The Home Buyer's Glossary of TermsAMORTIZATION: The actual number of years it will take to pay back your mortgage loan. APPRAISED VALUE: An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection. ASSUMABILITY: allows the buyer to take over the seller's mortgage on the property. CLOSED MORTGAGE: A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of the closed term. CONDOMINIUM: The owner has title to a single unit, as well as a share in the common elements such as elevators or surrounding land. CONDOMINIUM FEE: A common payment among owners which is allocated to pay expenses. CONVENTIONAL MORTGAGE: A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less. DOWN PAYMENT: The buyer's cash payment towards the property. The difference between the purchase price and the amount of the mortgage loan. EQUITY: The difference between the home's selling value and the debts against it. HIGH-RATIO MORTGAGE: A mortgage that exceeds 75% of the home's appraised value. These mortgages must be insured for payment. INTEREST RATE: The value charged by the lender for the use of the lender's money. Expressed as a percentage. LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX: A fee paid to the municipal and /or provincial government for the transfer of property from seller to buyer. MATURITY DATE: The end of the term, at which time you can pay off the mortgage or renew it. MORTGAGEE: The person or financial institution that lends the money. MORTGAGOR: The borrower. MORTGAGE INSURANCE: Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage. MORTGAGE LIFE INSURANCE: Pays off the mortgage if the borrower dies. OPEN MORTGAGE: Allows partial or full payment of the principal at any tome, without penalty. PORTABILITY: A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty. PRE-APPROVED MORTGAGE: Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a "firm: offer when you find the right home. PREPAYMENT PRIVILEGES: Voluntary payments in addition to regular mortgage payments. PRINCIPAL: The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount. REFINANCING: Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage. RENEWAL: Re-negotiation of a mortgage loan at the end of a term for a new term. SECOND MORTGAGE: Additional financing. Usually has a shorter term and higher interest rate than the first mortgage. TERM: The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender. TITLE: Legal ownership in a property. VARIABLE-RATE MORTGAGE: A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal. VENDOR TAKE-BACK MORTGAGE: When the seller provides some or all of the mortgage
financing in order to sell their property.
|
Resources Realty |