Mortgages Glossary C
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CMHC / Canadian Mortgage and Housing Corporation
Canadian Mortgage and Housing Corporation is a Canadian governmental housing agency and regulatory body. CMHC was founded in 1946 for the purpose of making Canadian house market more affordable and attractive to home buyers, real estate developers and financial institutions. One of the most important products offered by CMHC is the mortgage insurance, which secures lenders, and permits no money down or little money down mortgages with less then 20% down payments.
One in three Canadians used CMHC insurance at some point during ownership of their property. Visit Canadian Mortgage and Housing Corporation Website. http://www.cmhc-schl.gc.ca/
Canada Deposit Insurance Corporation / CDIC
As stated on CDIC website:
“Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation created by Parliament. CDIC insures Canadians’ savings in case their bank or other CDIC member institution fails or goes bankrupt. CDIC is NOT a bank. CDIC is NOT a private insurance company.”
The primary purpose of CDIC is to insure individuals from loosing their savings in case their bank goes bankrupt. CDIC offers insurance coverage on up to $100.000 worth of savings. Canada Deposit and Insurance Corporation website. http://www.cdic.ca/
Canada Savings Bonds / CSB / CSBs
A type of saving bond issued by the Bank of Canada. Bond is a document which states that the lender will get the invested amount, together with the interest at a specific date. In the case of Canada Savings Bonds, any person can become an investor. For example, Ron buys $5000 worth of Canada Savings Bonds. After a set period of time, Ron’s will get back more then $5000, since his money was invested by the bank. CSBs allow people to pull out at any time, meaning that they can cash their bonds whenever they deem appropriate. More info on Canada Savings Bonds from Government of Canada http://www.csb.gc.ca/eng/bonds_csb.asp
Canadian Bankers Association / CBA
Association providing coaching, assistance, research, lobby and support to its members. CBA members are mostly banks and other financial institutions. Visit Canadian Bankers Association website http://www.cba.ca/
Canada Education Savings Grant / CESG
Federally funded program that assists parents saving for higher education of their kids(college, university). Families that open Registered Education Savings Plan can enroll in Canada Education Savings Grant and receive assistance from government. CESG offers maximum $400 per year and a maximum of $7,200 over the life of the program. Visit Canada Education Savings Grant website
http://www.hrsdc.gc.ca/en/learning/education_savings/public/cesg.shtml
Canadian Depository for Securities Limited / CDS
Canadian Agency responsible for secure transactions within Canada. Visit CDS website. http://www.cds.ca/
Canadian Payments Association / CPA
Canadian Payments Association is a non-profit organization that acts as a regulatory body for clearing and settlement of payments throughout Canada. Minister of Finances is responsible for CPA operations. All Canadian banks are required to be a member of the Canadian Payment Association.
Visit CPA website. http://www.cdnpay.ca/
Cantilever
Cantilever is a type of structure which has weight on one end and a load on the other end. You can picture cantilever being a letter T with vertical element of the letter T representing supporting beam and the horizontal element being the actual part that carries a load.
Callable Debt
A callable debt is a type of debt where the lender has the right to request partial payout after a specific date, but before the maturity of the loan. For example, Ron borrowed $1000 of callable debt from Alex. Alex may request Ron to pay $200 of that debt after a specific date.
Call Option
A mortgage feature that gives lenders power to request full payout of a mortgage, any time.
Cancellation Clause
Contract provision that gives the right to cancel the contract when certain criteria is met. For example, Ron leased a building from Alex. Cancellation clause can give Alex the right to end the contract with Ron, if Alex decides to sell his building before contract is over.
Cap
Limit on the interest rate for an adjustable rate mortgage. For example Ron has an adjustable rate mortgage starting at a rate of 6%, but with the cap of 8%. No matter the market, his interest rates will not go higher than 8% in an adjustable rate mortgage.
Capped Rate Mortgage
Mortgage with a cap on interest rates, usually an adjustable rate mortgage. Cap refers to the limit on an interest rate. Cap sets the maximum rate to which the interest can rise.
