Glossary of Terms: C
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Cash-out Refinance:
Refinancing transaction where the principal amount of the new loan exceeds the principal amount of the loan being refinanced. The borrower can convert this additional equity to cash, which can be used for any purpose, such as home improvements, bill consolidation, education expenses, purchase of big-ticket items or paying for a vacation.
Closing:
The meeting with the buyer, seller and lender consummating a real estate transaction. The property and funds are legally exchanged at this meeting.
Closing Costs:
Fees paid by the borrower and seller at or prior to the closing of a mortgage loan, not included in the price of the property. These costs may include attorney’s fees, loan origination fees, taxes, title search, insurance, points, and appraisal fee.
Co-Borrower:
An additional person that is listed on the title and assumes equal responsibility
for the repayment of the loan.
Commitment (Loan):
An agreement between the lender and the borrower to make a loan for a given time period subject to the stated conditions.
Commitment Fee (Loan):
A fee paid by the borrower to the lender for the lender’s commitment to lend money for a given time period and at a specified rate.
Competitive Market Analysis (CMA):
A property evaluation prepared by a real estate agent that determines the property’s value by comparing it to similar properties sold in the area.
Compounded Interest:
Interest that includes the principal balance of the mortgage along with the accrued interest.
Condominium or Condo:
A building or development where there is individual ownership of a unit and a proportionate interest in common areas.
Conforming Loan:
A mortgage loan that meets the criteria set forth by Fannie Mae and Freddie Mac.
Construction Loan:
A short-term interim mortgage loan to pay for the cost of construction. The lender advances funds in stages as work progresses.
Contingency:
A specified condition that must be met before the home sale can occur.The two most common contingencies when buying a home are a satisfactory home inspection and the borrower being approved for a mortgage.
Conventional Loan:
A private sector loan that is not insured or guaranteed by a government agency such as the VA, FHA or Farmers Home Administration.
Conventional Mortgage:
Any mortgage which is not insured or guaranteed by a government agency such as the VA, FHA or Farmers Home Administration.
Co-signer:
A second person to sign a loan who agrees to assume a debt obligation if the principal borrower defaults on payments. This person has no ownership interest in the property and receives no benefit in any loan proceeds.
Credit:
An arrangement in which a borrower receives money to be paid back to the lender over time.
Credit Reporting Agency or Bureau:
A company that gathers and sells information relating to the credit of individuals.
Credit History:
A record of an individual’s credit over time, including how they have borrowed and repaid debts.
Credit Report:
A report of an individual’s debts, used to help in the determination of a person’s creditworthiness.
Credit Score:
A three-digit number that rates the quality of an individual’s credit. This number is used by lenders to determine the borrower’s likelihood of a loan being paid in a timely manner. It is also used by lenders in determining rates and terms to the loans they make. Scores range from 360-840, where a higher
score means less risk.
Creditor:
The lending institution providing credit or a loan
Creditworthiness:
The way a lender measures a borrower’s ability to repay debt
Current Value Index:
The index used to calculate the interest adjustment on your Adjustable Rate Mortgage (ARM.)
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