call option
Similar to the acceleration clause. A provision of a note which allows the lender to require repayment of the loan in full before the end of the loan term. The option may be exercised due to breach of the terms of the loan or at the discretion of the lender.

can light
An incandescent light inside a metal can that is mounted flush with the surface.

can lights
Cylindrical chambers with bulbs recessed into the ceiling.

cancellation clause
A clause that details the conditions under which each party may terminate the agreement.

cantilever
A projecting structure supported on one end, such as a balcony.

cap
Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as "caps." Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap. 

Caps (interest)
Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage can change in an adjustment interval and/or over the life of the loan. For example, if your per-period cap is 1% and your current rate is 7%, then your newly adjusted rate must fall between 6% and 8% regardless of actual changes in the index.

Caps (payment)
Consumer safeguards which limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, these consumer safeguards may cause negative amortization.

Cape Cod style
A wood-frame or shingled house with a steep roof and several windows projecting from the second floor.

capital
Money used to create income, such as funds invested in rental property.

capital
The decorative top of a column or pilaster.

capital expenditure
The cost of making improvements on a property.

capital gain
Profit an investor makes from the sale of real estate or investments.

capital gains tax
A tax placed on profits from the sale of real estate or investments.

capital improvement
Any improvement that extends the life or increases the value of a piece of property.

capitalization
A mathematical formula that investors use to compute the value of a property based on net income.

capitalization rate
The percentage rate of return estimated from the net income of a piece of property.

caravan
A group of real estate agents who tour a house that has been recently listed for sale.

carport
A roof that covers a driveway or other parking area.

carryback financing
Financing in which a seller agrees to take back a note for a set amount of the sale of the home.

casement window
A window hinged on its sides to allow it to swing open vertically.

cash flow
The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income.

cashier's check
A check the bank draws on itself rather than on a depositor's account.

Cash Out
Any cash received when you get a new loan that is larger than the remaining balance of your current mortgage, based upon the equity you have already built up in the house. The cash out amount is calculated by subtracting the sum of the old loan and fees from the new mortgage loan.

For example, if your existing loan is $100,000, you might refinance it with a loan of $120,000. After you pay off your current loan ($100,000) and any loan-origination costs for the new loan (for example $2,000 in points), you would be left with $18,000 cash out.

Cash-out loans may not be available for all types of property.

cash-out refinance
When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."

casing
The trim that encircles a window or door opening, hiding the gap between the door or window jamb and the wall's surface.

cathedral ceiling
A high, open ceiling formed by finishing exposed roof rafters.

caulk
An acrylic or silicon sealant used to fill cracks, crevices, and holes in a home.

caveat
A formal notice asking a court to suspend action until the party that filed the challenge can be heard.

caveat emptor
A legal principle stating that a buyer is responsible for ensuring the quality of goods purchased. From Latin, "let the buyer beware."

cavedium
A courtyard or atrium.

CD (certificate of deposit)
A document showing that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm, or other financial institution.

Ceiling
The maximum allowable interest rate of an adjustable rate mortgage.

ceiling fan
A large, ceiling-mounted paddle fan. Also known as a Casablanca fan.

ceiling height
The standard height of a ceiling is eight feet.

center mullion
A cabinetry term referring to the vertical piece of wood on the front that divides the opening into two parts.

central air conditioning
A device that generates cold air through an outside unit connected to ductwork inside the house.

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

certificate of deposit index
One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.

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

certificate of occupancy
A document stating that a home or other building has met all building codes and is suitable for habitation.

Certificate of Reasonable Value (CRV)
Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.

certificate of sale
A document issued at a judicial sale that entitles the buyer to receive a deed after court confirmation of the purchase of the property.

Certificate of Title
Written opinion of the status of title to a property, given by an attorney or title company. This certificate does not offer the protection given by title insurance.

Certificate of Veteran Status
FHA form filled out by the VA to establish a borrower's eligibility for an FHA Vet loan. Obtainable through local VA office by submitting form DD 214 (Separation Paper) with form 26-8261a (request for certificate of veteran status).

Certified International Property Specialist (CIPS)
An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for handling international real estate transactions.

Certified Real Estate Brokerage Manager (CRB)
An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for real estate office management.

Certified Residential Specialist (CRS)
An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for handling residential real estate transactions.

chain of title
An analysis of the transfers of title to a piece of property over the years.

chair railing
Decorative trim installed on a wall about 32 inches above the floor to protect against scuffs from furniture.

change frequency
The adjustment schedule on an adjustable rate mortgage.

change order
A modification of a construction contract to authorize a change in the work, an adjustment in the amount of the contract, or a change in the contract time. The owner, architect, and contractor must sign the change.

chase
A shielded vertical shaft that houses various pipes, drains, ducts, and flues.

chattel
Personal property such as furniture, clothing, or a car.

chattel mortgage
A lien on personal property used as collateral for a loan.

chimney back
The back wall or lining of a fireplace or furnace chimney.

chimney cap
A concrete cap that surrounds the top of the chimney brick. The cap protects the masonry from rain and other elements.