Capital
Capital is a measure of financial strength. Capital can be measured in terms of property, money and assets. Capital usually refers to a corporation or a businessman.
Capital Adequacy Ratio
Measure of banks capital(total financial strength).
Capital Asset
Property of an individual. Capital asset can be virtually anything: automobile, real estate, land, funds, bonds, jewelry, etc.
Capital Gain
Profits made from sale of capital assets.
For example: Ron purchased a house worth $400.000. Five years later Ron sold that property for $450.000. Ron’s capital gain is $50.000
Capital Loss
Loss from sale of a capital asset. Capital loss can happen when an asset is sold for less then it’s market value, or it is sold when its value goes down.
For example: Ron purchased a house for $100.000. Five years later its value went down and Ron sold it for $80.000, experiencing capital loss.
Capital Gain Distribution
Payment made by an investment company to its shareholders upon sale of its assets. For example, Ron and Alex have shares at YYY company. YYY company sold some of its assets to another company. YYY is bound to perform capital gain distribution and share its profits with its shareholders, which include Alex and Ron.
Capital Expenditure
Cost of making improvements to an asset, such as real estate property.
Capital Gains Tax
Tax on profits from the sale of capital assets.
Capital Investments
Investments which are made for profit.
For example: Ron purchased a house, only to sell it 2 years later, when the value went up.
Capital Improvement
An upgrade that adds value to an asset. It can be in a form of additional structures, swimming pool etc.
Capitalization
A way to determine the value of commercial property by the amount it generates and the expenses required to run it.
Capital Expenditures
An improvement on the property that will last more then one year
Capitalization Rate
An estimated value that a piece of property will produce to its owner.
For example: Ron bought a condominium for $100.000. Capitalization rate projects that his property value will go up by 20% over five years.
Captive Finance Company
Sister company of a parent company, which provides financing to the customers of the parent company.
For example: Ron owns an automotive company which produces cars. He can establish a captive finance company which will finance Ron’s cars and help buyers purchase his products.
Caravan
This term refers to a group of real estate agents looking at newly listed property.
Carrying Costs
Costs involved in maintaining property. Costs usually include: mortgage payments, electricity, water, taxes, etc.
Carryback Loan / Seller Carryback / Seller's Second
Carryback loan is a loan that is financed by the seller of the real estate property.
Cash Advance Fee
Whenever you withdraw money from a credit card, banks charge a “cash advance fee”. This can be a flat fee or a percentage of a withdrawal amount.
Cash Flow
Money that the investment produces after subtracting expenses.
Card Holder Agreement
A document which specifies terms and conditions on the credit account.
Cash Collateral
Assets that can be immediately monetized in case of bankruptcy. Cash collateral can be virtually anything. For example, Rudy filed for bankruptcy. His cash collateral will be his car, savings, bonds, furnishing etc.
Cash Out Refinance / Cash-out Refinancing
Cash out refinance is an alternative to Home Equity loan. When the owner of a house has lived in that house for long enough for the value to go up, he can refinance with a bigger mortgage, where accumulated equity will be free to spend. For example, Ron has lived in his house for 10 years. He originally bought it for $300.000 and its price went up to $360.000. He can cash out refinance and get a bigger loan with $60.000 being at his disposal.
Cash Flow Forecast
A forecast on future revenues, minus expenses.
Cash Method
An accounting method, where you calculate the expenses at the time you pay for them. For example, if Ron buys inventory for his company in 2009, but pays for it in 2010, he will record that expense in 2010, when he pays for it.
Cash Back Mortgage
A type of mortgage where the borrower gets a lump sum on top of a mortgage.
For example: Ron buys a house for $200.000, but also wants to have some cash for furniture and renovations. He decides to go for a cash back mortgage and gets $220.000 loan, even though the value of the house is $200.000.
