Glossary of Words & Terms:
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Cash-out refinance: When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."
Certificate of deposit: A time deposit held in a bank which pays a certain amount of interest to the depositor.
Certificate of deposit index: One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.
Certificate of Eligibility: A document issued by the Veterans Administration that certifies a veteran's eligibility for a VA loan.
Certificate of Reasonable Value (CRV): Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.
Certificate of sale: The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.
Chain of title: The succession of the conveyance (or transfer) of title, over the years from an accepted starting point, whereby the present holder of real property derives title.
Civil Rights Act of 1866: An act that prohibits racial discrimination in the sale and rental of housing.
Clear title: A title that is free of liens or legal questions as to ownership of the property.
Closing: An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer. In Arizona a real estate transaction is not consider "closed" until the documents record at the local recorders office.
Closing costs: Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
Closing statement: A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Cloud on title: Any conditions such as documents, claims, unreleased liens, or encumbrances revealed by a title search that adversely affect and impair the title to real estate, or make the title doubtful. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.
Co-borrower: IAn additional individual who is both obligated on the loan and is on title to the property.
Coinsurance clause: An clause in insurance policies covering real property that requires the policy holder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
Collateral: In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust. Something of value deposited with a lender as a pledge to secure repayment of a loan.
Collection: When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.
Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Common area assessments: In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.
Common areas: 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 egress, etc.
Common law: The body of law based on custom. usage, and court decisions.
Community Association management: Provides a team of property managers, accounting staff, office staff, and property consultants to manage property.
Community property: A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in western state.
Comparable sales: Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."
Competitive Market Analysis (CMA): A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, year built, size, and amenities.
Condemnation: A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
Conditional-use permit: Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
Condominium: The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.
Condominium conversion: Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
Condominium hotel: 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 individually owned. These are often found in resort areas like Hawaii.
Condominium conversion: Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
Conformity: The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
Consideration: (1) That which is received by the grantor in exchange for his or her deed. (2) Something of value that induces a person to enter into a contract.
Construction loan: 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.
Contingency: 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.
Contract: An oral or written agreement to do or not to do a certain thing.
Conventional mortgage: Refers to home loans other than government loans (VA and FHA).
Convertible ARM: An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
Cooperative (co-op): 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.
Cost of funds index (COFI): One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.
Counter offer: The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way. For example, if a Buyer offers $160,000 for a home, and the Seller replies that he wants $175,000, the Seller has rejected the Buyer's offer of $160,000 and made a counteroffer to sell at $175,000. The legal significance of a counteroffer is that it completely voids the original offer, so that if the Seller decided to sell for $160,000 the next day, the Buyer would be under no legal obligation to pay that amount for the property.
Covenants, conditions, & restrictions (C,C,&R's): Rules and regulations for a development, such as acceptable landscaping or improvements that can be made to individual real estate properties. C,C, & R's are usually enforced by a homeowner's association (HOA) and passed on to the new owners of property.
Craftsman style: An architectural style that evolved as part of the Arts and Craft movement near the turn of the century.
Creditor: A person to whom money is owed.
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 force.
Credit report: 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.
Credit repository: 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.
Cul de sac: A street or alley that is closed at one end.
