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Mortgage Loan Glossary - 'C'

Use the alphabet letters below to navigate to the words in this glossary.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

- C -

Cash-out Refinance

The process of refinancing with a loan amount greater than the existing loan balance for the purpose of paying off the present loan with the intention of receiving money for personal use. Cash-out refinancing allows the borrower to take advantage of the home's equity.
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Cash Reserves

Money put aside in case of a financial emergency. Most lenders want to know that the borrower has enough savings and/or investments to provide a cushion for unexpected expenses in the future. Lenders typically require an amount that is twice the monthly mortgage payment; however, this varies by mortgage product.
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Change Date

The day when the interest rate changes on an adjustable rate mortgage (ARM). After an initial period when an ARM's interest rate remains the same, the rate changes on the adjustment date to reflect the current market rate.
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Closing

The final step in the loan process when mortgage loan documents are signed. Closing is also referred to as Settlement and may take place in an attorney's office, a title company office or other location depending upon the state in which the property is located. Documents such as the lender agreement are signed and recorded, closing costs and escrow amounts are paid, and the property is transferred or refinanced.
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Closing Agent

A third party who prepares the closing package, conducts the closing or settlement and records the mortgage. This can be an attorney (in some states), escrow or title company.
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Closing Costs

Fees paid in connection with obtaining a mortgage. The fees may be paid on or before the closing date by the buyer and/or seller in addition to the down payment. These fees usually include an origination fee, an attorney's fee, real estate taxes, escrow account payments, and charges for title insurance.
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Closing Statement

Please see HUD-1 Settlement Statement.
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Co-Borrower

An additional borrower on a loan and on the title to the property. A co-borrower's obligations on a loan are the same as all other borrowers.
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Combined Loan to Value (CLTV)

The Combined Loan to Value (CLTV) percentage is calculated by adding all proposed mortgages on the property and dividing by the appraised property value. If an existing mortgage will be retained, it is added to the proposed mortgages and the total is divided by the property value.
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Commitment Letter

A formal offer from a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment".
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Comparable Sale (Comp)

A recently completed sale of a property that is used to estimate the value of a similar property for comparative purposes in the appraisal process.
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Conforming loan

Conforming loans have a set of standards established by government-sponsored agencies like Freddie Mac or Fannie Mae for the maximum loan amount a person can borrow, and how much is needed for a down payment.
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Construction loan

A short-term loan used to pay for land and for the construction of residential buildings and/or detached homes. The lender typically requires period payments or draws to be paid to the builder at periodic intervals as the work progresses.
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Conventional mortgage

Any loan granted by a lender that is not insured or guaranteed by a government agency such as Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). Most loans are conventional, except those insured by FHA and the VA.
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Convertible ARM

An adjustable rate mortgage that allows the borrower to convert to a fixed rate mortgage under specific conditions and after a specific timeframe.
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Credit and Income Pre-approval

A conditional approval based on credit history, income and assets. An appraisal of the property may be required to obtain a final approval.
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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. Includes information about the borrower's past loan history, tax liens, judgments and any other related credit details.
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