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.
C
Construction Loan
A short term loan that is used to finance the construction of a new home. During the term of the loan the lender makes payments to the builder as the work progresses and the borrower makes interest payments on only the funds that have been disbursed to the builder. Typically, the construction loan is refinanced into a permanent loan after the home is completed.
Construction Spending
Economic indicator that measures the total amount of spending in the U.S. on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume. Frequency: monthly. Source: Commerce Department.
Consumer Confidence
A monthly survey of 5,000 households designed to measure Americans’ optimism about their current situation and the future. Frequency: monthly. Source: Conference Board.
Consumer Price Index (CPI)
Measures the change in the cost of living for most American families. Widely followed as an indicator of inflation of retail purchases. Frequency: monthly. Source: Federal Reserve.
Consumer Reporting Agency (CRA)
A company that prepares detailed reports used by lenders to determine a potential borrower’s creditworthiness. These agencies obtain data for these reports from a credit repository as well as from other sources. More Commonly referred to as credit bureaus.
Consumer Sentiment
An index designed to measure consumer optimism. Includes a preliminary report at mid-month and final report near month-end. Frequency: semimonthly. Source: University of Michigan.
Contingency
A condition that must be met before a contract is legally binding. For example, a lender's commitment to provide financing to a borrower may be contingent on receipt of an acceptable appraisal.
Contract
An oral or written agreement to do or not to do a certain thing for consideration.
Conventional Mortgage
A mortgage that is not insured or guaranteed by a government agency.
Convertibility Clause
A provision in some adjustable-rate-mortgages (ARM’s) that allows the borrower to change the ARM to a fixed-rate-mortgage at a specified period within the term of the loan.
Convertible ARM
An adjustable rate mortgage (ARM) that allows a borrower to convert their mortgage to a fixed rate loan for the remainder of the loan term if certain conditions are met.
Cooperative (Co-op)
A type of real estate ownership in which residents of a multi-unit property own shares of the corporation that owns the property. The ownership of these shares gives the owner the right to occupy a unit in the building.
Cooperative Corporation
A corporation that holds the title to a cooperative project and grants occupancy rights to shareholders through leases or similar rental agreements.
Cooperative Project
A residential or mixed-use building wherein a corporation holds title to the property, sells shares of stock, representing the value of a single apartment, to individuals who then receive a lease, or similar agreement, as evidence of title.
Cosigner
Another person who signs your loan and assumes equal responsibility for it.