C

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 Gain
Profit from the sale of an asset or security.

Capital Growth
An increase in the market price or value of an asset.

Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Capital Loss
Loss from the sale of an asset or security.

Capitalization of Interest
Addition of unpaid interest to the principal balance of a loan which increases the total outstanding balance due.

Capitalized Cost
The value of an asset used to calculate depreciation.

Cap
The maximum amount the mortgage rate can change annually or over the life of the loan on a one-year adjustable. For example, if the caps are 2% annual and 6% life of loan, a mortgage whose first-year rate is 10% could rise to no more than 12% the second year.

Cash Available for Closing
Borrower funds available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes or that the down payment come from certain sources, borrower's cash available for closing does not include cash reserves or money from other sources.

Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc).

Cash Out
A loan transaction in which the borrower receives funds at the time of closing.

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.

Ceiling
The maximum interest rate that can accrue on a variable rate loan or adjustable rate mortgage (ARM).

Certificate of deposit
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer’s promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Occupancy
Document issued by a local governmental agency that states a property conforms to local building standards for occupancy and is in compliance with public health and building codes.

Certificate of Title
A legal document that lists a property’s current owner.

Chain of Title
The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).

Chattel
Another name for personal property.

Claim
An amount requested of an insurer, by a policyholder or a claimant, for an insured loss.

Clear Title
A title that is marketable and is free of liens or disputed legal questions as to ownership of the property.

Closing
The process of finalizing the sale of property that includes the transfer of title from the seller to the buyer. Also called settlement.

Closing Costs
Fees and other expenses that must be paid by buyers and sometimes sellers when transferring ownership of a property. Costs typically include a loan origination fee, attorney’s fee, advance on taxes (which is placed in an escrow account), title insurance fees, recordation and transfer taxes, and other fees. Also called settlement costs.

Closing Day
The day on which the formalities of a real estate sale are concluded. The certificate of title, abstract, and deed are generally prepared for the closing by an attorney and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are paid. The final closing merely confirms the original agreement reached in the agreement of sale.

Closing Statement
An accounting of funds given to both buyer and seller before real estate is sold.

Cloud on Title
An outstanding claim or lien, revealed by a title search, that adversely affects the owner's title to real estate. Usually, clouds on title cannot be removed except by a quitclaim deed, release, or court action.

Coinsurance
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.

Coinsurance Clause
A provision in a hazard insurance policy stating the minimum amount of coverage that must be maintained - as a percentage of the total value of the property - in order for the insured to collect the full amount of a loss.

Collateral
Property offered to support a loan and subject to seizure if you default. The underlying security, mortgage, or asset pledged or held in trust for the purpose of securitization or borrowing and lending activities.

Collections Account
When an account cannot be collected, it is referred for collection, i.e.; given to a bill collector. Once this happens, it will appear on your credit history whether paid or not. Obviously, the ramifications are more serious if the account remains unpaid. Any collection item, whether paid or not, is considered negative by all credit grantors.

Collection Agency
A company hired by a creditor to collect a debt that is owed. Creditors typically hire a collection agency only after they have made efforts to collect the debt themselves, usually through letters and telephone calls.

Combined loan-to-value (CLTV)
The unpaid principal balances of all the mortgages on a property (first and second usually) divided by the property's appraised value.

Commission
Compensation paid to a broker for acting as an agent in the purchase or sale of securities or property.

Commitment Letter
A formal notification from a lender stating that the borrower's loan has been conditionally approved and specifying the terms under which lender agrees make the loan.

Common Area Assessments
Payments required of individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.

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.

Community Property
Refers to assets or a method of ownership. Generally, it means that each spouse owns a 50 percent interest in an account. Upon the death of one spouse, the survivor claims his or her ownership of one-half of the asset. The other half will pass in accordance to a will or to law. Each state has different laws and interpretations.

Comparables
Properties used in an appraisal report that are substantially equivalent to the subject property.

Compound Interest
Payment of interest, not only on principal investment, but also on the interest accumulated in previous periods.

Conforming Loan
A conventional mortgage that conforms to the loan amounts and mortgage guidelines used by the Federal National Mortgage Association (FNMA or "Fannie Mae"), and/or the guidelines of The Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac").

Condemnation
1. Declaration that a building is unfit for use or is dangerous and must be destroyed
2. Taking of private property for a public use (such as a park, street or school) through an exercise of the right of eminent domain.

Condominium
A real estate project in which each unit owner has title to a unit in a multi-unit building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

Condominium Conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

Consolidation Loan
A single loan obtained to pay off multiple loans. A consolidated loan may offer a lower monthly payment but a longer repayment period. Also called debt consolidation.

Construction Loan
A short-term, interim loan for financing the cost of home 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. Buyers and sellers often each add several contingencies.

Contract
An oral or written agreement to do or not to do a certain thing.

Contract of Sale
Written contract signed by both parties in which the seller agrees to sell and the buyer agrees to buy under certain specific terms and conditions.

Contractor
In the construction industry, a contractor is one who contracts to erect buildings or portions of them. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building, bridge and dam erection, and others.

Conventional Mortgage
A regular loan that may be privately insured, but is not insured or guaranteed by the government.

Conversion
The right of a borrower to convert an adjustable or balloon loan into a fixed loan.

Convertibility Clause
A provision in some adjustable rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed rate loan at specified times during the life of the loan.

Convertible ARM
An adjustable rate mortgage (ARM) that can be converted to a fixed rate loan under specified conditions.

Cooperative (co-op)
A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

Cooperative Corporation
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.

Cooperative Housing
An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation, which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.

Cooperative mortgages
Mortgages related to a cooperative project.

Cooperative project
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.

Cosigner
A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay.

Cost of Funds Index
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances. See adjustable-rate mortgage (ARM).

Court Record
Civil Court records include bankruptcies, judgments, liens, divorce, satisfied judgments, and satisfied liens. All court records, including satisfactions, will probably be considered negative by most credit grantors.

Covenant
A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure of the property.

Credit
The right granted by a creditor to pay in the future in order to buy or borrow in the present. A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.

Credit Bureau
An agency that keeps your credit record.

Credit History
History Kept by a credit bureau, this record details a person's line of credit and debt repayment history. It is used by lenders to help determine if a potential borrower is a good risk.

Credit Insurance
An insurance policy that pays off debts should the borrower lose their job, die, or become disabled.

Credit Limit
The maximum amount of credit granted to a borrower.

Credit Report
A report of a person's credit history, prepared by a credit bureau, that lists how individuals manage their debts and make payments, how much untapped credit they have available, and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information.

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.

Credit Scoring System
A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.

Creditor
A person or business from whom you borrow or to whom you owe money.

Cumulative Interest
Total interest accrued.

Cure
A loan that is removed from a delinquency status with no loss to the insurer.

Curtailment
A payment that reduces the principal balance of a loan.