Caps are used on adjustable rate mortgages (ARMs) to limit the interest rate and/or the payment. Most ARMs have a periodic cap that is around 2% per year and a life cap of around 5%-6% over the life of the loan. "Payment only" caps sometimes create negative amortization where the principal balance of the loan increases rather than decreases over time.
Taxable profit on the sale of an appreciated asset.
A legal term meaning "let buyer beware".
Certificate of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility).
Certificate of Occupancy
Document issued by a local governmental agency that states a property meets the local building standards for occupancy.
Certificate of Reasonable Value (CRV)
An appraisal of property for the purpose of insurance by the Veteran's Administration.
Certificate of veteran status
The document given to veterans or reservists who have served 90 days of continuous active duty (including training time) It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status. This document enables veterans to obtain lower down payments on certain FHA insured loans).
A true copy, attested to be true by the officer holding the original.
Cestui Que Trust
One having an equitable interest in property with the legal title being vested to the trustee.
Chain of Title
The chronological order of conveyance of a parcel of land from the original owner to the present owner.
Conclusion of a real estate sale where the title of the property is transferred to the new owners and funds are transferred to the appropriate parties ( seller, old lender, real estate broker, etc.).
A neutral third party that facilities the closing of a real estate transaction. The closing agent can be an escrow company, title company or attorney.
Expenses incurred by the buyer/borrower and the seller in a real estate or mortgage transaction. There can be non-recurring costs that include a one time charge for points, appraisal fees, etc. or a proration of recurring costs such as taxes and insurance incurred while the new buyer/borrower owns the real estate.
Statement prepared for the buyer and seller itemizing all of the costs of a real estate transaction.
Cloud on Title
An invalid encumbrance on real property, which, if valid, would affect the rights of the owner.
Equally responsible for repayment as the borrower.
The underwriters consider many variables in their analysis. No two borrowers have the same credit and income profiles andunderwriters use all of the information in the loan file to render a decision. Many times, borrowers fall outside the guidelines, but have strong compensating factors that reflect low credit risk. Some compensating factors are history of savings, long-term job stability, history of making monthly credit payments that equal or exceed the proposed payments, a substantial down payment or a large cash reserve after the close of escrow.
Fee paid to a broker or other entity for services rendered. Real estate brokers and mortgage brokers receive a commission for the services they provide; a real estate broker secures a buyer for a property that is for sale and a mortgage broker secures a mortgage loan for the buyer to finance the purchase of a property. Commissions are generally paid as a percentage of the sales price in a real estate transaction or the loan amount in a mortgage transaction.
A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. an agreement, often inwriting, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.
Properties used as comparisons to determine the value of a specified property.
A lenders promise to issue a loan subject to certain conditions. Generally, the lender will not fund the loan until the conditions have been met.
Purchase offer in which the buyer proposes to purchase property only after certain events (sale of another home, finding a loan commitment, etc.) occur.
A structure of two or more units, the interior space of which are individually owned.
Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.
Short-term financing for real estate construction. Generally followed by long term financing called a "take out" loan issued upon completion of construction.
Condition which must be satisfied before the buyer can consummate the purchase of a property. Contingencies are generally outlined in the purchase contract between the buyer and seller.
Contract of Sale
A purchase transaction in which the buyer receives possession of the property, but the seller retains title.
A mortgage loan that is not guaranteed or insured by the government. FHA and VA loans are not conventional loans.
ARMs that have a provision allowing the borrower to convert the mortgage to a fixed rate term. The conversion feature is outlined in the mortgage note and has certain restrictions.
A loan neither insure by the FHA nor guaranteed by the VA.
Cost Plus Contract
A building contract setting the builder's profit at a set percentage of actual cost of labor and materials.
Contract Sales Price
The full purchase price as stated in the contract.
Accounting figure that includes original cost of property plus certain expenses to purchase, money spent on permanent improvements and other costs, minus any depreciation claimed on tax returns over the years.
A division within a state, usually encompassing one or more cities or towns.
A report documenting the credit history and current status of a borrower's credit standing.
Typically, the buyer, as opposed to the principal (seller).