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Cap
A
limit on the variables of an adjustable rate mortgage.
Periodic cap is the limit by which the rate may increase at
each specified adjustment period and the life cap is the limit
by which the rate may be adjusted in the life of the loan.
Closing
Also referred to settlement. The meeting or the time at the
conclusion of the execution of all the documents and transfer
of all funds between the parties in a real estate transaction.
Closing Agent/Attorney
A closing agent or attorney assures
that all documentation related to the sale of a house had been
completed properly, including the title search and title
insurance. The closing agent explains all closing documents to
the buyer and the seller, obtains signatures where necessary
and record the documents.
Closing Costs or Settlement Costs
Costs in addition to the price of a house; usually
includes fees associated with the mortgage application,
approval and closing. May include fees for mortgage
origination or application, credit report, underwriting,
appraisal mortgage insurance and bank's attorney's fee, and
repayable items such as taxes and insurance payments collected
in advance and held in escrow.
Closing Statement/Settlement Sheet
A financial disclosure giving an account of all funds
received, expected and spent at the closing of a real estate
sale, including the escrow deposits for taxes, hazard
insurance and mortgage insurance. The statement is furnished
by the closing agent or attorney to the buyer and seller
separately. The standardized form HUD-I, is used in most
residential property sales.
Closing/Settlement
The process that brings a loan into legal existence,
including the signing of all loan documents, their delivery to
the appropriate parties, and the disbursing of at least some
of the loan funds. In real estate, the sale of the property is
finalized by signing of the mortgage documents, and paying of
closing costs. This includes the delivery of a deed, financial
adjustments, the signing of notes and mortgages, and the
disbursement of funds necessary to the sale of loan
transaction.
Co-Borrower
The person who signs the mortgage
note along with the borrower and who shares ownership to, and
the responsibility to pay the monthly obligation on the
mortgage with the borrower. Also called "co-mortgagor".
Commitment Letter/Commitment
A formal offer, similar to a pre
qualification letter, staling the terms under which a lender
agrees to lend money to a home, or commercial property buyer,
at a future date, stated conditions that are included in the
letter.
Comparables
Refers to the properties located within a certain distance
from the subject property that were reviewed as part of a
comparative market analysis in an appraisal report.
Comparative Market Analysis
A written report that reviews the
prices of comparable homes that have closed or sold in the
past six months if available, that are currently under
contract or sometimes homes that are currently on the market.
Conditional Sales Contract
A contract for the sale of a
property in which closing of the sale is contingent on
fulfillment of certain conditions or contingencies.
Such as appraisal, sale of existing property, obtaining
suitable financing etc...
Contingency
A condition that must be met before
a contract is binding. For example, the sale of a house might
be contingent upon the seller paying for certain repairs.
Debt-to-Income Ratio
The ratio, expressed in percentage terms, obtained by
dividing a borrower’s total monthly obligations by the gross
income.
Discount Points
A fee paid by the borrower to a lender in order to reduce the
interest rate. Strictly speaking, it a pre paid interest.
Down Payment
Cash paid by buyer, over and above closing costs, that
makes up the difference between the sales price and the loan
amount.
Ernest Money/Escrow deposit
Money paid by buyer into an escrow account as deposit
towards the purchase in a real estate transaction.
Equity
Is the difference between the fair market value of a property
and the lines against the property. It is the value that the
seller will realize should the property be sold.
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