Cap
A limit on how much a variable interest rate can increase. Many adjustable rate mortgages have both annual (or semi-annual) rate caps and lifetime caps. They limit the amount your payments can increase in an adjustment period and over the life of the loan.

Closing
The time and place at which all documents for your loan are signed, dated and notarized. Also called a settlement.

Closing costs
Fees paid at or prior to the closing of your loan. They may include attorneys' fees, as well as fees for preparing and filing a mortgage, and for taxes, title search, and insurance. They include the expenses incurred in obtaining the loan and in transferring the ownership of any collateral property from the seller to the buyer. Generally closing costs range from 2% to 6% of the mortgage amount.

Co-borrower
An additional person who assumes equal responsibility for repayment of a loan and is fully obligated under the terms of the loan. This person also has equal rights to the proceeds of the loan.

Collateral
An asset, such as a car or a home, used for securing the repayment of a loan. The borrower risks losing the asset if the loan is not repaid.

Commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A broker commission is generally a percentage of the price of the property or loan.

Condominium or condo
A building or development with many housing units where each person owns his or her individual unit and shares an interest in the common areas and facilities of the entire project. You go through the same process of buying a condo as you do when buying a house, and have a deed to and a mortgage on your particular unit. You also pay property taxes on your unit.

Conforming loan
A mortgage loan that has the standard features as defined by and is eligible for sale to Fannie Mae and Freddie Mac.

Contingency
A specified condition that the sales contract requires must be satisfied before the home sale can occur. When buying a home, the two most common contingencies are that the house must pass inspection and that the borrower must be approved for a loan.

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

Co-signer
A second person who signs your loan and assumes equal responsibility for payment of the loan but receives no benefit from the loan proceeds.

Cost benefit analysis
A dollar-value analysis that compares the benefits of owning a home to the costs. Some home ownership benefits may include: tax savings you may receive on the mortgage interest and property taxes you pay; and the appreciation that may occur in the value of your home over time, building your home equity. Home ownership costs may include: interest you pay on the loan; closing costs, including any mortgage points; property taxes and homeowner's insurance premiums; private mortgage insurance premiums; and maintenance costs including those associated with normal wear and tear and weathering.

Credit
An arrangement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date. Credit reporting agency or credit bureauskip to next word An organization that gathers, records, updates and stores financial and public records of individuals who have been granted credit and provides this information to lenders and other authorized users for a fee.

Credit history
A record of an individual's debts and payment habits over time. It helps a lender determine whether or not a potential borrower is a good business risk.

Credit limit
The maximum amount you can borrow under a line of credit.

Credit report
A record of an individual's debts and payment habits. It helps a lender determine whether or not a potential borrower is a good business risk.

Credit score
A number, rating the quality of an individual's credit. Lenders calculate this number, often with the assistance of computer systems, as part of the process of assigning rates and terms to the loans they make.

Creditor
A person or business from whom you borrow or to whom you owe money.

Credit worthiness
The likely ability of a borrower to repay debt.