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Glossary (click letters)

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CAP – the maximum, which an adjustable–rate mortgage may increase, regardless of index changes. An interest rate cap limits the amount the interest can change, while a payment cap limits the increase in monthly payment to a specific dollar amount.

CAPITAL EXPENDITURES – line items on a profit and loss statement that would not be expensed on an annual basis. This category would include replacement of major building systems, such as roofs, etc.

CAPITALIZATION RATE – the ratio of the first year NOI to the asking price (NOI/Asking price). Not the rate of return.

CARVE OUT – the definition used for the inclusion of recourse in loan documents for fraud and misrepresentation.

CASH–OUT REFINANCING – when the principal amount of a new mortgage involved in refinancing is greater than the principal amount outstanding of the existing mortgage being refinanced, and all or a portion of the equity is converted to cash.

CENTRAL BUSINESS DISTRICT (CBD) – the downtown section of a city, generally consisting of retail, office, hotel, entertainment, and government land uses with some high–density housing.

CLEARANCE – the distance between the building’s floor and effective storage ceiling.

CLIMATE CONTROLLED – an industrial and self–storage term that represents temperature controlled commercial space.

CLOSING COSTS – the costs and fees associated with the official change in ownership of the property and with obtaining the mortgage, that is assessed at the closing.

CLOSING – the meeting between the buyer, seller and lender (or their agents) where the property and funds legally change hands.

CMBS (Commercial Mortgage Backed Security) – a bond or other financial obligation secured by a pool of mortgage loans.

COFI (Cost of Funds Index) – index used to determine interest rate changes for adjustable rate mortgages. It is based on the cost of funds of the 11th District of the Federal Home Loan Bank.

COMMERCIAL LAND – development and transitional land acquired for investment use: land for lots, site selection and assemblage of parcels.

COMPARATIVE MARKET ANALYSIS – an estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

CONDUIT – the financial intermediary that sponsors the conduit between the lender(s) originating loans and the ultimate investor. The conduit makes or purchases loans from third party correspondents under standardized terms, underwriting and documents and then, when sufficient volume has been obtained, pools the loans for sale to investors in the CMBS market.

CONGREGATE CARE – a type of senior housing that typified by a central eating facility, smaller rooms, and a higher level of care for its tenants.

CONSTANT MATURITY TREASURE (CMT) – an index based on the U.S. Treasury that is used in the pricing of debt for banks.

CONSTRUCTION LOAN – a short term loan to pay for the construction of commercial buildings. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed a take–out or permanent loan is used to pay off the construction loan.

CONSTRUCTION TYPE – the type of construction used for a commercial building, (i.e. concrete tilt–up, etc.).

CONTINGENCY – an element of an agreement that must be satisfied before the total agreement can be consummated.

COUPON – the coupon on U.S. Government securities expressed as an annual percentage of face value, is the interest rate the U.S. Government promises to pay to the holder on an ongoing basis until maturity.

CREDIT TENANT NET LEASE – a lease with a tenant that has a credit rating of BBB– or better.

CREDIT TENANT – a tenant, who has obtained a debt rating by S&P or Moody’s of "BBB–" or better.

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