjustment period or over the life of the…
What is Caps (Payment)? Consumer safeguards may limit the amount monthly payments on an adjustable-rate mortgage may change. Because they do not limit the amount of interest the lender is earning, they may cause negative…
What is Cash-out? A refinance for more than the balance of the original mortgage, with the extra money is taken out of the equity in the…
What is Cashier’s check (or bank check)? A check whose payment is guaranteed because it was paid for in advance and is drawn on the bank's account instead of the…
What is CC&Rs? See Covenants, Conditions and…
What is Ceiling? The maximum allowable interest rate of an adjustable-rate…
What is Certificate of eligibility? Document issued by the Veterans' Administration to qualified veterans that entitles them to VA guaranteed loans. This certificate can be obtained through local VA office by submitting form DD-214…
What is Certificate of occupancy? Document issued by local government agency stating that a property meets the requirements of health and building…
What is Certificate of reasonable value (CRV)? A property appraisal performed by a VA-approved appraiser that establishes the limit on the principal of the VA…
What is Certificate of title? Written opinion of the status of title to a property, given by an attorney or title company. This certificate does not offer the protection given by title…
What is Certificate of veteran status? Document given to veterans or reservists who have served 90 days of continuous active duty (including training time) which enables them to obtain lower down payments on certain FHA-insured loans.…
What is Certified check? A check drawn on the issuer's account for funds that have been segregated by the bank, guaranteeing…
What is CFPB? See Consumer Financial Protection…
What is Chain of title? The chronological order of conveyance of a property from the original owner to the present…
What is Change Frequency? The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage…
What is Clear title? A marketable title, free of clouds and…
What is Closing (or settlement)? Meeting between the buyer, seller and lender or their agents at which property and funds legally change…
What is Closing costs? Fees incurred in a real estate or mortgage transaction and paid by borrower and/or seller during a mortgage loan closing. These typically include a loan origination fee, discount points, attorney's…
What is Closing statement? A financial disclosure statement that lists the funds received and expected at the…
What is Cloud on title? An outstanding claim or encumbrance that, if valid, would affect or impair the owner's…
What is CLTV? See Combined…
What is COFI? See Cost of funds…
What is Collateral? Assets that back a mortgage…
What is Collection? The process of bringing a delinquent debt current and the filing of the necessary notices to proceed with repossession or foreclosure when…
What is Combined loan-to-value (CLTV)? The ratio of the total mortgage liens against the subject property to the lesser of either the appraised value or the sales…
What is Commission? Money paid to a real estate agent or broker by the seller (usually 6 to 7 percent of a home's sale…
What is Commitment? A formal offer by a lender to make a loan under certain terms or conditions to a…
What is Compound Interest? Interest paid on the original principal balance and on the accrued and unpaid…
What is Condominium? A form of property ownership in which the homeowner holds title to an individual dwelling unit and an interest in common areas and facilities of a multi-unit…
What is Conforming loan? A mortgage loan under the maximum amount of loans that FNMA and FHLMC are legally allowed to buy. Maximum loan amount varies by…
What is Consumer Financial Protection Bureau (CFPB)? A federal agency that enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit…
What is Consumer Reporting Agency (or Bureau)? An organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history. The agency gets data for these reports from a credit repository and from…
What is Contingency? A condition that must be satisfied before a contract is legally binding before a sale can…
What is Contract of sale? The agreement between the buyer and seller on the purchase price, terms and conditions of a…
What is Conventional loan? A mortgage not insured by the FHA or guaranteed by the…
What is Conversion clause? A provision in some ARMs allowing you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate is set at current rates, and there may be a charge for the…
What is Conversion option? Many "short-term" ARM products feature a conversion option. This option allows a consumer, subject to certain restrictions, to convert the loan from an adjustable to a fixed-rate…
What is Convertible ARMs? ARMs with the option of conversion to a fixed loan during a given time…
What is Conveyance? The transfer of a deed or possibly a lease or…
What is Cost of funds index (COFI)? An index of the weighted-average interest rate paid by savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank…
What is Covenants, conditions and restrictions (CC&Rs)? A document defining the use, requirements and restrictions of a…
What is Credit report? A report detailing the credit history of a prospective borrower, used when determining…
What is Credit risk? The possibility that the borrower may default on financial…
What is Credit Risk Score? A credit score measures a consumer's credit risk relative to the rest of the U.S. population, based on the individual's credit usage history. The credit score most widely used by lenders is the…
What is CRV? See Certificate of reasonable…


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