chimney flue
The passage inside a chimney that channels smoke and heat to the outside.

chimney pot
A short pipe at the top of a chimney that increases ventilation to the fireplace and reduces smoke.

chipboard
A board made of wood chips glued together under pressure.

cinder block
A block made of ash and cement, used in construction.

cinder fill
Cinders used below a basement or around a foundation to promote drainage.

circuit
Short for electrical circuit, a complete circuit requires two electrical conductors (wires), an electrical source, and an electrical device such as a light. Electricity travels through one "hot" wire from the source to the device where it is converted into light, heat, or energy, then it returns along the other "neutral" wire to the source.

circuit breaker
A switch-like device in an electrical circuit that is designed to shut down the circuit in the event of an electrical overload or short circuit. Circuit breakers are normally installed in main electrical panels or subpanels.

cistern
A tank used to store rainwater.

clapboard
A type of siding, typically cedar, composed of overlapping horizontal boards.

Class B
Finish coat/top lift of asphalt on road.

classified property tax
A tax that varies in rate depending on the use of the property.

cleanout
An opening in the drainage system for the removal of obstructions. It also refers to the part of a fireplace from which ashes can be removed.

cleanout
A Y-shaped fitting with a cap or plug on one of the arms of the Y that can be removed in the event of a drain clog to snake out the drain line.

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

clevis
Part of the assembly needed to raise and lower a sink or tub pop-up. The clevis is a pin that connects to a pivot rod.

closing
This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.

closing costs
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

closing statement
See Settlement Statement.

cloud on title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.

cluster development
A method of squeezing more homes into less space.

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

co-housing
Individual housing units that are clustered around a common building where residents share cooking and other activities.

co-insurance
Coverage that involves the use of two or more insurers.

co-maker
A person who signs a promissory note with the borrower and assumes responsibility for the loan.

co-signer
A second party who signs a promissory note and takes responsibility for the debt.

CO/ALR
A designation on special light switches and outlets intended to be installed with aluminum wiring.

codicil
A change to a will that adds or subtracts provisions or clarifies portions of the document.

collar beam
The structural element that connects roof rafters.

collateral
In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.

collection
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.

collusion
The action of two or more people to break the law.

column
A slender upright structure that consists of a base, a round or square shaft, and a capital.

column footing
The support base for a load-bearing column. The footing is usually made of reinforced concrete.

combination door
An outer door with interchangeable screen and glass panels.

combination window
A window with interchangeable screen and glass panels.

combustion gases
The fumes or exhaust from a gas- or oil-burning appliance such as a water heater or furnace. Combustion gases are usually vented through a flue.

commercial bank
A financial institution that provides a broad range of services, from checking and savings accounts to business loans and credit cards.

commercial property
An area that is zoned for businesses.

commingling
The mixing of money held in trust with other funds.

commission
Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.

Commitment
A promise to lend and a statement by the lender of the terms and conditions under which a loan is made.

common area assessments
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-area assessments
Fees paid by the owners of a condominium project or planned-unit development to maintain, repair, improve, or operate common areas.

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

community property
Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances. This is an outgrowth of the Spanish and Mexican heritage of the area.

Community Reinvestment Act
A federal law that encourages financial institutions to loan money in the neighborhoods where minority depositors live.

commute
The distance and time it takes a person to reach his or her workplace.

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."

comparative market analysis
An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

competent
A term for a buyer who is legally fit to enter into a sales contract.

compound interest
The interest paid on the principal balance of a mortgage plus accrued interest.

compressor
Motorized equipment in a refrigeration (or air conditioning) system that circulates coolant through the system.

concrete tilt-up
The process of pouring concrete into forms on the ground, allowing the forms to harden, and then raising the material to a vertical position to form walls.

condemnation
The process the government uses to take private property for public use without the consent of the owner.

condensate drain
A drain required by a dehumidifier, high-efficiency furnace, or similar appliance to carry away condensation.

condensate pump
A small pump used with high-efficiency furnaces or other appliances that create significant condensation. It activates when water collects to a certain level and pumps it out to a drain.

condenser
Part of a refrigeration (or air conditioning) system that pressurizes refrigerant to cool it by changing it from a vapor to a liquid. On a refrigerator, the condenser is the coil on the outside of the unit; an air conditioner's condenser is usually outside the house.

conditional commitment
A promise by a lender to make a loan if the borrower meets certain conditions.

conditional sale
A contract for the sale of property stating that the title will remain invested in the seller until the conditions of the contract have been fulfilled.

condominium
A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

condominium conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

condominium hotel
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. These are often found in resort areas like Hawaii.

conduit
A metal pipe that houses electrical wiring.

