Real Estate 101 Glossary

Lola and me

Today I  will tackle the “C’s”

CALL OPTION   a REMAX logoA clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.

CAP   Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.

CAPE COD COLONIAL   A single-story house style made popular in New England. Often characterized by a steep roof with gables.

CAPITAL   Accumulated goods and money which is most often used to generate additional income.

CAPITAL EXPENDITURE   An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

CASH-OUT REFINANCE   Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.

CAULKING   A pliable material used to seal cracks or openings such as around windows.

CAVEAT EMPTOR   Literally translated: ”Let the buyer beware.” A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CERTIFICATE OF DEPOSIT   A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

CERTIFICATE OF DEPOSIT INDEX   An index based on the interest rate of six month CD’s. Used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY  A document issued by the Veterans Administration that certifies eligibility for a VA loan.

CERTIFICATE OF OCCUPANCY   Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

CERTIFICATE OF REASONABLE VALUE (CRV)   Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

CERTIFICATE OF TITLE   A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

CERTIFIED GENERAL APPRAISER   Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

CERTIFIED RESIDENTIAL APPRAISER   A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

CHAIN OF TITLE   The complete history of ownership of a piece of property.

CHATTEL   Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

CIRCUIT BREAKERS   Electrical devices which automatically open electrical circuits if they are overloaded.

CLEAR TITLE   Ownership of property that is not encumbered by any counter-claim or lien.

CLOSING   A torturous process designed to induce cramping in a home buyer’s hands by requiring signature on countless pieces of documentation that nobody has ever read. Or, the process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).

CLOSING COSTS   All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

CLOSING STATEMENT   The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.

CO-BORROWER   A second person sharing obligation on the loan and title on the property.

COLLATERAL   An asset which is placed at risk to secure the repayment of a loan.

COLLECTION   The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.

CO-MAKER   A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

COMMON LAW   As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

COMMISSION   A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.

COMMON AREA ASSESSMENTS   Fees which are charged to the tenets or owners of properties to cover the costs of maintaining areas shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.

COMMON AREAS   Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property near by. Commonly found in condominium, PUD or office spaces.

COMMUNITY PROPERTY   In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

COMPARABLES   An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property whose value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

COMPOUND INTEREST   Interest paid on the principal amount, as well as any accumulated interest.

CONCESSIONS   Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDEMNATION  The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

CONDENSATION   The transition of water vapor to liquid. Typically forms in areas of high humidity.

CONDOMINIUM   A development where individual units are owned, but common areas and amenities are shared equally by all owners.

CONDOMINIUM CONVERSION   Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

CONDUIT  The pipe through which electric wiring is run.

CONSTRUCTION LOAN   
A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

CONTIGUOUS   Connected to or touching along an unbroken boundary.

CONTINGEnCY   Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer that requires a complete home inspection before it becomes official.

CONTRACT  A legally binding agreement, oral or written, between two parties.

CONVENTIONAL MORTGAGE   A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

CONVERTIBLE ARM   A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.

COOPERATIVE (CO-OP)  
A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.

CORPORATE RELOCATION   A situation where a person’s employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee’s primary residence

COST OF FUNDS INDEX (COFI)   An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT   A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDIT   A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

CREDIT HISTORY   A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

CREDITOR   A person to whom money is owed.

CREDIT REPORT   A detailed report of an individuals credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.

CREDIT REPOSITORY  Large companies that gather and store financial and credit information about individuals who apply for credit.

CUL-DE-SAC  A dead-end street. One with only one entrance/exit. French for bottom of the bag.

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One Response to “Real Estate 101 Glossary”

  1. HUD earnest money question? | FHA Loan Rates Says:

    […] Real Estate 101 Glossary « Larealestateblog's Blog […]

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