Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
The maximum amount the interest rate can change annually or cumulatively over the life of an adjustable-rate mortgage. Caps can be expressed a couple of different ways, such as 2/6 or 5/2/5. The 2/6 format means the rate can adjust no more than 2 percentage points each year and no more than 6 percent over the life of the loan. The 5/2/5 format means the rate can adjust as much as 5 percentage points at the first adjustment, but no more than 2 percentage points in subsequent years, with a maximum of 5 percentage points over the life of the loan.
Certificate of title
A statement provided by a title company or attorney stating that the title to the real estate is legally held by the current owner.
A title that is free of liens or legal questions as to ownership of a piece of property.
Expenses incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, escrow payments, and charges for title insurance. Lenders or Realtors® provide estimates of closing costs to prospective home buyers.
A financial disclosure accounting for all funds changing hands at the closing. See also HUD-1 statement.
Cloud on title
Any fact or condition that could adversely affect the title.
In real estate, the broker or salesperson's fee for assisting the transaction, usually expressed as a percentage of the total paid by the buyer.
A formal offer by a lender stating the approved terms for lending money to a home buyer.
Common area assessment
A levy against individual unit owners in a condominium or planned unit development to pay for upkeep, repairs and improvements to the property's common areas, such as corridors, elevators, parking lots, swimming pools and tennis courts.