Mortgage Terms

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The mortgage industry has many unique and confusing terms and acronyms. We hope these descriptions help you to better understand the lending process.

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There are 10 names in this directory beginning with the letter C.
Cash-Out Refinance
This refinance loan allows veterans to refinance to a lower interest rate and tap into their equity. Borrowers can obtain a cash-out refinance for up to 90 percent of the home's appraised value, plus the VA Funding Fee and any costs from energy efficiency improvements.

Certificate of Eligibility
This is a formal VA document that delineates what entitlement, if any, a prospective borrower has available. It is the only acceptable method to document entitlement.

Clear to Close
This means that any loan conditions have been satisfied to the underwriter's satisfaction and the borrower is ready to formally close on the home purchase.

Closing Costs
These are charges and fees associated with finalizing a loan. The VA limits what veterans can pay in closing costs to a 1 percent lender origination fee, reasonable discount points and other reasonable and standard fees and charges.

Comparable Sales
They're better known as "comps." These are recently sold properties that are similar in size, location and other key facets to a home being purchased.

Compensating Factors
These are strengths on a loan application that can help offset lender concerns about a borrower's credit or financial weaknesses. Low debt, great credit history and liquidity are all examples. Compensating factors must go above and beyond what would be considered a normal program requirement.

Conforming Loan Limit
Fannie Mae and Freddie Mac can only purchase mortgages below what's known as the conforming loan limit. This limit, which is subject to change, is currently $424,100.

Construction-to-Permanent Refinance Loan
This allows qualified borrowers to refinance a construction loan into a VA loan. Requirements and underwriting are nearly identical to other VA refinance options.

Conventional Loan
These loans feature no government guarantees but adhere to the standards and requirements of government-sponsored enterprises Fannie Mae and Freddie Mac.

Credit Score
A numeric value assigned to an individual that assesses the amount of risk to lend that person money. Credit scores are affected by a variety of factors, including debt, past payment history and income.

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