Cash Reserves / Emergency Funds
Funds that are held available to be spent in cases of urgency or emergency. Many corporations have cash reserves, ready to be spent at moments notice: to save market share, make moves against competition, etc. Cash reserves are also referred to as emergency funds.
Cashier's check
A check that is given by the bank, from banks money reserves, to the person specified by the customer.
For example: Ron wants to give cashier’s check to Alex. He will go to his bank, specify Alex’s name and other details. Ron’s bank will give the check to Alex, from its own funds.
Casual Employment
Occasional work.
Caveat
A warning or caution. In mortgage context, caveat refers to a written letter from the mortgage lender, who may issue a warning of foreclosure due to non payment.
Caveat emptor
Latin for: “Buyers beware”, means that the buyer purchases on his / her own risk.
Cavedium
A courtyard of a house.
Certificate of Occupancy
Certificate issued by local government stating that the property is open to occupancy. Certificate of occupancy is issued to newly build properties.
Certificate of Deposit / CD / CDs
Savings method where person looking to save money and garner interest on it can buy financial papers called Certificate of Deposit. Certificate of deposit limits withdrawal of money for a fixed period of time. You can also say that your money is frozen. For example, Ron has $10.000 and wants to get some interest on it. He can get a Certificate of Deposit for $10.000 for one year at 5% interest. After 1 year time Ron would get back 10.500($10,000 * 1.05). CDs smaller then 100.000 are called “small CDs”, while those larger than $100.000 are called “jumbo CDs” or “large CDs”
Certificate of Sale
After a written statement is issued to the buyer, his must pledge in faith before public notary. The buyer is then entitled to the property.
Certificate of Title
A document which states that the individual has rights to a property.
Chain of Title
A list of owners to a piece of land. Starting from the very first owner recorded and listing all other owners in a chronological manner, to the individual or corporation that currently owns that land.
Chain of title may have owners such as: government, original owner, construction companies, community, families, banks etc.
Change Order
A document which specifies change in construction plans. Change of order may be very costly.
Change Frequency
Period when adjustable rate mortgage adjusts. For example Ron got an adjustable rate mortgage, which adjusts every 6 months. His change frequency is 6 months.
Charge
The right of a lender(bank) to receive cash payment in order to cover debt by selling borrowers property. In most cases borrowers borrow money against the value of their homes, where the non payment gives lender a “charge” to sell the property.
Chattel
Personal property that can be moved. For example, a trailer.
Chattel Mortgage
A mortgage on movable property, such as a trailer, mobile home or a car.
Cheque / Check (U.S.)
Document which can be used for payment or for personal money transfer. People with checking accounts can issue cheques. A cheque has a field where the money amount can be specified, person to which the cheque is being issued and a field which requires issuers signature for the cheque to be valid.
Cheque Book / Check Book (US)
A book with blank cheques. A cheque from the check book can be singed with specific amount of money and given to anyone. Cheques are also used for payments. Cheques are issued to persons with a chequing bank account.
Cheque Clearing / Check Clearing (US)
When you receive a check, you usually cash that cheque in the bank. Once the bank approves that cheque, you receive the money. Once the money is received, we can say that the check was cleared.
Cheque Hold
A number of days a bank can hold a check before crediting person’s bank account.
Cheque Register
A journal where each transaction involving cheques is recorded.
Child Support
Payment issued to support a child. Child support may be issued upon divorce, where ex spouse is required by law to make monthly payments to support another spouse who will be taking care of a child.
For example: John and Marry got divorced and their child will be living with Marry. Court may order John to pay monthly child support to Marry so she can take care of their child until he matures.
Child support may also be provided by the government to single moms.
Child Tax Credit
A tax break allowed to people who are supporting a child and specify it in their tax return papers. An individual must meet certain criteria to qualify for child tax credit.
Claim
1. A demand by the lender for payment by the borrower.
2. Demand for payment from and insured individual who meets the payout criteria of his insurance policy. For example, Rudy broke his leg and cannot work. If he had accident insurance, he can make a claim requiring payout of the amount of money that his insurance company guaranteed in the case he became temporarily disabled.
