Dictionary - C

Mortgage terms and definitions for home buyers, home sellers, and real estate consumers. Use the links below to find the word you're looking for.


Callable Debt -
A debt security in where the issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity date.

Caps -
A set percentage amount by which an adjustable rate mortgage may adjust each adjustment period. For adjustable loans, caps are usually quoted as two numbers as in 2/6. The first number indicates how much a loan may adjust at each adjustment period while the second number indicates how much a loan may adjust over its lifetime.

Loans like the 3/1 and 5/1 adjustable which have an initial fixed period are quoted with 3 numbers as in 3/2/6 which would mean that the first adjustment may be as much as 3%, subsequent adjustments are capped at 2% each, and the lifetime cap is 6%.

Two-Step loans are quoted with a single cap, which is the amount by which the loan may adjust at its single adjustment date.

Carryback Loan -
A loan in which a seller agrees to finance a buyer in order to complete a property sale.

Certificate of Eligibility -
A veteran's evidence of entitlement for a VA-guaranteed loan.

Certificate of Reasonable Value (CRV) -
An appraisal that has been performed on a property that is being paid for a VA loan. After the property has been appraised, the Veterans Administration issues a CRV.

Clear Title -
A title that is free of liens or any legal question as to the ownership of the property.

Closing -
Final arrangements to transfer title of property as well as allocate charges and credits.

Closing Costs -
Closing costs are fees paid by the borrower when a property is purchased or refinanced. Costs incurred include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charges. All closing costs are separated into "non-recurring," and "pre-paid." Non-recurring charges are any items that are paid only once because a loan was obtained or a property bought, such as a loan origination fee. Pre-paid charges are those that recur over time, like insurance and property taxes. These are summarized in the Good Faith Estimate.

Cloud -
An outstanding claim or encumbrance, that, if valid, would affect or impair the owner's property title.

Collateral -
Property, real or personal, pledged as a security to back up a promise. In a home loan, the property is considered collateral that can be revoked if loan is not repaid according to the terms of the mortgage or deed of trust.

Commitment -
A written letter of agreement detailing the terms and conditions by which the lender will lend and the borrower will borrow funds to finance a home.

Conforming Loan -
A mortgage loan for up to $300,700 in the continental United States (Alaska and Hawaii limits are higher).

Construction Loan -
A short term loan for funding the cost of construction. The lender advances funds to the builder as the work progresses.

Conversion -
The right of a borrower to convert an adjustable or balloon loan into a fixed loan. The possible options are as follows...

Option Description
Not Available Borrower May Not Convert This Loan.
Must Requalify Borrower May Convert But Must Requalify.
Conversion Fee Applies
Auto-Qualify Borrower May Convert And Is Automatically Qualified.
Conversion Fee Applies

Conventional Mortgage -

A mortgage loan that is obtained without any additional guarantees for repayment, such as FHA insurance, VA guarantees, or private insurance. This is usually given at an 80% loan-to-value ratio.

Credit Loan -
A credit loan is a mortgage that is issued on only the financial strength of a borrower, without great regard for collateral.

Credit-Loss Ratio -
The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit Rating -
Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower.

Credit-Related Expenses -
The sum of foreclosed property expenses plus the provision for losses.

Credit-Related Losses -
The sum of foreclosed property expenses plus charge-offs.

Credit Report -
A report to a prospective lender on the credit standing of a prospective borrower. Used to help determine creditworthiness. Information regarding late payments, defaults, or bankruptcies will appear here.

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