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Law Office of William F. Scofield
William F. Scofield, LLC Attorney at Law
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Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z all
 
Caps
Caps are limits on the amount that the interest rate on an Adjustable Rate Mortgage can change at any one adjustment and (usually) over the life of the loan. They protect the borrower from huge increases in the monthly payment in a rising interest rate environment. Rarely, a cap may apply to the payment amount rather than to the rate. Under certain conditions, payment caps can cause the loan balance to increase rather than decrease. See Negative Amortization
 
Cash Out Refinance
The process of refinancing a loan in an amount higher than the outstanding balance on the existing loan, assuming the property has a sufficiently high value to support the higher loan.
 
Cash Reserves
A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.
 
Certificate of Eligibility
A document required for a VA- (Veterans Administration)-guaranteed loan. It is obtained through any local VA office on presentation of a DD-214 Separation Paper.
 
Certificate of Reasonable Value (CRV)
Used for VA loans only, a certificate issued by the Veterans Administration verifying the appraisal.
 
Certificate of Title
A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.
 
Closing
Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.
 
Closing Costs
The total costs and fees associated with closing. Includes one-time non-recurring fees and charges for inspections and other services, and (usually) initial escrows for recurring costs such as property taxes and insurance.
 
Closing Statement
See Settlement Statement
 
COFI (Cost Of Funds Index)
An index produced by the 11th District Federal Home Loan Bank. One of several indexes used to set interest rate changes for certain Adjustable-Rate Mortgages.
 
Collateral
An asset used to secure a loan. A lender can seize it if the borrower defaults.
 
Collection
The semi-formal process used by lenders in contacting borrowers in an effort to bring a loan current. In the case of a mortgage, the mailing and formal recording of certain documents which may be required to foreclose on a property.
 
Commission
An amount, usually a percentage of the property sales price, that is collected by a real estate professional and/or mortgage lender or broker as a fee for negotiating the transaction..
 
Commitment
A promise by a lender to make a loan within a specified time period, subject to compliance with stated conditions. The lender’s obligations expire if the borrower does not close the loan prior to the expiration date of the commitment.
 
Common Area
Those portions of a building, land, and amenities in condominium and cooperative projects, which are, used by all of the apartment or condo owners. These include the hallways, parking areas, and other amenities.
 
Common Area Assessments
Fees paid (usually) to an Owners Association. Fees paid by the owners of the individual units in a condominium or cooperative, which are used to maintain the property and common areas.
 
Community Home Buyers Programs
A series of low-income loan programs offered under Fannie Mae and Freddie Mac auspices. These generally require only 3—5% down but do require PMI (Private Mortgage Insurance).
 
Comparables
Recent sales of similar properties in the area. Used as a measure of local market value to help set the current value of a property.
 
Condominium
A form of ownership in real property where the owners have title of only an apartment or townhouse. The common areas and the building exteriors are owned jointly. All owners generally have rights to all common areas and share the financial responsibility of maintaining them.
 
Consolidation Extension Modification (CEM)
See Assignment of Mortgage
 
Construction Loan
A loan used to finance construction of a new home and, sometimes, the land for a home. Depending on local custom, a construction loan may a permanent mortgage with funds disbursed as construction proceeds, or may be a short-term loan that must be repaid on completion.
 
Contingency
A condition that must be met before a contract is binding. For example, a requirement that an existing lien on the property must be cleared by a certain date.
 
Conventional Mortgage
A loose term that generally refers to a fixed-rate conforming loan, other than an FHA or VA loan.
 
Conversion
Usually refers to the process of converting a property from rental to either a condominium or cooperative property. Tenants generally have a first right of purchase for the unit they occupy.
 
Convertible ARM
An Adjustable-Rate mortgage with a borrower’s option to convert to a fixed-rate mortgage under specified conditions.
 
Cooperative (co-op)
A form of ownership in which the residents own shares in a corporation which owns the entire property. Shareholders are entitled to occupy a specific apartment and to have use of the common areas. Interest on the cooperative unit loan is tax deductible, similar to a condominium or home loan. Additionally, the percentage of monthly maintenance paid to the cooperative corporation that represents interest on the mortgage loan on the entire cooperative building, is also tax deductible to the unit owner.
 
Credit Bureau Score
Credit bureau scoring is a scientific way of assessing how likely a borrower is to pay back a loan. A credit bureau score is based on data available in the borrower’s credit report. The score measures the relative degree of risk a potential borrower represents to the lender or investor. It is not a measure of a borrower’s income, assets or bank account, although these and other factors are still considered by lenders and investors, independent of the score.
 
CRV
See Certificate of Reasonable Value (CRV)
 
These definitions are provided for informational purposes only. William Scofield, LLC shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
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