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Glossary of Mortgage and Home Equity Terms

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Cash-Out Refinancing
When the principal amount of a new mortgage is greater than the outstanding balance of the existing mortgage being refinanced, and a portion of the equity is converted to loan proceeds for the borrower’s use.
Cash Reserve
The portion of assets that a borrower will have after the loan closing. Cash reserves may be required as part of the loan process to ensure the borrower has financial flexibility after the transaction.
Cash to Close
Liquid assets that are readily available to be used to pay the closing costs involved in closing a mortgage transaction.
Changed Circumstance
Under certain limited circumstances as defined by HUD, the lender may issue a revised Good Faith Estimate (GFE) prior to settlement/closing to disclose a change in loan fees
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Closing
The closing includes the delivery of a deed, the signing of loan documentation, and the disbursement of funds necessary to complete the sale and loan transaction. Also known as “settlement.”
Closing Costs
Money paid by the borrower in connection with the closing of a mortgage loan. This generally involves an origination charge, discount points, and fees for required third-party services, taxes, and government recording fees.
Closing Date
The approximate date your loan transaction is completed, or closed.
Closing Statement
A form used at closing that gives an account of the funds received and paid at the closing, including the sales price, closing costs, escrow deposits for taxes, hazard insurance, and mortgage insurance.
Co-Borrower(s)
Additional borrower(s) whose income contributes to qualifying for a loan and whose name(s) appear on documents with equal legal obligations.
Collateral
Property pledged as security for a debt, such as the real estate pledged as security for a mortgage.
Collection
The servicing procedure followed to bring a delinquent mortgage “current” and to file the required notices to bring foreclosure when necessary.
Commitment (Loan)
A binding pledge made by the lender to the borrower to make a loan, at certain (or maximum) loan terms within a given period of time for a given purpose, subject to various stated conditions.
Commitment Letter
A formal letter sent by a lender stating the terms and conditions under which the lender agrees to loan money to a potential borrower.
Comparable Properties
Properties used for comparative purposes in the appraisal process that have been recently sold and have characteristics similar to property being appraised, thereby indicating the approximate fair market value of the subject property.
Compensating Factors
Positive characteristics of a borrower's credit, employment, or savings history which may be used to offset high debt-to-income ratios in the underwriting process.
Concession
A discount or other incentive given by a landlord or seller to a prospective tenant or buyer to induce them to sign a lease or purchase property.
Conforming Loan
Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA, also known as “Fannie Mae”) or the Federal Home Loan Mortgage Corporation (FHLMC, also known as “Freddie Mac”). These agencies generally purchase first mortgages up to loan amounts mandated by Congressional directive.
Contingency
A condition that must be met before a contract is legally binding.
Conventional Mortgage
A mortgage not obtained under a government program (such as FHA or VA).
Convertible ARM
An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.
Cooperative
A building of two or more dwelling units that is owned by a corporation made up of people in the building. The right to occupy a unit is obtained by buying shares of stock in the corporation and signing an occupancy agreement known as a “proprietary lease”.
Covenant
A clause in a contract that obligates or restricts the parties and which, if violated, can result in legal action.
Credit Limit
The maximum amount that you can borrow under the home equity loan or line.
Credit Report
A report detailing an individual's credit history.
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