Caps (Interest) - Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (Payment) - Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Cash Flow - A measure that compares your income and your expenses. When more cash comes in than goes out, you have a positive cash flow. Negative cash flow occurs when more cash goes out than comes in. Your ability to qualify or be approved for a loan is determined in part by your cash flow situation.

Cash Value - The accumulated savings component of a life insurance policy, which is available to the holder for a loan. The policy holder will receive payment in this amount if the policy is cancelled or lapses before the policy matures or the insured person dies. Also known as the cash surrender value.

Cash-out Refinance - Refinancing transaction in which the money the borrower receives from the new loan exceeds the total amount he uses to repay the existing first mortgage, closing costs, points; and satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash he can use for any purpose.

CD indexed - These ARMs are indexed to Certificate of Deposits (CDs). Adjustments occur every six months, with a per adjustment cap of 1 percent and a lifetime cap of 6 percent.

Certificate of Deposit - A time deposit held in a bank which pays a certain amount of interest to the depositor.

Certificate of Eligibility - A document issued by the Veterans Administration that certifies a veteran's eligibility for a VA loan.

Certificate of Title - A certificate issued by a title company or a written opinion by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title which an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence.

Chain of Title - An analysis of the transfers of title to a piece of property over the years.

Clear Title - A title that is free of liens or legal questions as to ownership of the property.

Closing - The meeting between the buyer, seller and lender where the property and funds legally change hands. Also called settlement.

Closing Costs - Includes a loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The closing costs usually are about 2 percent to 6 percent of the mortgage amount.

Closing Day - The day on which the formalities of a real estate sale are finished. The certificate of title, abstract, and deed are generally prepared for the closing by an attorney and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are paid. The final closing merely reiterates the original agreement reached in the agreement of sale.

Cloud (On Title) - An outstanding claim which negatively affects the marketability of title.

Co-Borrower - An additional individual who is both obligated on the loan and is on title to the property.

Collateral - Property offered to support a loan that can be seized if you default.

Collateral Insurance - Insurance which covers damage to your vehicle that results from a collision with another vehicle or object. Different than comprehensive insurance.

Commission - The fee charged by or paid to a broker, agent or auto sales rep for negotiating a real estate, car sale or loan transaction. A commission is generally a percentage of the sales price.

Commitment - A report prepared by a real estate agent that determines a house's market value. The agent compares the house's attributes to similar properties in the area that have recently sold or are still on the market. The CMA is often used to establish the listing price.

Common Area Assesments - In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.

Common Areas - 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 egress, etc.

Common Law - An unwritten body of law based on general custom in England and used to an extent in some states.

Community Property - In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances.

Comparable Sales - Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as 'comps.'

Competitive Market Analysis (CMA) - An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the stated conditions.

Compounded Interest - Interest is computed on the principal balance of a mortgage plus accrued interest.

Condemnation - A determination by a governmental agency that a particular building is unsafe or unfit for use.

Condominium - Individual ownership of a unit and an individual interest in the common areas and facilities which serve the project.

Condominium Association - An association of unit owners in a condominium building. The association elects a board of directors, which handles the maintenance and repair of common areas, disputes among unit owners, and enforcement of rules and regulations, and condominium fees.

Condominium Fees - Also called maintenance fees, the monthly fees paid by all condominium owners. The condominium fees go toward the maintenance and repair of common areas in the building, as well as salaries for groundskeepers, repairmen and security guards. The condominium fees are set and managed by the condominium association, and are typically determined based on the size of your unit.

Conduit - Secondary market entity that purchases loans from originators. Conduits provide expertise to evaluate, price, purchase, and service nonconforming loans.

Conforming Loan - Any loan that meets the criteria and limits set forth by the largest buyers of loans, Fannie Mae or Freddie Mac.

Construction Loan - A short term interim loan for financing the cost of construction. The lender advances funds to the builder as the work progresses.

Consumer Reporting Agency - An organization, commonly referred to as a credit bureau, that prepares credit reports which are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository and from other sources.

Contigency - 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.

Contract - An oral or written agreement to do or not to do a certain thing.

Contractor - A person who contracts to erect buildings. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building and others.

Conventional Loan - A mortgage not insured by FHA or guarantee by the VA or Farmers Home Administration (FmHA).

Conventional Mortgage - Any mortgage which is not insured or guaranteed by a government agency such as HUD/FHA, VA, or the Farmers Home Administration.

Conversion Option - A conversion option allows you to convert an ARM to a fixed rate mortgage. You will likely pay a higher rate or more points to have this option.

Cooperative Housing - An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.

Correspondent - An entity that typically sells the Mortgages it originates to other lenders. The Correspondent performs some or all of the loan processing functions such as taking the loan application, ordering credit reports, appraisals, title reports, and verifying the borrower's income and employment. The Correspondent may or may not have delegated underwriting and typically funds the loans at settlement. The Mortgage is closed in the Correspondent's name and the Correspondent may or may not service the Mortgage. The Correspondent could commission a Mortgage Broker to perform some of the processing functions.

Cosigner - Another person who signs your loan and assumes equal responsibility for it.

Cost of Funds - These ARMs are indexed to the actual costs of what banks pay to borrow money. Rates can adjust every month, six months, or every year.

Cost of Funds Index (COFI) - One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.

Covenants, Conditions and Restrictions (CC&Rs) - A set of rules and regulations governing a condominium building. The CC&Rs can include restrictions on things such as noise levels, pet ownership and renovations. These rules are enforced by the condominium association.

Credit - The right granted by a creditor to pay in the future in order to buy or borrow in the present; also, a sum of money owed to a person or business.

Credit Bureau - An agency that keeps your credit record.

Credit History - The record of how you've borrowed and repaid debts.

Credit Ratio - The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her net income (FHA/VA loans) or gross monthly income (Conventional loans).

Credit Report - Report of an individual's credit history that a credit reporting company (CRC) or credit repository prepares that you use to determine a borrower's creditworthiness.

Credit Reporting Company - Company that collects information received from more than one credit repository, merges all the information, and reports it in one form; merged credit reports.

Credit Repository - Company that collects information on an individual's credit history and reports it in one form, the in-file credit report.

Credit Scoring System - Statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.

Credit Warranty - Guarantee or promise by the seller of the loan relating to the creditworthiness of the borrower(s). The seller warrants that the borrower has the willingness to repay and there is evidence of an acceptable credit reputation.

Credit-related Insurance - Health, life, or accident insurance designed to pay the outstanding balance of debt.

Creditor - A person or business from whom you borrow or to whom you owe money.

Creditworthiness - Past and future ability to repay debts.

Current Index Value - Your current index value is the index that is used to figure your interest adjustment on ARMs.