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C
CalHFA
California Housing and Financing Agency Programs are typically funded by state bonds approved in general elections held in the State of California. There are a variety of programs mostly designed for 1st Time Buyers, Low Income Borrowers, or Moderate Income Borrowers. These programs offer easier qualifying, low down payments, low closing costs, and even Silent Seconds.
Call option
Similar to the acceleration clause.
Cap
Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as "caps." Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap.
Capital Gains
Capital gain is calculated as follows: total selling price of the relinquished
property, less exchange expenses, less the relinquished property’s adjusted basis. The adjusted basis is the original cost, plus the cost of capital improvements, less depreciation or cost recovery deductions. Capital gains may be subject to depreciation recapture and other rules of the internal revenue service.
Cash-out refinance
When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."
Certificate of deposit
A time deposit held in a bank which pays a certain amount of interest to the depositor.
Certificate of deposit index
One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.
Certificate of Eligibility
A document issued by the Veterans Administration that certifies a veteran’s eligibility for a VA loan.
Certificate of Reasonable Value (CRV)
Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.
Chain of title
An analysis of the transfers of title to a piece of property over the years.
Clear title
A title that is free of liens or legal questions as to ownership of the property.
Close of Escrow
Generally, an escrow period is the time from when an offer to purchase is signed by the buyer and seller and the time the new buyer takes possession of the home. Many things have to happen during the escrow period; the loan is approved and funded, all the inspections are performed, all documents and disclosures are signed. After everything is ready, the money changes hands and all the deeds are signed and recorded. This ending is called the Close of Escrow.
Closing
This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.
Closing costs
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
Closing statement
See Settlement Statement.
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 deed, release, or court action.
Co-borrower
Is An additional individual who is both obligated on the loan and is on title to the property.
Collateral
In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.
Collection
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.
Commission
Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.
Common area assessments
In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.
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.
Common law
An unwritten body of law based on general custom in England and used to an extent in some states.
Community property
In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances. This is an outgrowth of the Spanish and Mexican heritage of the area.
The Community Reinvestment Act (CRA)
The Community Reinvestment Act (CRA) gives incentives to banks and lenders to encourage them to help meet the credit needs of the communities in which they operate. Although enacted by Congress in 1977, it has only been during the past few years that most of the programs designed by these banks and lenders have been put into place.
Comparable sales
Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."
Condemnation
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.
Condominium
A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.
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. These are often found in resort areas like Hawaii.
Conforming Loan
FNMA and FHLMC make up what is know as the Secondary Market. Although they do not originate any loans, by purchasing home loans originated by lenders, it frees up more money to be used by those lenders to originate more home loans. These loans must conform to FNMA or FHLMC standards which is why they are called Conforming Loans.
Construction Exchange
You may purchase replacement property that is not yet built, provided that the improvements on the property are completed prior to the expiration of the 180 days. In a Construction Exchange, the property is held by a specially formed LLC called the EAT ( Exchange Accommodation Taxpayer) . A Construction Exchange generally has greater complexity and fees than a 1031 Exchange.
Construction loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Constructive Receipt
A term that refers to the exchanger having unrestricted control of the equity from the property sold. A Constructive Receipt will invalidate a tax deferred exchange.
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
An oral or written agreement to do or not to do a certain thing.
Contract Exchange
A Contract Exchange is the tax-deferred exchange of: The Buyer’s ownership in a Sales Contract on real property, for different real property, or for a contract or option on different real property; or the Option Holder’s exchange of an Option to purchase real property, for different real property, or for an option or contract on different real property. Essentially, a contract exchange is an exchange of an open option to purchase, or an open Sales Contract, rather than an exchange of the underlying real estate itself.
Contractor
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.
Conventional mortgage
Refers to home loans other than government loans (VA and FHA).
Convertible ARM
IAn adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
Cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
Cooperation Clause
Clause added to the purchase on sales agreement requiring the person who is not the exchanger to use their best efforts to assist the exchanger in consummating a 1031 tax deferred exchange.
Cost of funds index (COFI)
One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.
Credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
Credit history
A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.
Creditor
A person to whom money is owed.
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.
Credit repository
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 Score
Credit reporting agencies collect information about your credit use, such as payment history, the number of accounts you have, the balances on the accounts, and any derogatory information regarding your credit. They then use a statistical program to award points for each factor that might predict how likely you are to repay a new debt. A total number of points is given to create your Credit Score. The higher the score, the better. Typically scores of less than 500 make it difficult to obtain home financing while scores over 700 make it much easier
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