C

Capital Gains: Profit realized on the sale of real estate

CAP (on interest): Consumer safeguard that limits the amount the interest rate on an adjustable mortgage is allowed to change per year and for the life of the loan.

CAP (on payment): Consumer safeguard that limits the amount the monthly payment on an adjustable rate mortgage can change.

Cash Flow: The excess cash that is realized after paying for the expenses of the property.  The cash flow of a property is an essential element when purchasing income producing properties.

Cash Out: Money taken out of the equity of a property through refinancing the present mortgage.

Cash Reserve: Sufficient cash on hand after closing to be able to make the first two mortgage payments.  A cash reserve is required by some lenders.

Caveat Emptor: A legal term meaning “buyer beware”. The buyer must inspect the property and buy at his own risk.

Ceiling: The maximum an interest rate is allowed to increase during the life of the loan of an adjustable rate mortgage.

Certificate of Eligibility: The document issued to qualified veterans which entitles them to VA guaranteed loans for homes which they can buy with no down payment. Certificates of eligibility may be obtained by sending the form DD-214 to the local VA office along with VA form 1880.
 
Certificate of Occupancy: A certificate that the city government issues stating that the building is complete and/or in proper condition to be occupied by a tenant.

Certificate of Reasonable Value (CRV): An appraisal issued by the Veterans Administration establishing the property's current market value

Certificate of Title: A written opinion by an attorney setting the status of title to the property as shown on the public records.

Clear Title: A title that is clear and marketable.  It must not be clouded or disputed.

Closing: When the property legally transfers to the buyer and the funds legally transfer to the seller in a real estate or mortgage transaction.

Closing Costs: Typically include origination fees, inspection and appraisal fees, survey fees, title search fees, title insurance fees, taxes, deed recording fees, credit report fees, discount points, and other fees assessed at closing. Closing costs are usually about 3 to 6 percent of the mortgage amount.

Co-Borrower: A second borrower.  Example: husband and wife.  Both are financially responsible for the repayment of the loan.

Collateral: The property that is pledged to secure a loan.

Commercial Property: Any property that is used for business purposes.  Multi-Family properties with 5 or more units are also considered commercial properties and will need commercial real estate financing.

Community Property: Property that is owned jointly and equally by a husband and wife.

Commitment Letter: A written agreement by a lender to make a loan on specific terms or conditions to a borrower.

Comparables (Comps): Properties that are similar in style, structure, amenities, and geographical area that are used to determine the value of the subject property during the appraisal process.

Conditional Commitment: A written agreement by a lender to make a loan as long as specific conditions noted in the contract are met prior to closing.

Condominium: Individual fee simple ownership of a dwelling unit with joint ownership of common areas and facilities.
 
Construction Loan: A short term loan for the construction of commercial or residential real estate. The lender typically disburses funds to the builder as each phase of the project is completed.  When construction is complete, the builder/buyer must get take-out financing (a permanent loan) to pay off the construction loan. 

Consideration: Something of value that is conveyed to another to enter into a contract. 

Contingency: Conditions most typically seen in a purchase contract between the buyer and seller or in a commitment letter between a lender and buyer which must be met before the buyer can close the purchase of a property or receive funds for a loan.

Conventional Loan: A mortgage that is not insured or guaranteed by the FHA, VA or any other federal government program.
 
Conversion Clause: A provision that would allow an Adjustable Rate Mortgage to convert to a Fixed Rate Mortgage if the specified conditions in the contract are satisfied. 

Conveyance: Real estate title transfer from one party to another.

Covenants, Conditions, & Restrictions: Rules established for homes in an association (condominiums, townhomes, subdivisions, etc...  These rules are usually put into place by the developer for the purpose of maintaining the expectations of the homeowners within the development.

Credit Report: A report documenting and detailing the credit history and current status of a borrower.  The report usually contains payment history on revolving accounts such as credit cards or lines of credit, and installment accounts such as automobile loans.  The report also shows delinquent account information stating the amount of time the payment was late.  It will also contain information on the public records such as tax liens and judgments.