Clear Title
A title to a property without any legal bindings, such as liens, claims, etc.
Clerk
Person employed in various agencies performing various tasks, such as keeping the records, filing, selling merchandise, responding, writing letters etc.
Clearing and Settlement
A process which enables banks and financial institutions to accept checks, money and banks drafts from other financial institutions and banks.
Client-based
Customers can use Client-Based software on their computers which allows them to access their bank accounts from within that software and make transactions from the comforts of their homes. A good example of such software is the Quick Books accounting suite. http://quickbooks.intuit.com/
Closed-account Fee
Fee charged for closing the account.
Closed-end Lease / Closed End Lease
An agreement which puts no obligation on the lessee by the end of a lease. For example, Ron leased a car for $60.000 for 5 years. The assumption is that in five years the value will go down. If the lender estimated that in five years the cost will go down to $45.000, but in fact in went down to $40.000, Ron will be required to pay $5000 as per agreement with the leaser. In a closed-end mortgage Ron is not required to pay anything by the end of a lease.
Closed End Credit / Closed-end Credit
A type of loan where the amount of money borrowed must be paid in full by a set date. Most mortgages are closed-end loans, while credit cards are open end loans.
Closed Mortgage
Mortgage with strict payment schedule, where borrower cannot pay less than the agreed amount, change mortgage options or refinance.
Closing Statement
A document issued before transferring ownership rights from one person to another. Closing statement details: insurance, taxes, commissions and other fees that must be paid before the transfer can be completed.
Closing
In real estate and mortgage world, closing refers to completion of real estate or mortgage transaction. For example Ron signs a final document in a mortgage, meaning that he is closing the mortgage transaction.
Closely Held
A corporation where few shareholders hold the voting stock and almost exclusively operate that corporation. For example YYY Mortgage Corporation has 3 shareholders, each one of them holding 30% of the stock while the rest is traded publicly.
Closing Costs
Fees associated with real estate or mortgage transaction. Such fees may include: commission, taxes, insurance, etc.
Cloud / Cloud on Title
Claim on the property which can stop transfer of ownership of that property from one person to another.
Closing Date
The date when the seller transfers property rights and the buyer pays the money. Usually all the parties get together for one last time and settle down everything.
Cluster Development
Government issued document that specifies population density in a specific area in a specific development. The developer(may be a construction firm) can then decide that certain areas will be more populated then the others.
CMG Plan
A type of mortgage structured like a checking account, where borrower puts money on the account whenever he/she desires or according to the minimum monthly payment. The drawback of the CMG is in higher interest rates, since the term is usually shorter with this type of mortgage plan.
Co-housing / Cohousing
A type of housing where residents have access to shared commodities such as a kitchen, bathroom and so on.
Common Areas
Areas which used by all condo residents. For example, elevators, swimming pools, tennis courts, etc.
Common-interest Development
Housing where owners belong to an association which maintains and administers common areas, such as the swimming pools, gold courses etc.
Co-maker / Co-signer / Co-mortgagor
Person signing the loan agreement, pledging to repay the loan if other person refuses or cannot repay it.
Codicil
Codicil can be referred to as a document that corrects or deletes persons will. For example Ron wrote a will to his kids. Ron needs a codicil to delete make changes to that will.
Coinsurance / Coinsurance Clause
An insurance policy that states a minimum amount to be insured in order to receive full payout. For example, Rudy bought a $100.000 house and insured it for $60.000. Insurance states that the house must be insured for 80% in order for him to receive full payout in case of a fire or a natural disaster. If Rudy’s house gets burned down he will only receive $60.000, however if he insured 80% which is $80.000 he would receive full payout which is $100.000.
Collateral
Collateral is the property accepted by the lender as a security in the case borrower does not for pay his loan.
Collusion
A secret agreement between two or more people to fraud other people or institutions.
