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
A provision of an adjustable-rate mortgage (ARM) that limits how much
the interest rate or mortgage payments may increase or decrease. See
lifetime payment cap,
lifetime rate cap, periodic
payment cap, and periodic
(1) Money used to create income, either as an investment in a business
or an income property. (2) The money or property comprising the wealth
owned or used by a person or business enterprise. (3) The accumulated
wealth of a person or business. (4) The net worth of a business represented
by the amount by which its assets exceed liabilities.
The cost of an improvement made to extend the useful life of a property
or to add to its value.
Any structure or component erected as a permanent improvement to real
property that adds to its value and useful life.
A refinance transaction in which the amount of money received from
the new loan exceeds the total of the money needed to repay the existing
first mortgage, closing costs, points, and the amount required to
satisfy any outstanding subordinate mortgage liens. In other words,
a refinance transaction in which the borrower receives additional
cash that can be used for any purpose.
certificate of deposit
A document written by a bank or other financial institution that is
evidence of a deposit, with the issuers promise to return the
deposit plus earnings at a specified interest rate within a specified
certificate of deposit
An index that is used to determine interest rate changes for certain
ARM plans. It represents the weekly average of secondary market interest
rates on six-month negotiable certificates of deposit. See adjustable-rate
Certificate of Eligibility
A document issued by the federal government certifying a veterans
eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable
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
A statement provided by an abstract company, title company, or attorney
stating that the title to real estate is legally held by the current
chain of title
The history of all of the documents that transfer title to a parcel
of real property, starting with the earliest existing document and
ending with the most recent.
The frequency (in months) of payment and/or interest rate changes
in an adjustable-rate mortgage (ARM).
Another name for personal property.
A title that is free of liens or legal questions as to ownership of
A meeting at which a sale of a property is finalized by the buyer
signing the mortgage documents and paying closing costs. Also called
closing cost item
A fee or amount that a home buyer must pay at closing for a single
service, tax, or product. Closing costs are made up of individual
closing cost items such as origination fees and attorney's fees. Many
closing cost items are included as numbered items on the HUD-1 statement.
Expenses (over and above the price of the property) incurred by buyers
and sellers in transferring ownership of a property. Closing costs
normally include an origination fee, an attorney's fee, taxes, an
amount placed in escrow, and charges for obtaining title insurance
and a survey. Closing costs percentage will vary according to the
area of the country; lenders or realtors® often provide
estimates of closing costs to prospective homebuyers.
See HUD-1 statement.
cloud on title
Any conditions revealed by a title search that adversely affect the
title to real estate. Usually clouds on title cannot be removed except
by a quitclaim deed, release, or court action.
A sharing of insurance risk between the insurer and the insured. Coinsurance
depends on the relationship between the amount of the policy and a
specified percentage of the actual value of the property insured at
the time of the loss.
A provision in a hazard insurance policy that states the amount of
coverage that must be maintained -- as a percentage of the total value
of the property -- for the insured to collect the full amount of a
An asset (such as a car or a home) that guarantees the repayment of
a loan. The borrower risks losing the asset if the loan is not repaid
according to the terms of the loan contract.
The efforts used to bring a delinquent mortgage current and to file
the necessary notices to proceed with foreclosure when necessary.
A person who signs a promissory note along with the borrower. A co-maker's
signature guarantees that the loan will be repaid, because the borrower
and the co-maker are equally responsible for the repayment. See endorser.
The fee charged by a broker or agent for negotiating a real estate
or loan transaction. A commission is generally a percentage of the
price of the property or loan.
A formal offer by a lender stating the terms under which it agrees
to lend money to a home buyer. Also known as a "loan commitment."
common area assessments
Levies against individual unit owners in a condominium or planned
unit development (PUD) project for additional capital to defray homeowners'
association costs and expenses and to repair, replace, maintain, improve,
or operate the common areas of the project.
Those portions of a building, land, and amenities owned (or managed)
by a planned unit development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative corporation) that
are used by all of the unit owners, who share in the common expenses
of their operation and maintenance. Common areas include swimming
pools, tennis courts, and other recreational facilities, as well as
common corridors of buildings, parking areas, means of ingress and
An unwritten body of law based on general custom in England and used
to an extent in the United States.
