Call (Demand) Option:A clause in a loan agreement that lets the lender request the balance of the loan at any time during the life of the loan.
Cancellation Clause:A clause that explains the conditions under which a party may terminate an agreement.
Cap: The limit on the amount that the monthly payment and interest rate can increase on an adjustable rate mortgage.
Capital: Money used to create additional wealth, such as money invested in rental property.
Capital Expenditure:The cost of making improvements on property.
Capital Gains: The profit from the sale of real estate or other long term investments.
Capital Gains Tax:A tax on the profit from the sale of real estate or other long term investments.
Capital Improvement:Any improvement that increases the value of a property.
Cash Out Refinancing:Refinancing a mortgage with a loan amount that is greater than the amount due on the loan being refinanced. The additional funds may be used for cash to the borrower, payment of additional outstanding liens, or personal new loan expenses.
Caveat Emptor: A legal principle derived from the Latin phase, meaning “let the buyer beware.”
CC&R’s (Covenants, Conditions, and Restrictions): Rules and regulations for a particular housing development.
Certificate of Occupancy: A document issued by local government to a builder, stating that the building has met all building codes and is suitable for habitation.
Certificate of Title:A document issued by a title company or a written opinion from an attorney stating that the seller of a property has good marketable and insurable title to the property for sale.
Chain of Title: The official record detailing the ownership history of a property.
Change Frequency:The interest rate change schedule on an adjustable rate mortgage.
Clear Title: A property that does not have any liens, defects, or other legal encumbrances recorded against it.
Closing: The final step in the purchase of a property, in which documents are signed and recorded and the property is transferred to the new owner.
Closing Costs: Various costs related to the sale of real estate, including loan, title, escrow, and appraisal fees.
Cloud on Title: An outstanding encumbrance on a property which may adversely affect the marketability of title.
Collateral: Property that a borrower offers as security to obtain a loan.
Collection: Steps taken by a lender to obtain overdue payments on a loan.
Commercial Property:An area zoned for business.
Commission: A percentage of a sale paid to an agent of the sale as compensation for assisting either the buyer or seller.
Commitment: A promise from a lender to make a loan, under certain terms. Commitments are issued for a limited period of time.
Commitment Fee: The amount a lender may charge for issuing a commitment to lend.
Common Area: An area within a housing complex or tract that is owned by all residents and is maintained using common funds.
Common Area Assessments: Fees paid by the owners of a condominium or home in a planned unit development to operate and maintain common areas.
Common Interest Development: A compilation of individually-owned units that share responsibility for and usage of common areas.
Community Property:A classification in certain states of property owned jointly by a husband and wife.
Comparable: A property with similar characteristics used to compare with a subject property for the purpose of determining the fair market value of the subject property.
Condominium: Individual ownership of a unit within a building or development with common areas owned by all residents. The individual owners own the interior space of the dwelling. They do not own the land the condominium sits on.
Conforming Loan:Any loan that meets the qualifications to be purchased by Fannie Mae or Freddie Mac.
Construction Loan:A short term loan of which funds are disbursed in stages by the lender, for the construction of a home.
Construction to Permanent Loan: Converting a construction loan to a traditional mortgage loan after construction is complete.
Consumer Credit: Credit owed that is not secured by real estate.
Contract: An agreement between two or more parties.
Contract to Purchase:A contract between the seller and buyer of a home detailing the price and terms of the transaction.
Conventional Mortgage:A long-term loan for the purchase of a home that is not insured by HUD or guaranteed by the Veteran’s Administration.
Convertible Adjustable Rate Mortgage: An adjustable rate loan that allows the borrower to convert to a fixed rate loan during a specific period of time.
Conveyance: The transfer of a property’s title from one party to another.
Conveyance Tax: A tax on the transfer of real property.
Co-Signer: A second party who signs a promissory note and assumes responsibility for payment of the loan. A co-signer is fully responsible for the debt in the event the borrower does not repay the debt.
Counteroffer: A response to an offer to purchase property, usually requesting a change in the terms set forth in the buyer’s offer.
Credit: Money lent to a borrower in exchange for a commitment to repay the loan within a certain timeframe.
Credit Bureau: A company whose function is to collect credit data and issue credit reports. A credit bureau will generally access credit information held by a credit repository.
Credit History: A record of a person’s current and past payment of debts.
Creditor: Any individual or institution to whom a debt is owed.
Credit Rating: Credit worthiness assigned to an individual based on current credit, credit history, and financial standing.
Credit Report: A report furnished by an independent credit reporting agency that verifies an individual’s credit and payment history on current and previous debts, and other information pertinent to their credit history.
Credit Repository:A large company that gathers financial and credit information from multiple sources about individuals who have applied for credit. The credit repository generally furnishes data to credit reporting agencies or bureaus.