Glossary

CAP: This is used as a limit on Adjustable Rate Mortgages 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, characterized by a steep roof with gables.

CAPITAL: When goods and money are accumulated most often used to generate additional income.

CAPITAL EXPENDITURE: This is an outlay of funds designed to improve the income-producing capabilities of a property or to extend its economic life.

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

CAULKING: This is a pliable material used to seal cracks or openings such as around windows.

CAVEAT EMPTOR:   When literally translated, it means, ''Let the buyer beware.'' The buyer is responsible for verifying any and all claims by the seller of property.

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

CERTIFICATE OF DEPOSIT INDEX: An index based on the interest rate of six months CD's. This is often used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY: The Veterans Administration uses this document that certifies eligibility for a VA loan.

CERTIFICATE OF OCCUPANCY: This is issued by a municipality, using a document which certifies that a building complies with all building codes and is safe for use or habitation.

CERTIFICATE OF REASONABLE VALUE (CRV): This document is 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: Usually provided by a title or abstract company, this is a document designating the legal owner of a parcel of real estate.

CERTIFIED GENERAL APPRAISER: Generally this designation is, 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: This is a sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

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

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

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

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

CLOSING COSTS: These are all of the 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 details the final financial arrangement between a buyer and seller and the costs paid by each, often used by Title Companies.

CO-BORROWER: Also called a “Co-Signer”, a second person sharing obligation on the loan and title on the property.

COLLATERAL: This is an asset which is placed at risk to secure the repayment of a loan.

COLLECTION: The process a lender or creditor takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage or credit current again. This includes documentation that may be used in foreclosure for a lender.

CO-MAKER: Also considered a “Co Borrower” is a second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

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

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

COMMON AREA ASSESSMENTS: The fees which are charged for properties to cover the costs of maintaining common areas shared with other owners or tenants. Mostly 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 owners of property near by. Commonly found in condominium, PUD or office spaces.

COMMUNITY PROPERTY: In many states, 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 and real estate agents to describe properties which are similar in size, condition, location and amenities to a subject property, which the value is being determined.

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

CONCESSIONS: Usually used as additional value granted by a buyer or seller to entice another party to complete a deal.

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

CONDENSATION: Typically, this is the transition of water vapor to liquid forms, usually found in areas of high humidity.

CONDOMINIUM: A development where individual units are owned, but common areas and amenities are shared equally by all owners and each owner is assessed by the Home Owners Board of Directors (also called Association of Apartment Owners) to pay for common interests on a monthly basis.

CONDOMINIUM CONVERSION: Commonly, this is used when 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: This is the pipe through which electric wiring is run.

CONSTRUCTION LOAN: This is 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. Often, these loans are expensive and short term.

CONTIGUOUS: When a property is connected to or touching along an unbroken boundary.

CONTINGENCY: In a contract when 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: This is a legally binding agreement, oral or written, between two parties.

CONVENTIONAL MORTGAGE: A traditional, real estate financing mechanism that is not backed nor insured by any government or other agency (FHA, VA, etc.).

CONVERTIBLE ARM: When a mortgage 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. The unit is considered personal property with each resident having stock certificate as collateral and rights to a specific unit within the building.

CORPORATE RELOCATION: When a person's employer pays all or some of the expenses associated with relocation, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling, buying of the employee's primary residence and moving costs.

COST OF FUNDS INDEX (COFI): An index of financial institutions costs used for Adjustable Rate Mortgages.

COVENANT: Used as a stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDIT: This is 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: This is a report used by mortgage lenders in determining credit worthiness of individuals; record of debt payments, past and present.

CREDITOR: This is a person, lender or company to whom money is owed.

CREDIT REPORT: When a detailed report is created of an individual’s credit, employment and residence history prepared by a credit bureau. The reports are used by lenders to determine credit worthiness of individuals.

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

CUL-DE-SAC: The term for a dead-end street with only one entrance/exit.