LAS VEGAS REAL ESTATE GLOSSARY C

CALL OPTION

Similar to the acceleration clause.

CAP

Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as "caps." Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap.

CASH-OUT REFINANCE

When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."

CERTIFICATE OF DEPOSIT

A time deposit held in a bank which pays a certain amount of interest to the depositor.

CERTIFICATE OF DEPOSIT INDEX

One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.

CERTIFICATE OF ELIGIBILITY

A document issued by the Veterans Administration that certifies a veteran’s eligibility for a VA loan.

CERTIFICATE OF REASONABLE VALUE (CSV)

Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.

CHAIN OF TITLE

An analysis of the transfers of title to a piece of property over the years.

CLEAR TITLE

A title that is free of liens or legal questions as to ownership of the property.

CLOSING

This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.

CLOSING COSTS

Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

CLOSING STATEMENT

See Settlement Statement.

CLOUD ON TITLE

Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.

CO-BORROWER

An additional individual who is both obligated on the loan and is on title to the property.

COLLATERAL

In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.

COLLECTION

When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.

COMMISSION

Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.

COMMON AREA ASSESSMENTS

In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.

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.

COMMON LAW

An unwritten body of law based on general custom in England and used to an extent in some states.

COMMUNITY PROPERTY

In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances. This is an outgrowth of the Spanish and Mexican heritage of the area.

COMPARABLE SALES (COMPS)

Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."

CONDOMINIUM

A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

CONDOMINIUM CONVERSION

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

CONDOMINIUM HOTEL

A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. These are often found in resort areas like Hawaii.

CONFORMING LOAN

A mortgage loan for up to $322,700 in the continental United States (Alaska and Hawaii limits are higher).

CONSTRUCTION LOAN

A short-term, interim loan for financing the cost of 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. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

CONTRACT

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

CONVENTIONAL MORTGAGE

Refers to home loans other than government loans (VA and FHA).

CONVERTIBLE ARM

An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.

COOPERATIVE (CO-OP)

A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

COST OF FUNDS INDEX (COFI)

One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.

CREDIT

An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

CREDIT HISTORY

A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.

CREDIT RATING

Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower.

CREDIT REPORT

A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

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.