Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
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Commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a small percentage of the price of the property or amount borrowed. Sometimes called points.
Commitment Letter
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a loan commitment.
Common Area Assessments
Charges against individual unit owners in a condominium complex, or planned unit development (PUD), for additional funds to repair, maintain, or improve the common areas of the project.
Common Areas
Those areas of a property (usually a planned unit development or condominium project) that are used by all owners or tenants. Common areas may include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings and parking areas.
Common Law
The body of law based on general custom in England and used to a certain extent in the United States. Common law sometimes prevails unless superseded by other law.
Community Home Buyer’s Program
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low or moderate income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Community Land Trust Mortgage Loan
An alternative financing option that enables low to moderate income homebuyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.
Community Property
In some western and southwestern states, a form of ownership under which property accumulated through joint efforts of husband and wife is presumed to be owned equally by them unless acquired as separate property of either spouse.
Comparables
An abbreviated form of comparable properties. Comparables are used for comparative purposes in the appraisal process and are properties that are very similar to the property being appraised. They have been sold recently and have approximately the same size, location and features. Comparables help the appraiser determine the approximate fair market value of the subject property. Often just called “comps”.
Compound Interest
Interest paid on the original principal balance, and on the accumulated and unpaid interest.
Condemnation
The taking of private property for public purpose by a government under the right of eminent domain. Also, the determination that a building is not fit for use or is dangerous and must be destroyed.
Condominium
A form of real estate ownership in which each owner has title to a specific unit in a project and joint ownership in the common areas of the project.
Condominium Conversion
Changing the ownership of an existing rental complex building to the condominium form of ownership.
Condominium Hotel
A condominium complex that has registration desks, short-term occupancy, room service and daily cleaning services. Such properties are often operated as commercial hotels even though the units may be individually owned.
Conforming Loan
A loan that does not exceed the maximum loan amount allowed for the most common mortgage investors. Loans that exceed this amount are referred to as "jumbo mortgages". The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage.