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Mortgage
Terminology
BALLOON MORTGAGE
A mortgage with periodic installments of principal and interest
that do not fully amortize the loan. The balance of the mortgage
is due in a lump sum at a specified date, usually at the end
of the term.
BRIDGE LOAN
A form of interim financing which is secured by the borrower's
present residence (which is usually for sale) so as to allow
the proceeds to be used to close on a new home before the
present home is sold.
BUILDING CODE
The local regulations that control design, construction and
materials issued in construction. Building codes are based
on safety and health standards.
CAP
A provision of an ARM limiting
how much the interest rate or mortgage payments may increase.
CAPITAL GAINS
The tax paid upon certain types of real estate transactions.
Contact an accountant for specifics.
CASH RESERVE
A requirement of some lenders that buyers have sufficient
cash remaining after closing to make the first two mortgage
payments (also known as "payment buffer" or "payment cushion").
CERTIFICATE OF ELIGIBILITY
VA Form 26-8320. Evidence that the veteran is eligible for
VA loan guaranty benefits. The face of the form identifies
the veteran. The reverse provides details on the status and
extent of his or her eligibility.
CERTIFICATE OF REASONABLE VALUE (CRV)
VA Form 26-1843. A document issued by the VA establishing
a maximum value and loan amount for a mortgage to be guaranteed
by VA. The CRV will also be accepted by HUD-FHA to establish
the appraised value of the property for a mortgage to be insured
by HUD-FHA.
CERTIFICATE OF OCCUPANCY
Written authorization given by a local municipality that allows
a newly completed or substantially renovated structure to
be inhabited.
CLOSING
The conclusion of the transaction. In real estate, closing
includes the delivery of a deed, financial adjustments, the
signing of notes and the disbursement of funds necessary for
the loan transaction.
CLOSING COSTS
One-time cost paid the day of closing, usually paid by the
buyer. Closing costs may include charges for points, title
insurance, title search, attorney's fees, credit report, preparation
of documents, property survey, loan origination service and
either closing service or escrow.
CLOSING STATEMENT
A financial disclosure giving an account of all funds received
and expected at closing, including escrow deposits for taxes,
hazard insurance, and mortgage insurance. All FHA, VA and
most conventionally financed loans use a uniform settlement
statement called the "HUD-1".
COMMITMENT LETTER
A formal offer by a lender stating the terms under which it
agrees to loan money to a home buyer (also known as approval
letter).
CONDEMNATION
Taking of private property for public use by a government
unit, with compensation to owner.
CONDOMINIUM
An individually owned unit within a multi-unit structure or
community that carries with it a shared ownership in common
areas and facilities. Individual units may be mortgaged separately.
CONVENTIONAL FINANCING
Financing not guaranteed by government
(typically the FHA or VA).
CONVENTIONAL MORTGAGE
A mortgage loan not guaranteed by the government (typically
the FHA or VA).
COOPERATIVE
A multiple dwelling, usually an apartment building, belonging
to residents through their ownership of shares in a corporation.
Residents occupy but do not own individual units and cannot
mortgage them separately.
COVENANT
An agreement restricting the owner 's rights in using his
property, generally within a subdivision or community.
Credit Bureaus
Agencies that provide compilations of your credit history.
The three main credit bureaus are Experian, Trans Union, and
Equifax. See About Credit to
obtain your credit score.
Credit Report
Report provided by the one or more of the credit bureaus which
shows the history, current status, and credit profile of an
individual.
Credit Scores
The number generated by the credit bureaus which is a numerical
representation of the subjects credit profile. The range is
from 450 (low) to 900 (highest possible).
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Licensed Mortgage Banker and/or Authorized Lender in all 50 states and
the District of Columbia