Michelle McKiel
Re/Max Real Estate
10510 121 Street, Edmonton, Alberta
P: 780-488-4000 F: 780-426-5700
Email
Re/Max Real Estate
10510 121 Street, Edmonton, Alberta
P: 780-488-4000 F: 780-426-5700
Amortization The length or amount of time necessary to reduce a mortgage or debt to zero if payments were to be made regularly on a schedule. Most common amortization lengths are 15 to 35 years.
--------------------------------------------------------------------------------
Anniversary Many institutions will permit the borrower to make a bulk payment of the anniversary date of their mortgage. It is provided with charges and is a great way to accelerate the reduction of your outstanding mortgage.
--------------------------------------------------------------------------------
Appraisal A method to figure out the exact value of a home or property.
--------------------------------------------------------------------------------
Appraised Value An overall estimate of the value of a property provided by an accredited appraiser in order to be approved for a mortgage loan.
--------------------------------------------------------------------------------
Approved Lender Lenders are required to be to be licensed by the government in order to provide mortgages as a service. This is mandatory under the Canada Housing Act.
--------------------------------------------------------------------------------
Assumption Taking over a mortgage requires legal documentation outlining that the buyer is assuming the responsibility for paying the mortgage.
--------------------------------------------------------------------------------
Balanced Market A market where the demand for homes is equal to the supply of homes available for sale. Prices usually remain stable and sellers often accept offers they might not in a sellers market.
--------------------------------------------------------------------------------
Blended Payment Most mortgages are a combination of paying off the principal and paying the interest on the outstanding balance. This is considered a blended payment, as it usually remains the same over the life of the mortgage.
--------------------------------------------------------------------------------
Building Permit Required before certain upgrades or repairs can be made.
--------------------------------------------------------------------------------
Buyer’s Market When the amount of homes for sale is high and buyers have more choose than in a balanced market. Allows certain leverage in the negotiating process.
--------------------------------------------------------------------------------
Closed Mortgage This is the term when a loan has a locked and inflexible payment schedule. To fully repay the loan before the end of the mortgage will repay a penalty to be paid.
--------------------------------------------------------------------------------
Closing Costs There are certain fees that need to be paid to close a real estate transaction. Typically these fees will range from two to four percent of the final sale price of the property.
--------------------------------------------------------------------------------
Closing Date The day when the sale of the home becomes finalized and keys exchange hands.
--------------------------------------------------------------------------------
CMHC A government run corporation that allows insurance on properties where the buyer has less than a twenty percent down payment (this can fluctuate). It was created to facilitate home ownership by as many Canadians as possible.
--------------------------------------------------------------------------------
Collateral Mortgage A process in which your mortgage is secured by a promissory note. Generally requiring a flexible lender and spotless credit, it allows the down payment to be used for other purposes.
--------------------------------------------------------------------------------
Commitment Letter Of Approval Of Mortgage A notice from the mortgage lender to the person or business borrowing the funds approving an advancement of a specific amount of money.
--------------------------------------------------------------------------------
Conditional Offer An offer on a home that can only go through when certain conditions are met. This can include final arrangement of mortgage financing or the property passing an inspection. This usually coincides with a time limit for the conditions to be met.
--------------------------------------------------------------------------------
Conventional Mortgage A mortgage where only 80% of the amount of the home is lent to the borrower. Insurance is not required for this type of mortgage, making it a cost saving solution.
--------------------------------------------------------------------------------
Covenant A part of the legal agreement which outlines the terms of the mortgage. Agreed by both parties, a convenant will detail how much is to be paid and when.
--------------------------------------------------------------------------------
Conveyancing The process of transferring ownership of a home from one person or entity to another.
--------------------------------------------------------------------------------
Deed The legal document which both parties sign and agreed to to transfer ownership of the home or property from one party to another.
--------------------------------------------------------------------------------
Default Failing to make payments on the mortgage can lead to the loan defaulting. This can lead to a foreclosure on the home.
--------------------------------------------------------------------------------
Deposit An amount of money that is put into a trust account by the buyer when an offer is made on a property. It is kept in the trust account until the transaction is closed.
--------------------------------------------------------------------------------
Discharge of Mortgage Official documentation that a mortgage has been paid in full, acknowledging that the lender no longer have a lien on the home.
--------------------------------------------------------------------------------
Down payment The amount of the home purchase that the buyer must pay from their own personal finances, before securing financing for the remainder of the balance. Generally this is around 5 to 25 percent of the mortgage.
--------------------------------------------------------------------------------
Easement A legal right sometimes acquired for access to or the use of another property. Generally this is for something like a access to build a driveway or utility upgrades.