Collection
An effort made by specialists to collect money owed by the borrower. For example, George does not pay his credit card. He may receive constant calls, emails, mail, visits from collection agency, all in an effort to make him pay what he owes.
Combination Account
An account which combines both saving and chequing account benefits. You can withdraw on regular basis, write checks or make payments. It also earns interest as long as there is sufficient money on the account.
Column
A round structure in a circular shape. Columns are used for decoration and for support of heavy structures.
Combined Loan-to-value / CLTV
Combined Loan-to-value Ratio is the ratio between all mortgages on a property and a projected market value of that property. For example Ron has two mortgages, one for $20.000 and another one for $80.000, a total of $100.000 in mortgages. Market value of that property is $130.000, meaning that the loan to value ratio is $30.000.
Commercial Bank
A bank that accepts deposits(money put in the bank) and gives out business related loans(for example funds for a construction project). Commercial banks are for businesses only.
Commercial Banking
Banking for business related purposes. For example, managing corporate accounts, getting loans for upcoming projects, etc.
Commercial Paper
Unsecured short term papers sold by large companies in order to satisfy their short term cash needs. Commercial papers are not backed up by any collateral(something valuable that can be converted into money) and mature within 270 days or 9 months.
Commercial Land / Commercial Property
Land or property used for business purposes.
Commingling
When mortgage broker combines his funds with the funds of his client. This is illegal by law.
Commitment
Written document from the lender/bank, promising to lend specific amount of money at a specified date.
Commitment Fee
Fee paid by the borrower to the lender, who promises to lend money for a specific period of time, under certain conditions.
Commission
Money earned from sale of a mortgage by a mortgage broker. Commission fee is usually included in the mortgage or is specified in mortgage closing costs.
Commitment Letter
Notification from lender, stating approval for a loan and specifying conditions on which the loan will be granted. For example, Ron received a commitment letter from his lender, stating that he is approved for a mortgage, bit first he must agree to certain conditions.
Common Area Assessment / Maintenance Fee
A fee charged to the condominium owners, which funds elevator, corridor, front yard maintenance as well as other services and property improvements. It is also referred to as the maintenance fee.
Common Tenancy
Two or more unrelated people owning the same property. Each one of those individuals is entitled to a part of that property and upon his/her death that ownership can be transferred to the any other person as opposed to the co-owner of a property.
Community Bank / Independent Bank
Also referred to as an independent bank. Community Bank is locally owned an operated.
Community Property
Property earned and bought by joint efforts of both husband and a wife.
Commission Income
Income which is not fixed and depends on a number of sales made by the person earning commissions. For example, Tony is a mortgage broker and he only works for a commission. He sold a $100.000 mortgage and his commission is 2% of that mortgage, meaning that he earned $2000. He may not have any more sales that month or he may have four more $100.000 mortgage sales, earning him $8000 at 2% commission rate.
Compound Interest
Compound interest is an act of adding accumulated interest to the principal and then charging new interest from the total figure. All mortgages, credit cards and car loans use compound interest formula.
Compound Interestexample
For example you a have a $200.000 with 6% interest.
6% interest is 0.06 in decimals. 0.06 / 12 = 0.005.
$200.000 at 6% interest, multiplied by 0.005 gives amount you will pay per month in interest rates. $200.000 x 0.005 = $1000 per month. So if your monthly payment is $1300 per month, $1000 is going towards interest and $300 towards principal. As you pay every month, interest payments go down and principal payments go up. For example, your $300 went towards principal, reducing the amount to $199.700.
Interest rate will have to be calculated again: $199.700 x 0.005 = $998.5
This time, out of your $1300 monthly payment $998.5 is interest and $302.5 is principal. Essentially, the interest payment goes down each month as you pay for the mortgage. The reverse formula works for credit cards. The more you take the more interest you pay.
Comparables / Comps / Comparative Market Analysis
Comparables refer to similar property. It is a process of comparing similar properties to the one being sold, in order to estimate its value.
