Vocabulary Letter C Flashcards
(47 cards)
Call Option
A clause in a loan agreement that allows a lender to ask for the balance at any time.
Cancellation Clause
a contract provision that gives the right to terminate the obligations upon the occurrence of specified conditions or events.
Cap
a provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.
Capital
(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.
Capital Expenditure
the cost of an improvement made to extend the useful life of a property or to add to its value, such as adding a room. The cost of repairing a property is not a capital expenditure. Capital expenditures are appreciated over their useful life; repairs are subtracted from income for the current year.
Capital Improvement
any structure or component erected as a permanent improvement to real property that adds to its value and useful life. (See Capital Expenditure).
Capitalization (Cap) Rate
rate of return used to derive the capital value of an income stream, divide annual income by net operating income.
Carrying Charges
expenses necessary for holding property, such as taxes and interest on idle property or property under construction.
Cash Flow
The net operating income minus the total of all debt service payments. (See definition of “net operating income” below.)
Cash Flow Basis
this calculation shows when your monthly payment savings exceed your estimated closing costs and discount points. It does not consider the tax impact or differences in principal balance reduction between your current loan and the refinance suggestions. You can use the Amortization Schedule Calculator to compare principal reduction.
Cash Out
Cash given to the borrower from the proceeds of a loan. While relatively common as part of a refinance, it is uncommon, but not impossible, as a benefit of a small percentage of non-conforming loans used for a purchase.
Cash - Out Refinance
a refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity.
Caveat Emptor
let the buyer beware.
Certificate of Eligibility
issues by the Veterans Administration to those who qualify for a VA loan.
Certificate of Insurance
a document issued by an insurance company to verify the coverage.
Certificate of Occupancy (C.O.)
a document issued by a local government or agency permitting the structure to be occupied by members of the public.
Certified Commercial Investment Member (CCIM)
a designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Certified Residential Broker (CRB)
a designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Certified Residential Specialist (CRS)
a designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Chain of Title
a history of conveyances and encumbrances affecting a title from the time that the original patent was granted or as far back as records are available.
Clear Title
a marketable title, one free of clouds and disputed interests.
Closing
The formal meeting where loan documents are signed and funds disbursed. Note, however, that Federal law requires that funds not be disbursed for three business days on certain loans where personal residences serve as the security. (See definition of “recission” below.)
Closing Costs
The expenses which borrowers incur to complete the loan transaction. These costs may include title searches, title insurance, closing fees, recording fees, processing fees and other charges.
Closing Date
the date on which the seller delivers the deed and the buyer pays for the property.