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Glossary

Mortgage Terms Defined

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  • Closing Statement
    A financial disclosure statement that lists funds received and expected at closing.
  • CLTV
    See Combined Loan To Value.
  • COFI
    See Cost of Funds Index.
  • Collateral
    Assets that back a mortgage loan.
  • Combined Loan to Value Ratio
    CLTV- The ratio of the total mortgage liens against the subject property to the lesser of either the appraised value or the sales price.
  • Commission
    Money paid to a real-estate agent or broker by the seller (usually about 6 or 7 percent of the home’s sales price).
  • Commitment
    A formal offer by a lender to make a loan under certain terms or conditions to a borrower.
  • Compound Interest
    Interest paid on the original principal balance and on the accrued and unpaid interest.
  • Condominium
    A form of property ownership in which the homeowner holds title to an individual dwelling unit and an interest in common areas and facilities of a multi-unit project.
  • Conforming Loan
    A mortgage loan amount under the maximum amount of loans that FNMA and FHLMC are legally allowed to buy. Maximum loan amount varies by county.
  • Consumer Finance Protection Bureau (CFPB)
    A federal agency that enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit accounts.
  • Consumer Reporting Agency (or Bureau)
    An organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history. The agency gets data for these reports from a credit repository and from other sources.
  • Contingency
    A condition that must be satisfied before a contract is legally binding before a sale can close.
  • Contract of Sale
    The agreement between the buyer and the seller on the purchase price, terms and conditions of a sale.
  • Conventional Loan
    A mortgage not insured by the FHA or guaranteed by the VA.
  • Conversion Clause
    A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
  • Convertible ARMs
    ARMs with the option of conversion to a fixed rate during a given time period.
  • Conveyance
    The transfer of a deed, lease or mortgage.
  • Cost of Funds Index (COFI)
    An index of the weighted-average interest rate paid by savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank District.
  • Covenants, Conditions and Restrictions (CC&Rs)
    A document defining the use, requirements and restrictions of a property.
  • Credit Report
    A report detailing an individual's credit history that is prepared by a credit bureau and used by a lender to determine a loan applicant's creditworthiness.
  • Credit Risk
    The possibility that a borrower may default on financial obligations.
  • Credit Risk Score
    A credit score measures a consumer's credit risk relative to the rest of the U.S. population, based on the individual's credit usage history. The credit score most widely used by lenders is the FICO® score, developed by Fair, Issac and Company. This 3-digit number, ranging from 300 to 850, is(...)
  • Debt to Income Ratio (DTI)
    The ratio, expressed as a percentage, that results when the borrower’s monthly payment obligation on debts is divided by monthly gross income.
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