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Cap Compensating factors
Capital Condemnation
Capital improvement Condominium (condo)
Cash-out refinance Conforming loan
Case reserves Construction loan
Closing costs Consumer credit bureau
Closing date Contingency
Closing statement Conventional mortgage
Cloud on title Convertible ARM
Collateral Cooperative (Co-op)
Collection Covenants,conditions and restriction (CC&Rs)
Comparable sale (Comp) Credit score

Cap
The limit on the amount to which the interest rate or monthly payment on an adjustable rate mortgage (ARM) can rise or fall

Most ARMs have several types of interest rate caps: (1) lifetime caps, required by law, that limit the increase and decrease of a rate over the life of the loan. (2) The first adjustment cap, which limits the rate change on the ARM's initial adjustment; and (3) the subsequent adjustment caps (also called periodic caps), which limit the rate changes on the rest of the adjustment periods, even if the market interest rates significantly rise or fall during this time.

See: Adjustable rate mortgage, Negative amortization

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Capital
Money used to create income

Capital is money invested in a business or income property. An example of capital is the money you put towards a home’s down payment or shares of stocks.

See: Equity

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Capital improvement
Renovation that increases the value of your property

Capital improvement includes major renovations that add value to your property. Repairs and normal maintenance on a home, such as replacing a broken window or fixing a hole in the roof, do not count as capital improvements.

See: Adjusted cost basis

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Cash-out refinance
Refinancing your home for a greater amount than the current balance with the purpose of paying off the present loan and keeping the difference

Cash-out refinancing lets you take advantage of the equity that you've built over the years, but it also raises your debt level on your mortgage loan.

See: Refinance
Compare: Home equity loan

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Cash reserves
Stashed money to be used in case of a financial emergency

Most lenders prefer that you have savings or investments to cover any unexpected events in the future that may put a strain on your finances.

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Closing costs
Fees (not including the down payment) that must be paid by the buyer and/or seller before closing

Closing costs vary from lender to lender. It is best to ask for a list of closing costs from your lender.

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Closing date
The day on which the sale or purchase is completed

The closing date, agreed upon by both the seller and buyer, is written in the purchase/sale agreement. A closing can either be an actual meeting or escrow, which requires no meeting.

In general, there are 4 main steps to take place on the closing date: (1) the buyer pays for the property (2) the buyer and seller sign the closing documents (3) the deed is recorded at the county courthouse and (4) the mortgage officially begins. Sometimes, these steps can span over several days before and after the closing date.

See: Settlement, Escrow

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Closing statement
A document that gives a breakdown of the costs for both parties

A closing statement gives you the final record of the fees paid at closing. A closing statement is also called a settlement statement or HUD-1.

See: Closing costs

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Cloud on title
When a false title is found on the property

Before you buy a house, a title company requires a title search to prove that the seller really owns the property you are about to buy. It can happen that the search catches a problem or "cloud" on the title.

Some clouds that result from poor record keeping can be easy to clear. But others, as in the case of contested wills, can take a long time to clear.

See: Quitclaim deed, Title insurance

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Collateral
Something of value that the borrower offers as security on a loan, which the lender can collect if the loan is not paid

When you buy a home, the property is used as collateral or security for the loan.

See: Deed of trust, Mortgage

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Collection
The attempts made by a creditor to obtain money owed on a debt

The collection process begins if you are past due on your monthly mortgage payments. If collection fails, the lender may start the foreclosure process to sell your home in order to repay the loan.

See: Foreclosure

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Comparable sale (Comp)
A property that has been recently sold that is used to estimate the value of a similar property

Comps are used to set the sales price for a property. Comps can also be used to obtain an updated value on your home – they provide a good reference point. Appraisers also use comps to help them evaluate properties.

A comparable property that would work well for you would be one that has sold in the last six months and is similar to your home in age, style, size, condition and location. Real estate agents have easy access to comps through an online network.

