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Mortgage Terms Defined

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  • Bridge Loan
    A second trust that is collateralized by the borrower's present home allowing the proceeds to be used to close on a new house before the present home is sold. Also known as "swing loan."
  • Broker
    An individual or company that brings borrowers and lenders together for the purpose of loan origination.
  • Buydown
    When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage. Buydowns can occur in both fixed and adjustable rate mortgages.
  • Buyer's Market
    Market conditions that favor buyers. If there are more sellers than buyers in the market, buyers have ample choice of properties and can use that to negotiate lower purchase prices.
  • Call Option
    A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.
  • Cap
    Limits how much the interest rate or the monthly payment can increase, either at each adjustment or during the life of the mortgage. Payment caps don't limit the amount of interest the lender is earning and may cause negative amortization.
  • Caps
    Limits on changes in ARM interest rates or monthly payments, either in an adjustment period or over the life of the loan.
  • Caps (Payment)
    Consumer safeguards may limit the amount that monthly payments on an adjustable-rate mortgage may change. Because they do not limit the amount of interest the lender is earning, they may cause negative amortization.
  • Cash-Out
    A refinance for more than the balance of the original mortgage. Extra funds are based on the borrowers equity in the property.
  • Cashier's Check (Bank Check)
    A check whose payment is guaranteed because it was paid for in advance and is drawn on the bank’s account rather than the customer’s.
  • CC&Rs
    See Covenants, Conditions and Restrictions
  • Ceiling
    The maximum allowable interest rate of an adjustable-rate mortgage.
  • Certificate of Eligibility
    A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) mortgage.
  • Certificate of Occupancy (COO)
    Document issued by local government agency stating that a property meets the requirements of health and building codes.
  • Certificate of Reasonable Value (CRV)
    A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
  • Certificate of Title
    Written opinion of the status of the title to a property, given by an attorney or a title company. This certificate does not offer the protection given by title insurance.
  • Certificate of Veteran Status
    Document given to veterans and reservists who have served 90 days of continuous active duty (including training time) which enables them to obtain lower down payments on certain FHA-insured loans. Obtainable through local VA office.
  • Certified Check
    A check drawn on the issuer’s account for funds that have been segregated by the bank, guaranteeing payment.
  • CFPB
    See Consumer Finance Protection Bureau.
  • Chain of Title
    A chronological order of conveyance of a property from the original owner to the present owner.
  • Change Frequency
    The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
  • Closing
    A meeting held to finalize the sale of a property. The buyer signs the mortgage documents and pays closing costs. Also called "settlement."
  • Closing Costs
    These are expenses - over and above the price of the property- that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs(...)
  • Closing Disclosure
    The form that itemizes the costs associated with purchasing a home. The computation of costs payable at closing that determines the seller’s net proceeds and the buyer’s net payment.
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