Home Improvement Mortgage Loan®
An alternative financing option that allows low- and moderate-income
home buyers to obtain 95 percent financing for the purchase and improvement
of a home in need of modest repairs. The repair work can account for
as much as 30 percent of the appraised value.
Community Land Trust
An alternative financing option that enables low- and moderate-income
home buyers to purchase housing that has been improved by a nonprofit
Community Land Trust and to lease the land on which the property stands.
In some western and southwestern states, a form of ownership under
which property acquired during a marriage is presumed to be owned
jointly unless acquired as separate property of either spouse.
An alternative financing option for low- and moderate-income households
under which an investor purchases a first mortgage that has a subsidized
second mortgage behind it. The second mortgage may be issued by a
state, county, or local housing agency, foundation, or nonprofit organization.
Payment on the second mortgage is often deferred and carries a very
low interest rate (or no interest rate at all). Part of the debt may
be forgiven incrementally for each year the buyer remains in the home.
An abbreviation for "comparable properties"; used for comparative
purposes in the appraisal process. Comparables are properties like
the property under consideration; they have reasonably the same size,
location , and amenities and have recently been sold. Comparables
help the appraiser determine the approximate fair market value of
the subject property.
Interest paid on the original principal balance and on the accrued
and unpaid interest.
The determination that a building is not fit for use or is dangerous
and must be destroyed; the taking of private property for a public
purpose through an exercise of the right of eminent domain.
A real estate project in which each unit owner has title to a unit
in a building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas.
Changing the ownership of an existing building (usually a rental project)
to the condominium form of ownership.
A condominium project that has rental or registration desks, short-term
occupancy, food and telephone services, and daily cleaning services
and that is operated as a commercial hotel even though the units are
A short-term, interim loan for financing the cost of construction.
The lender makes payments to the builder at periodic intervals as
the work progresses.
consumer reporting agency
An organization that prepares reports that are used by lenders to
determine a potential borrower's credit history. The agency obtains
data for these reports from a credit repository as well as from other
A condition that must be met before a contract is legally binding.
For example, home purchasers often include a contingency that specifies
that the contract is not binding until the purchaser obtains a satisfactory
home inspection report from a qualified home inspector.
An oral or written agreement to do or not to do a certain thing.
A mortgage that is not insured or guaranteed by the federal government.
Contrast with government
A provision in some adjustable-rate mortgages (ARMs) that allows the
borrower to change the ARM to a fixed-rate mortgage at specified timeframes
after loan origination.
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate
mortgage under specified conditions.
A type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns
the property, giving each resident the right to occupy a specific
apartment or unit.
A business trust entity that holds title to a cooperative project
and grants occupancy rights to particular apartments or units to shareholders
through proprietary leases or similar arrangements.
Mortgages related to a cooperative project. This usually refers to
the multifamily mortgage covering the entire project but occasionally
describes the share loans on the individual units.
A residential or mixed-use building wherein a corporation or trust
holds title to the property and sells shares of stock representing
the value of a single apartment unit to individuals who, in turn,
receive a proprietary lease as evidence of title.
Arrangements under which an employer moves an employee to another
area as part of the employer's normal course of business or under
which it transfers a substantial part or all of its operations and
employees to another area because it is relocating its headquarters
or expanding its office capacity.
cost of funds index (COFI)
An index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans. It represents the weighted-average
cost of savings, borrowings, and advances of the 11th District members
of the Federal Home Loan Bank of San Francisco. See adjustable-rate
A clause in a mortgage that obligates or restricts the borrower and
that, if violated, can result in foreclosure.
An agreement in which a borrower receives something of value in exchange
for a promise to repay the lender at a later date.
A record of an individual's open and fully repaid debts. A credit
history helps a lender to determine whether a potential borrower has
a history of repaying debts in a timely manner.
credit life insurance
A type of insurance often bought by mortgagors because it will pay
off the mortgage debt if the mortgagor dies while the policy is in
A person to whom money is owed.
A report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's creditworthiness.
See merged credit report.
An organization that gathers, records, updates, and stores financial
and public records information about the payment records of individuals
who are being considered for credit.