Provisions of an adjustable-rate mortgage limit how much the interest rate can change at each adjustment period (e.g., every six months, once a
year) or over the life of the loan (rate cap). A payment cap limits
how much the payment due on the loan can increase or decrease.
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income-producing property (mortgage payment, maintenance, utilities, etc.).
Certificate of Eligibility
The document was given to qualified veterans entitles them to VA-guaranteed loans for homes, businesses, and mobile homes. Certificates of eligibility may be obtained by sending form DD-214 (Separation Paper) to the local
Veterans Affairs office with VA form 1880 (request for Certificate
Certificate of Reasonable Value (CRV)
An appraisal issued by Veterans Affairs shows the property’s current market value.
Certificate of Veteran Status
The document is given to veterans or reservists who have served 90 days of continuous active duty (including training time). It may be obtained by
sending DD 214 to the local Veterans Affairs office with form 26-8261a (request for certificate of veteran status; this document enables veterans to obtain lower down payments on certain FHA-insured loans).
The frequency (in months) of payment and/or interest rate changes on an adjustable-rate mortgage.
The meeting at which a home sale is finalized. The buyer signs the mortgage pays closing costs and receives title to the home. The seller pays closing costs and receives the net proceeds from the home sale.
Expenses in addition to the price of the home are incurred by buyers and sellers when a home is sold. Common closing costs include escrow fees, title insurance fees, document recording fees, and real estate commissions.
An adjustable-rate mortgage with a rate that adjusts based on a cost-of-funds index, often the 11th District Cost of Funds.
A short-term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he or she progresses.
Consumer Reporting Agency (or Bureau)
An organization that handles the preparation of reports used by lenders to determine a potential borrower’s credit history. The agency gets data for these reports from a credit repository and other sources.
A condition that must be fulfilled before a contract is binding.
Contract Sale or Deed
A contract between purchaser and seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.
A loan is not guaranteed, insured, or made by the federal or state government.
A provision in an adjustable-rate mortgage allows the loan to be converted to a fixed-rate mortgage at some point during the term. Usually, conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
An offer in response to an original offer.
A report documenting the credit history and current status of a borrower’s credit standing.
Credit Risk Score
A credit risk score is a statistical summary of the information contained in a consumer’s credit report. The most well-known type of credit risk score is the Fair, Isaac, or FICO score. This form of credit scoring is a mathematical summary calculation that assigns numerical values to various pieces of information in the credit report. The overall credit risk score is highly relative in the credit underwriting process for a mortgage loan.