Competent
Ability to make decisions and enter into contract agreements.
Condemnation
Government declaration stating that the land is to be used for public purposes.
Contract Race
When a seller gets two or more offers on the property and sells it to a buyer ready to buy first.
Condominium Conversion
A change to a condominium type of ownership. For example apartments turned into condominiums.
Conditional Commitment
Lenders acceptance of individual application and approval for a mortgage. Borrower must then meet lenders demands to get the mortgage. Requirements stated in a conditional commitment may differ and depend on lenders and borrowers. For example, Ron received a conditional commitment letter from the bank, stating that the bank will give him the mortgage, but he will have to sign up for the insurance.
Condominium
A building complex or a building, where apartments are owned by individuals, while the rest of the property is shared among them, i.e. elevators, swimming pool, tennis courts, etc.
Concessions
A promotion provided by the seller to induce someone to buy his product. For example, Ron is converting his apartments into condominiums and offers 15% discount for all the residents currently living in it.
Consideration
Something of value that is negotiated as part of the contract. For example Ron is selling his house, he may offer his car with it to increase chances of sale.
Consent Judgment
Consent judgment is a contract between two or more parties agreed before the judge, where all parties voluntarily accept the outcome.
Construction Budget
Budged allocated for construction purposes.
Construction to Permanent Loan
A loan that pays for construction of the property and for the property itself, as opposed to having two separate mortgages. For example YYY firm took a loan from X Bank to fund its condominium project. X bank then stated they will provide loans to individuals looking to buy those condos, as opposed to buyers looking for their own lenders.
Construction Loan / Construction Financing
Loan taken by a construction firm to fund its projects.
Consumer Bankruptcy
Bankruptcy filed because of consumer debt which cannot be repaid.
Consumer Credit
Loans taken for personal use as opposed to business related loans. Consumer credit loans are usually credit cards and other debts, not backed up by collateral(something of value that can be sold).
Consumer Credit Counseling Service
An agency that works with individuals in order to work out a plan to reduce debt both short term and long term.
Consumer Debts
Debts for individual needs. For example Ron wants a new TV. He might buy it on credit with the store, entering into consumer debt.
Contingency
An event that must take place for the contract to go through. For example, Ron wants to buy a house. For the purchase to go through, Ron will need an approval of his mortgage by his lender, which is contingency.
Contingency listing
A piece of property or real estate with special conditions attached.
Contingent fee
A fee which is not charged unless a certain condition is met. For example, Ron is suing a multinational corporation. He has an attorney representing him. Ron wants to sue for $10 million. He will share the money with his attorney if he wins and will not pay anything if he looses.
Consumer Price Index / CPI
Measure of the cost of living, including credit, food prices, rent, gas etc.
Contiguous Lots
Real estate properties next to each other. For example, two houses next to each other or across the road.
Contingent Liability
Legal responsibility for future lawsuits.
Conveyancing
Act of transferring ownership of the property from one person to the other.
Conveyancing fee
Fee charged for the transfer of rights to the property, from one person to another.
Conveyance tax
Taxes charged for transfer of property rights from one person to another.
Covenant
Covenant is an agreement on a loan, which binds a person into doing certain things and not doing others. For example Ron bought a house. His covenant states that he will: take care of its land, will not sell liquor, will take care of the structure.
Covenanter
One who promises to follow the covenant(see covenant).
Second Meaning: Person who is responsible for repayment of a mortgage.
Contract for Deed / Land Contract
The sale process, where the buyer takes possession of the property, but the seller holds title to the property until full amount is received from the buyer.
Contract to Purchase / Agreement of Sale / Purchase Contract
An agreement between the seller and the buyer, when they both come to terms on pricing, fees and other details required for the transfer of ownership rights.
Contractor
Person or a company agreed to do work for another. For example contractors are hired to do landscaping, roofing, fix elevators, etc.
