Mortgage glossary

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Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Capital: the balance of your mortgage loan excluding costs and interest outstanding.

Cash Out Refinance: the process of refinancing for an amount higher than the balance due, assuming the property has a sufficiently high value.

Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender. FFI mortgage glossary.

CAT standard: stands for Charges, Access, and Terms - which have to be low, easy and fair respectively. These standards were introduced by the Government for mortgages to help borrowers, especially first-time buyers.

CCJ (County Court Judgment): a judgement reached in the County Court generally realted to non payment of a loan, mortgage etc debt in general. If you pay off the debt, the CCJ will be satisfied and a note is put on your records that states this.

Certificate of Eligibility: You need this in order to prove your entitlement to participate in the VA Home Loan Guarantee Program. In order to get a Certificate of Eligibility you should contact a VA approved lender who in most cases can use the ACE system on the internet to prove eligibility in minutes. FFI mortgage glossary.

Certificate of Reasonable Value (CRV): used for VA loans only, a certificate issued by the Veterans Administration verifying the appraisal.

Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Chain: a housing 'chain' made up of a number of buyers and sellers, essentially the line of buyers and sellers involved in each house move.

Charge: any right or interest, especially with a mortgage, to which a freehold or leasehold property may be held. Basically a charge is the claim the lender has on the property until the mortgage or loan is satisfied. FFI mortgage glossary.

Charge-off: the portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

Clear Title: The title or deed to a particular property that is completely free of all debts, liens, and encumbrances. The owner holds the title free and clear. FFI mortgage glossary.

Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing administration charge: a charge made by the lender to cover administration costs when a mortgage is repaid.

Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application. FFI mortgage glossary.

Collateral: an asset used to secure a loan. It can be seized by a lender if the borrower defaults.

Collection: the semi-formal process used by lenders in contacting borrowers in an effort to bring a loan current. In the case of a mortgage, the mailing and formal recording of certain documents which may be required to foreclose on a property. FFI mortgage glossary.

Commission: an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction..

Commitment: a promise by a lender to make a loan within a specified time period, subject to compliance with stated conditions. The lender's obligation expires if the borrower does not close the loan prior to the expiration date of the commitment. FFI mortgage glossary.

Commitment Letter: The letter given from a lender to a potential borrower that specifies the terms being offered for a mortgage loan.

Common Area: those portions of a building, land and amenities in condominium and cooperative projects which are used the apartment owners. The hallways, parking areas and other amenities.

Common Area Assessments: fees paid (usually) to an Owners Association Fees by the owners of the individual units in a condominium or cooperative which are used to maintain the property and common areas.

Comparables: recent sales of similar properties in the area. Used as a measure local market value to help set the current value of a property.

Completion: the term used when the seller and buyer exchange the finances required to buy a property through their respective solicitors. At exchange of contracts a deposit, usually 10%, will have been paid. At this point the buyer becomes legal owner of the property. FFI mortgage glossary.

Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Construction Loan: a loan used to finance construction of a new home and, sometimes, the land for a home. Depending on local custom, a construction loan may a permanent mortgage with funds disbursed as construction proceeds, or may be a short-term loan that must be repaid on completion.

Consumer Credit Counseling: Where a consumer can get help in the case that they have over-extended or developed derogatory credit.

Contents insurance: cover for the contents of your home - including furniture, appliances and personal items - against damage and theft.

Contingency: a condition which must be met before a contract is binding. For example, a requirement that an existing lien on the property must be cleared by a certain date.

Contract: the written agreement between the seller and the buyer of a property to transfer ownership. FFI mortgage glossary.

Contract race: where the seller has received two or more offers on the property and will sell to the buyer who is ready to exchange contracts first.

Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.

Conventional mortgage: a mortgage loan that is not guaranteed or insured by the U.S. government or its agencies, such as the VA, FHA or RHS.

Conversion: usually refers to the process of converting a property from rental to either a condominium or cooperative property. Tenants generally have a first right of purchase for the unit they occupy. FFI mortgage glossary.

Convertible ARM: an Adjustable-Rate mortgage with a borrower's option to convert to a fixed-rate mortgage under specified conditions.

Conveyance: the legal process in which ownership of the property is transferred from the seller to the buyer. Generally undertaken by a solicitor, or licensed conveyancer.

Conveyancer: solicitor or licensed conveyancer who deals with the legal aspects of buying or selling land or property.

Conveyancing: the legal work involved in the sale and purchase of land or property.

Co-operative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan. FFI mortgage glossary.

Cost Of Funds Index (COFI): An index produced by the 11th District Federal Home Loan Bank. One of several indexes used to set interest rate changes for certain Adjustable-Rate Mortgages.

Counter Offer: When a potential buyer makes an offer for the purchase price and terms to the seller of a property the seller then may make a counter offer of a different price and new terms.

Covenant: Restrictions that are placed on the borrower about what can be done with the property they purchase. Mortgage lenders may do this in order to sustain the value of the home.

Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Credit history: history of an individual's debt payment; lenders use this information to gauge a potential borrower's ability to repay a loan.

Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.

Credit scoring: a process that uses recorded information about individuals and their loan requests to assess - in a quantifiable, objective, and consistent manner - their future performance regarding debt repayment. FFI mortgage glossary.