Real Estate Terminology: Glossary For You: Mortgages C & D

Another installment of our glossary of real estate and mortgage terminology comes today with mortgage terms definedthat begin with the letters C and D. We hope you find these terms and definitions helpful.

Cap -- The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Cash Out -- Receiving money back when refinancing your present mortgage.

Ceiling--The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.

Closing Costs -- Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Conforming Loan -- Generally, a mortgage loan under 3,150. Qualifying ratios and underwriting methods are standardized to a large degree.

Contract of Sale -- The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer. More...

Credit Limit -- The maximum amount that you can borrow under a home equity plan.

Debt Service -- The total amount of credit card, auto, mortgage or other debt upon which you must pay.

Deed of Trust -- Used in many western states, the agreement used to pledge your home or other real estate as security for a loan. Similar to a mortgage.

Discount Points (or Points) -- The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $ 100,000 mortgage would equal $ 2,000). More...

Down Payment -- The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.

Due on Sale -- A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.