--------------------------------------------------------------------------------
Encumbrance A claim that has been registered legal against a home, mostly commonly used as part of a mortgage.
--------------------------------------------------------------------------------
Equity The financial difference between what a home could be sold for and the total mortgages outstanding against the property.
--------------------------------------------------------------------------------
FHLI First Home Loan Insurance - A product offered by the CMHC that allows those buying a home for the first time to put 5% down on the property. They will then provide insurance to the lender to secure this plan.
--------------------------------------------------------------------------------
Foreclosure When the borrower of a mortgage can not pay the loan or chooses not too, the legal process of foreclosure goes into effect where the lender claims ownership of the home.
--------------------------------------------------------------------------------
Gross Debt Service Ratio The amount of a person’s gross earnings that can be used for all the costs associated with a home.
--------------------------------------------------------------------------------
High-Ratio Mortgage / Insured Mortgage Loan A loan that is over 80% of the market value of the home being mortgaged. This kind of loan must be secured with insurance for default.
--------------------------------------------------------------------------------
Holdback A sum of money that is held back by the mortgage lender during construction of a new home. This is done at certain stages to ensure the buyer is satisfied with the work of the builder.
--------------------------------------------------------------------------------
Interest The percentage or cost to borrow money. Interest is paid to the lending institution along with an amount towards the overall principal of the mortgage.
--------------------------------------------------------------------------------
Interest Rate The percentage rate you pay to borrow money from a mortgage lender.
--------------------------------------------------------------------------------
Lending Value The bought price or market value of a home, whichever is lower.
--------------------------------------------------------------------------------
Loan-to-Value Ratio The ratio of a mortgage to the value of a home put forward as a percent.
--------------------------------------------------------------------------------
Lien (Mechanics) A claim against a home or property for an amount owing. Can be used by condo associations for lack of payment of fees, or a contractor for work not paid for.
--------------------------------------------------------------------------------
Maturity Date The end of the term of a mortgage arrangement. On this date the mortgage must be paid or a new agreement should be started.
--------------------------------------------------------------------------------
Mortgage Security The buyer’s personal promise or guarantee to repay the mortgage of the home as an added security for the loan.
--------------------------------------------------------------------------------
Mortgage Life Insurance Many institutions will offer this as a way to pay off your mortgage in case of death. It is also offer by other insurance providers.
--------------------------------------------------------------------------------
Mortgage Loan Insurance This is required by most lenders for mortgages where the mortgage is more than 80% of the homes value. Offered and often paid for through the CMHC.
--------------------------------------------------------------------------------
Mortgage Payment A regular and schedule payment that pays down the amount needed to purchase a home.
--------------------------------------------------------------------------------
Mortgagee The institution or lender that provides the loan for the purchase of a property.
--------------------------------------------------------------------------------
Mortgagor The person or entity who borrow against a property and provides the home as a security for the loan.
--------------------------------------------------------------------------------
Net Worth The total amount a person is worth, done by calculating total assets minus liabilities.
--------------------------------------------------------------------------------
NHA Premium Insurance An insurance requirement that is most often sought by a lender when the mortgage is more than 75 percent of the purchase price. It is available through the CMHC or a private lending company. The amount for this insurance can range anywhere from 0.5 to 3 percent of the total purchase price.
--------------------------------------------------------------------------------
Offer to Purchase A contractual offer to buy a home. The buyer provides a price and terms, and if the sellers accepts the contract becomes binding in the eyes of the law.
--------------------------------------------------------------------------------
Open Mortgage A kind of mortgage where the borrower is allowed to make additional payments to the principal of the mortgage anytime without incurring a penalty or fee.
--------------------------------------------------------------------------------
Option Agreement Document stating that a specific person it allowed the first option to buy a home. In return a deposit is usually provided.
--------------------------------------------------------------------------------
PTI - payment of the principal as well as interest and taxes under the agreement between lender and borrower. These payments are different because they include the annual property taxes into the mortgage.
--------------------------------------------------------------------------------
P.I.T.H. - the cost of taxes, principal, interest and heating. This is generally used to determine how much a person can afford on their mortgage.
--------------------------------------------------------------------------------
Portability - This is an optional part of a mortgage where the borrower can move their loan to another home without incurring a penalty.
--------------------------------------------------------------------------------
Pre-Approved Mortgage - This is the amount of a mortgage a person can shop for based on the income and debts they report to the mortgage lending institution.
--------------------------------------------------------------------------------
Pre-Approved Mortgage - This is the amount of a mortgage a person can shop for based on the income and debts they report to the mortgage lending institution.
--------------------------------------------------------------------------------
Prepayment Privileges - This option give the borrower the chance to make extra payments on the mortgage, above and beyond their regular payments.
--------------------------------------------------------------------------------