Conforming Loan
A mortgage loan which meets all requirements to be eligible for purchase by federal agencies such as FNMA and FHLMC. The maximum conforming loan amount is $240,000 for a one-unit property.

consent judgment
A binding written agreement between two parties to have a judgment entered and recorded.

conservator
A court-appointed guardian.

consideration
Anything that is legal, has value, and induces a person to enter into a contract.

construction budget
Funding arranged by an owner for the construction of a project.

construction documents
Drawings and specifications from an architect that provide detailed requirements for the construction of a project.

construction loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

construction-to-permanent loan
A construction loan that is converted to a longer-term traditional mortgage after construction has been completed.

Consumer Credit Counseling Service (CCCS)
A nationwide, nonprofit organization that helps consumers get out of debt and improve their credit profile. National headquarters: 8701 Georgia Avenue., Suite 507, Silver Springs, MD 20910. Phone: (800) 388-2227.

contemporary style
A design that features streamlined shapes, large unadorned windows, and industrial materials.

contiguous lots
Pieces of property that are adjoined.

contingency
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.

contingency listing
A property listing with a special condition attached.

contingent fee
A fee that must be paid if a certain event occurs.

continuity tester
A simple, battery-powered tool that indicates whether an electrical circuit is complete or incomplete by lighting or buzzing when you touch its two probes to the wires.

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

contract for deed
A contract in which the seller agrees to defer all or part of the purchase price for a specified period of time.

contract to purchase
A contract the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller. Also known as an agreement of sale.

contractor
The individual who contracts for the construction of a home or project.

contractual lien
A voluntary obligation such as a mortgage or trust deed.

controlled growth
Any restrictions imposed on the amount or type of new development in an area.

conventional mortgage
Refers to home loans other than government loans (VA and FHA).

conversion
The exchange of personal or real property of one character for another.

convertible ARM
An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.

Conveyance
The document used to effect a transfer, such as a deed, or mortgage.

conveyance tax
A tax imposed on the transfer of real property.

cooperating broker
A real estate broker who finds a buyer for a property listed by another broker.

cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

cooperative mortgage
Any loan related to a cooperative residential project.

cooperative project
A project in which a corporation holds title and sells shares representing individual units to buyers who then receive a proprietary lease as their title.

corbel
A short block or bracket projecting from a wall and providing support for a horizontal member.

corner bead
A reinforcement placed in the corner where two walls intersect.

corner influence
The effect on the value of a property because it is situated on a corner or near a corner.

cornice
A horizontal molding that projects from the top of a structure or wall.

corporate relocation
An arrangement by which employers pay to transfer and move employees.

corrective work
Necessary or desired repairs to remedy problems uncovered by a home or specialized inspection.

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.

cost-plus contract
A construction contract that determines the builder's profit based on a percentage of the cost of labor and materials.

cottage
A small, one-story house.

counterbore
A hole drilled to recess the head of a screw.

counteroffer
A response to an offer.

courier fee
Fee charged at closing to cover the delivery of documents between lenders, escrow companies, and other parties during a real estate transaction.

course
A horizontal row of bricks, cinder blocks or other masonry materials.

cove
A concave (a curved recess hollowed out like the inner curve of a circle) molding applied at the point where a wall meets a ceiling.

cove lighting
Concealed light sources behind a cornice or horizontal recess which direct the light upon a reflecting ceiling.

covenant
A legal assurance or promise in a deed or other document, or implied by law.

covenants, conditions, and restrictions (CC&Rs)
Rules and regulations for a development, such as those pertaining to acceptable landscaping or improvements that can be made to individual units.

craftsman style
An architectural style that evolved as part of the Arts and Crafts movement near the turn of the century.

crawl space
The space between the ground and the first floor of a home, usually no higher than four feet.

creative financing
Innovative home-financing arrangements that help sell a property.

credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

credit history
A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.

creditor
A person to whom money is owed.

credit life insurance
Insurance that pays off a mortgage in the event of the borrower's death.

credit rating
The degree of creditworthiness assigned to a person based on credit history and financial status.

credit report
A detailed account of an individual's credit, employment, and residence history. A lender uses this report to determine a loan applicant's creditworthiness.The three largest credit bureaus are Trans Union Corp., Equifax, and Experian (formerly TRW).

credit repository
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.

credit union
A nonprofit cooperative organization that provides banking and financial services such as mortgages, home improvement loans, and home equity loans to its members.

creditor
An individual or institution to whom a debt is owed.

cripples
Short framing studs above and below windows.

cross-bridging
The strengthening of a structure by bracing cross members between beams.

crown
A piece of molding around the top of a room.

CU/AL
A designation on standard light switches and outlets that intended to be installed with copper wiring.

cul-de-sac
A street or alley that is closed at one end.

cupola
A dome-like structure that sits on top of a roof.

curable defect
A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.

curb appeal
The first impression of a house as seen from the street.

current value
The value of a home at the time of appraisal.

curtain wall
An exterior wall that encloses a yard or other area but does not provide any structural support to a home.

custom builder
A builder who constructs a home or building based on plans created by the owner.

custom home
A structure designed by an architect hired by the owner.

cylindrical lockset
The familiar type of doorknob mechanism found on most interior (and some exterior) doors, designed to fit into a large hole bored through the face of a door's stile.