Cost of Funds Index / COFI
Index used by mortgage lenders to adjust interest on an adjustable rate mortgages(variable rate mortgages). Interest rates either rise or fall based on the cost of funds index. COFI moves very slowly both up and down, so not all mortgage lenders use it to adjust their interest rates.
Controlled Growth
Restrictions set by governments that limit the construction and developments.
Conventional Mortgage
Mortgage not insured by Canadian Mortgage and Housing Corporation(CMHC). Insurance from CMHC is required for mortgages with less than 20% down payments, so in a sense, conventional mortgage is a mortgage that has 20% or more down payment.
Conversion Clause / Convertibility Clause / Conversion option / Convertible ARM / Convertible Mortgage
A feature in an adjustable rate mortgage(variable rate mortgage) that allows to transform it into a fixed rate mortgage. A fee must be paid to the lender for the conversion to take place.
Contractual Lien
Contractual Lien is a voluntary claim against the property. For example Ron has a mortgage which bought his house, meaning he has a contractual lien to that house though his mortgage.
Cooperating broker
Real estate broker who shares his commission with another real estate broker.
Conduit
A government or a private organization that collects mortgages and loans in one place and issues securities(financial papers of value) in its own name.
Congregate Care
Care for children with problems, that must be addressed in specially allocated communities, who cannot normally function at home.
Contract Knavery
Contract knavery can be referred to predatory lending, where borrowers do not get to see the contract until the closing date. At the closing date a pile of papers is provided to them which they need to sign without the review. In many cases, predatory brokers will input extra fees and extra costs that the borrower should not pay at all, counting on the borrower to sign the papers without reviewing them.
Construction Type
Type of a construction project. Construction type can refer to a condominium complex, commercial property, private housing, etc.
Conservator
Person appointed to represent an individual in a court of law who is mentally handicapped or is too young.
Cooperative / Co-op / Cooperative Housing / Cooperative project
Cooperative is a corporate owned building where residents buy shares in a corporation, giving them the ability to live in that building. Tenants are required to make monthly payments for maintenance, property and real estate taxes.
Cooperative Mortgage
A mortgage loan, that allows people to buy shares in a cooperative housing.
Corporate Banking
Type of banking specifically designed for large firms and corporations. Corporate baking involves large, complex transactions that require special attention and multiple accounts.
Counter Offer / Counteroffer
Seller considers another offer on the property in the case current buyer fails to buy.
Correspondent Bank
Smaller bank may deposit some of its funds in a bigger bank, making a bigger bank a correspondent Bank.
Correspondent
A bank, dealer or another financial entity that acts on behalf of its clients with limited access to its funds. For example Ron is a correspondent to YYY Bank. He may perform some transaction for YYY bank, but very limited in their nature.
Corrective Work
Repairs requested by the buyer, which must be completed before she buys that property.
Co-signing a Note / Cosigning a Note
An agreement from the relative, friend or a partner to help a borrower with his mortgage for a limited period of time. For example, I co-singed a note with Ron. This entitles me to pay for Ron’s mortgage for as long as the note lasts.
Cost-plus Contract
A contract, where contractor supplies all materials and adds his service charges on top of the cost of materials.
Cost Basis
Cost Basis is the original cost of a building. For example Ron bought a house for a $100.000. Its price went down to $90.000, his cost basis is still $100.000.
Credit
Access to money from a bank or a lender, where the borrower promises to repay money borrowed.
Credit Bureau / Credit Reporting Agency / Consumer Reporting Agency / Credit Repository
Agency which accesses, calculates and sells individual credit scorea, based on past transactions.
A Good example is Equifax - http://www.equifax.com/home/en_ca
Credit Score / Credit Bureau Score
Credit score given by a credit bureau to an individual person, based on his past borrowing and spending habits. Mortgage lenders prefer and in some cases require good credit score for a person to be approved for a mortgage. The higher the score the easier it is to get a loan. The lower the credit score, the harder it is to get a loan and the higher the interest rates on that loan.
