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Glossary - C

Mortgage Brokers Glossary - C

Canada Mortgage and Housing Corporation (CMHC):

A federal crown corporation which administers the "National Housing Act" (NHA), and through which all federal housing policies and programs are implemented.

Cap:

A limit, for example which placed on an adjustable rate mortgage, on how much a monthly payment or else interest rate can raise or else reduce.

Cap Rate:

The highest rate that a borrower will pay within a defined time period. Examples are; the rate committed on a commitment letter or a mortgage pre-qualification (also known as a "rate hold"); or the maximum rate that will be paid by the borrower during the term of a "protected variable rate mortgage". A lender will usually have to incur a cost to insure against rate increases during the capping period. This insurance is called a "hedge".

Cash reserves:

A cash amount occasionally essential to be held in reserve in addition to the down payment in addition to closing costs; the cash amount is determined by the lender.

Certificate of title:

A document supply by a eligible source for example a named company that shows the property lawfully belongs to the current owner; before the title is transferred on finishing, it must be clear and free of all liens or else other claims.

Closed Mortgage:

A mortgage whose terms state that it cannot be paid out, even with a penalty, unless the lender agrees. In some cases, a closed mortgage may be discharged at a defined cost, usually Interest Rate Differential (IRD), but sometimes with a punitive penalty such as full interest to maturity.

Closing:

The final exchange of consideration and legal completion of a transaction, involving either a house purchase, a mortgage registration, or both.

Closing costs:

Normal costs above and beyond the sale price of the property that is required to be paid to cover the transfer of ownership at closing; these costs normally vary by geographic location and are typically detailed to the borrower after surrender of a loan application.

Commission:

An amount, generally a percentage of the property sales cost, which is collected by a real estate expert as a fee for negotiate the transaction.

Commitment Letter:

A written commitment from a lender to lend mortgage funds to specific borrowers as long as certain conditions are met within a specified time period before closing. A key component of the commitment, particularly in a period of volatile interest rates, is the "rate hold", where a lender may "cap" a rate for a defined period, such as 60 days or 90 days. Commitments on financing for new homes, which usually have longer closing dates, can be negotiated between the lender and the builder and be held for as long as 6 months, and even a year.

Compliance Letter:

Required in many municipalities throughout Canada before a property transfer can take place. This is an acknowledgement from the building department that the property either has, or is clear of outstanding work-orders. Work-orders are specific clean-up or fix-up requirements that the owner must complete, particularly before a transfer of ownership.

Condominium:

A form of ownership in which persons pay for and own a unit of housing in a multi-unit complex; the owner also shares financial duty for common areas.

Connection Charges:

Some local utility companies (hydro, gas, oil) charge a fee on closing to connect new buyers up to their service. More normal, however, is an extra charge on the first billing.

Conventional loan:

A private division loan, one that is not guaranteed or else insured by the U.S. government.

Conventional Mortgage:

A mortgage usually amounting to 75% (Loan to Value ratio) or less of the value of the property.

Convertible Mortgage

This allows you to convert your mortgage to a new one of longer term while it is still in effect.

Cooperative (Co-op):

Residents purchase stock in a cooperative corporation which owns a structure; each stockholder is then permitted to live in a specific unit of the structure and is in charge for paying a portion of the loan.

Credit bureau score:

A number on behalf of the possibility a borrower might default; it is based upon credit history as well as is used to find out ability to qualify for a mortgage loan.

Credit history:

History of a person’s debt payment; lenders use this information to measure a potential borrower's capability to repay a loan.

Credit Report:

A record of an individual's payment history available at a credit bureau. Individuals can order a copy of their own report by contacting their local bureau.