A provision in the mortgage that gives the mortgagee the right
to call the mortgage due and payable at the end of a specified
period for whatever reason.
A provision of an adjustable-rate mortgage (ARM) that limits
how much the interest rate or mortgage payments may increase
or decrease. See lifetime payment cap, lifetime rate cap,
periodic payment cap, and periodic rate cap.
(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.
The cost of an improvement made to extend the useful life
of a property or to add to its value.
Any structure or component erected as a permanent improvement
to real property that adds to its value and useful life.
A refinance transaction in which the amount of money received
from the new loan exceeds the total of the money needed to
repay the existing first mortgage, closing costs, points,
and the amount required to satisfy any outstanding subordinate
mortgage liens. In other words, a refinance transaction in
which the borrower receives additional cash that can be used
for any purpose.
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.
of deposit index
An index that is used to determine interest rate changes for
certain ARM plans. It represents the weekly average of secondary
market interest rates on six-month negotiable certificates
A document issued by the federal government certifying a veteran's
eligibility for a Department of Veterans Affairs (VA) mortgage.
of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA)
that establishes the maximum value and loan amount for a VA
A statement provided by an abstract company, title company,
or attorney stating that the title to real estate is legally
held by the current owner.
The history of all of the documents that transfer title to
a parcel of real property, starting with the earliest existing
document and ending with the most recent.
The frequency (in months) of payment and/or interest rate
changes in an adjustable-rate mortgage (ARM).
Another name for personal property.
A title that is free of liens or legal questions as to ownership
of the property.
A meeting at which a sale of a property is finalized by the
buyer signing the mortgage documents and paying closing costs.
Also called "settlement."
A fee or amount that a home buyer must pay at closing for
a single service, tax, or product. Closing costs are made
up of individual closing cost items such as origination fees
and attorney's fees. Many closing cost items are included
as numbered items on the HUD-1 statement.
Expenses (over and above the price of the property) incurred
by buyers and sellers in transferring ownership of a property.
Closing costs normally include an origination fee, an attorney's
fee, taxes, an amount placed in escrow, and charges for obtaining
title insurance and a survey. Closing costs percentage will
vary according to the area of the country; lenders or realtors®
often provide estimates of closing costs to prospective homebuyers.
Any conditions revealed by a title search that adversely affect
the title to real estate. Usually clouds on title cannot be
removed except by a quitclaim deed, release, or court action.
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.
A provision in a hazard insurance policy that states the amount
of coverage that must be maintained -- as a percentage of
the total value of the property -- for the insured to collect
the full amount of a loss.
An asset (such as a car or a home) that guarantees the repayment
of a loan. The borrower risks losing the asset if the loan
is not repaid according to the terms of the loan contract.
The efforts used to bring a delinquent mortgage current and
to file the necessary notices to proceed with foreclosure
A person who signs a promissory note along with the borrower.
A co-maker's signature guarantees that the loan will be repaid,
because the borrower and the co-maker are equally responsible
for the repayment. See endorser.
The fee charged by a broker or agent for negotiating a real
estate or loan transaction. A commission is generally a percentage
of the price of the property or loan.
A formal offer by a lender stating the terms under which it
agrees to lend money to a home buyer. Also known as a "loan
Levies against 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.
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
An unwritten body of law based on general custom in England
and used to an extent in the United States.
Land Trust Mortgage Option
An alternative financing option that enables low- and moderate-income
home buyers to purchase housing that has been improved by
a nonprofit Community Land Trust and to lease the land on
which the property stands.
In some western and southwestern states, a form of ownership
under which property acquired during a marriage is presumed
to be owned jointly unless acquired as separate property of
An alternative financing option for low- and moderate-income
households under which an investor purchases a first mortgage
that has a subsidized second mortgage behind it. The second
mortgage may be issued by a state, county, or local housing
agency, foundation, or nonprofit organization. Payment on
the second mortgage is often deferred and carries a very low
interest rate (or no interest rate at all). Part of the debt
may be forgiven incrementally for each year the buyer remains
in the home.
An abbreviation for "comparable properties"; used for comparative
purposes in the appraisal process. Comparables are properties
like the property under consideration; they have reasonably
the same size, location, and amenities and have recently been
sold. Comparables help the appraiser determine the approximate
fair market value of the subject property.
Interest paid on the original principal balance and on the
accrued and unpaid interest.
The determination that a building is not fit for use or is
dangerous and must be destroyed; the taking of private property
for a public purpose through an exercise of the right of eminent
A real estate project in which each unit owner has title to
a unit in a building, an undivided interest in the common
areas of the project, and sometimes the exclusive use of certain
limited common areas.
Changing the ownership of an existing building (usually a
rental project) to the condominium form of ownership.
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.
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.
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.
An oral or written agreement to do or not to do a certain
A mortgage that is not insured or guaranteed by the federal
government. Contrast with government mortgage.
A provision in some adjustable-rate mortgages (ARMs) that
allows the borrower to change the ARM to a fixed-rate mortgage
at specified timeframes after loan origination.
An adjustable-rate mortgage (ARM) that can be converted to
a fixed-rate mortgage under specified conditions.
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.
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
Mortgages related to a cooperative project. This usually refers
to the multifamily mortgage covering the entire project but
occasionally describes the share loans on the individual units.
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.
Arrangements under which an employer moves an employee to
another area as part of the employer's normal course of business
or under which it transfers a substantial part or all of its
operations and employees to another area because it is relocating
its headquarters or expanding its office capacity.
of funds index (COFI)
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
of the 11th District members of the Federal Home Loan Bank
of San Francisco. See adjustable-rate mortgage (ARM).
A clause in a mortgage that obligates or restricts the borrower
and that, if violated, can result in foreclosure.
An agreement in which a borrower receives something of value
in exchange for a promise to repay the lender at a later date.
A record of an individual's open and fully repaid debts. A
credit history helps a lender to determine whether a potential
borrower has a history of repaying debts in a timely manner.
A type of insurance often bought by mortgagors because it
will pay off the mortgage debt if the mortgagor dies while
the policy is in force.
A person to whom money is owed.
A report of an individual's credit history prepared by a credit
bureau and used by a lender in determining a loan applicant's
reporting agency (or bureau)
An organization that prepares reports that are used by lenders
to determine a potential borrower's credit history. The agency
obtains data for these reports from a credit repository as
well as from other sources.
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.