Credit Bureau
Credit File
File containing credit score, credit application, credit history, buying habits, current balance, payment history and other credit related data.
Creative Financing
Allows a borrower to customize his mortgage to suit his individual needs and budgets.
Credit Tenant / Credit Tenant Lease
When a landlord of the property borrows a loan to finance that property and promises that the tenants living on the property will repay the loan.
Credit Disability Insurance
Insurance that pays for monthly mortgage payments in case a person responsible for the payments becomes temporarily or permanently disabled.
Credit Insurance
An Insurance Policy which repays debts in a case the borrower dies, becomes disabled or looses her job.
Credit Life Insurance
Insurance which will pay off borrower’s debt if he dies.
Credit Limit
Maximum amount a borrower can borrow from a lender.
Credit Report
A report which details credit history of an individual.
Credit Line / Line of Credit / Bank Line
Credit line is a moral agreement, not requiring a contract. You can borrower as much as you desire, up to a limit.
Credit Union
A non profit organization owned and operated by the people who use its services. Credit Unions provide more favorable interest rates to its members than other lenders. The head of the credit union gets elected by the members from the members of the union. There are a number of governmental insurance policies that protect individual accounts in a case credit union closes or fails.
Critical Path
Minimum time needed to complete construction project.
Credit Risk
Credit risk is a measurement by which lenders estimate risks of lending money. Lenders request credit reports from credit reporting agencies. Once they have a credit report of a particular person, they estimate the risks involved in lending money to that person. The logic is the following:
Good credit score = less risks for lenders = lower interest rates
Bad credit score = more risks for lenders = higher interest rates
Creditor
Another word for “lender”. Creditor can be a bank, private lender or other financial institution.
Credits / Tax Credits
Tax credits reduce amount of taxes owed. As opposed to tax deductions, which deduct a percentage from overall taxes, tax credits reduce tax amount by applying a given credit. For example Ron owes $400 in taxes. He has tax credits for $300, meaning that he will only pay $100 in taxes(400-300=100). Tax credits are provided under certain conditions, some of which are:
- Having a child with a certain yearly income
- Mortgage interest credits, to make homes more affordable
- Business investments, to help companies achieve business goals
Credit Loss Ratio / Credit-Loss Ratio
Credit loss ratio is an investment term that identifies ratio on the loss of credit with a particular mortgage-backed security(mortgage related bank investment). Credit loss ratio may occur when the bank gives out a loan, which is partially funded by private individuals with an account in that bank. In a case the borrower does not pay out his loan, private individuals who invested in that borrower through mortgage-backed securities may experience credit loss ratio.
Curb Appeal
The look and feel of a house when viewed from outside.
Cul-de-sac / Culdesac
Cul-de-sac is a dead end street, with a circle at the end of it. You may have seen cul-de-sac on the streets with houses standing in circle, facing each other. It is also very convenient for cars who have reached dead end, since they can quickly turn around.
Curable Defect
House problem that can be fixed. Bad floors can be easily changed to new, while living close to the airport cannot.
Current Year Tax
Tax that must be paid the same year.
Current Market Value
Current cost of real estate property on the market. For example Ron bought a house for $100.000 ten years ago. Today that house might cost $130.000, meaning that it is a current market value of that house.
Custom Builder
Custom builder is contractor or a construction company which builds houses according to client’s specifications.
Curtain wall
Curtain wall is a fortification wall. For example, Great Wall of China.
Cumulative interest
Total amount of interest paid on a loan.
Custom Home
Home that was build according to custom specifications of a client. Custom homes are more expensive.
Current index value
Current index rate is used in Adjustable Rate(variable rate) mortgages. Interest rates for adjustable mortgages are calculated according to the current index value, which is released every day by different financial institutions, for example LIBOR(London Inter Bank Offered Rate)
Customer Identification File / CIF
Digital computer database which contains all information about particular customer, such as: credit cards, debit account information, address, etc. In order to make account management more efficient, all modern banks use Customer Identification Files for all of their customers.