See: Appraisal/Appraiser

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Compensating factors
The strengths in a borrower’s financial profile that may make up for any weaknesses

See: Back end ratio

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Condemnation
The taking of private property for public use (or because the property is not livable due to damage or neglect) without the consent of the owner, but only after payment for the property has been made

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Condominium (Condo)
A building or housing development consisting of two or more units where each person owns his or her unit and shares ownership of the common areas

Condo owners, like house owners, have a separate deed and mortgage, and pay property taxes on their unit. The major differences between owning a house and a condo are: (1) you have a shared ownership of any common areas, such as the land, staircases, swimming pool, etc.; and (2) you pay monthly dues that cover maintenance and repairs for the facilities that you share with everyone else, such as garbage collection, lighting in the hallways and landscaping.

Condos also follow a set of strict rules called covenants. It may be a good idea to ask for recent reports that outline future plans for the condo which might impact your dues.

See: Assessment, Covenants, conditions and restrictions (CC&Rs)
Compare: Cooperative (Coop)

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Conforming loan
Loans that meet certain borrowing guidelines

Conforming loans have a set of standards for the maximum loan amount you can borrow and how much you need to put towards a down payment. If you meet these guidelines, you can usually get lower interest rates and better financing options. Lenders make sure that the loans "conform" to these standards so that they can later package groups of conforming loans to sell to institutions in the secondary market.

See: Secondary market
Compare: Jumbo loan

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Construction loan
A loan that pays for land and the construction of buildings and/or detached homes on that land

See: Blanket mortgage, Take-out loan

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Consumer credit bureau
A company that prepares a report of your credit history

Lenders require a copy of your credit report from an accredited credit bureau. Your credit report will report all of your consumer debt including your history on paying back that debt. The report will also include a record of your recent applications for credit and if you've ever had any red flags on your record, such as bankruptcy.

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Contingency
A clause that requires that a stated event must happen before a contract is binding

Contingencies provide protection for both the seller and buyer. Usually, the contingencies include: a property inspection clause, which states that a deal is contingent on a favorable inspection of the property; a financing clause that requires the loan be approved before the deal is made; and a clause that requires the property’s appraised value match or exceed its selling price. Sellers often include a contingency clause in the contract giving the buyer a deadline to get an approval on a loan.

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Conventional mortgage
Any loan granted by a non-governmental lender

Most loans are conventional, except for those insured by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

See: FHA mortgage, VA loan

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Convertible ARM
An adjustable rate mortgage (ARM) that can be switched to a fixed rate mortgage during a specific period

See: Adjustable rate mortgage

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Cooperative (Co-op)
A housing complex or building consisting of two or more units where to become a tenant you must purchase stock in the corporation that owns the property

Co-ops are the forerunners of the condominium. Co-ops are usually found in big cities like New York and Chicago. When you buy a co-op, you will get a stock certificate that shows how many shares you have in the corporation, but you do not actually own the unit in which you live which makes it difficult to obtain financing. Buying a co-op makes you a co-owner of the building. The more shares you own, based on the unit’s size, the more voting power you have in deciding how the co-op is run. You also pay monthly fees to cover your portion of the building’s property taxes and mortgage, and the costs of repairs and improvements for the common areas.

Compare: Condominium

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Covenants, conditions and restrictions (CC&Rs)
Regulations that maintain a property’s design and maintenance

CC&Rs are most commonly connected with condominiums and other housing complexes. CC&Rs detail how maintenance and repairs are handled, and regulate what physical changes you can and cannot make to your unit. Single family housing also has CC&Rs that may, for example, ban you from converting your garage into a bedroom. CC&Rs can be very specific, and it is a good idea to read them before buying.

See: Condominium

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Credit score
A number which is dependent on personal information and information from your credit report that lenders use to help predict the likelihood of default for an applicant

A lender will score you on different areas such as timeliness of payment on debt, age, marital status, amount of debt, etc. The sum of the scores in each area will be your personal credit score.

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