The language used when buying and selling a home can be confusing and hard to understand for some people, especially if you are a first time home buyer. I have created a list of some common real estate terms to help you understand the “Language of Real Estate”.
The gradual reduction of money owed to a creditor by means of regular scheduled payments. Repayments of principle and interest in “blended” amounts. The average amortization period for mortgages in Canada would be 25 years, but they can be as short as 5 years if thats what you are wanting.
Creditors or lenders require an independent assessment of said property you plan to purchase before agreeing to financing.
The value placed on the property by a government agency for tax reasons.
What “YOU” the borrower owns, this can be anything from real estate already, savings, cars, RRSP’s, GIC’s, stocks, bonds, etc.
The buyer would take over the previous sellers existing mortgage at the interest rate and terms as laid out from when the seller originally got the mortgage documents.
Combines the amount owing on a previous property with additional funds being advanced, the interest is a combination of the rate of the previous loan and the rate at the time of the new financing.
Interim financing to bridge the time between closing date on the new home and the closing date on the sale (current home).
Regulations that control the design, construction, repair, building materials, use, and occupancy of any structure with in its jurisdiction.
Denial or restrictive access of repayment rights until the end of the mortgage term.
The time of meeting when the transfer of title of the property in play passes from the seller to buyer.
The costs that go along with closing are a one time fee and usually consist of charges for a title search and insurance, attorney fees, lender and broker fees.
Canada Mortgage and Housing Corporation.
Payment given to the real estate agent from the seller for their services, the amount is usually a percentage of the sale price (unless otherwise negotiated) and paid out at closing.
Letter that outlines the amount, terms and conditions to which a lender or creditor is willing to offer a mortgage to you.
Ownership of said property by more than one person, where on the death of one, the other share doesn’t automatically go to the other person but is credited to the estate.
Is the interest charged on the principle amount of the loan and the interest charged in the preceding period.
CONTRACT OF PURCHASE AND SALE
Statement written for which the buyer agrees to purchase said property and the seller agrees to sell a particular portion of the property according to the terms written in the agreement.
A mortgage given by an institutional lender being a bank or a trust company. The amount of said loan will not exceed 75% of the lending value of the purchase property.
Short term mortgage, generally 6 months or up to a year with allows a borrower to get locked into a longer term at any which time with no penalties.
Transfer of the ownership of the property from one person to another person.
CREDIT BUREAU REPORT
Report by a credit reporting agency that holds a history timely or untimely repayment of debt, this is the lenders primary outlet of information regarding the borrowers credit history. (read our blog on building your credit)
Failure to meet contract obligations, such as mortgage payments. Defaults can ultimately lead to foreclosure. (Read our blog about a foreclosure)
The money that is required to be paid with an offer to purchase a property as a symbol of commitment to the seller.
Amount of money put forward by the buyer on said property toward purchasing it.
Differences between the value of said home and the amount of financing.
FIXED RATE MORTGAGE
Interest that remains at a stead amount throughout the entire term of the mortgage.
Read our blog on a foreclosure for a more in depth explanation. READ NOW
This is the price you pay to basically rent the money from the lender. The interest rate for a specific amount of money over a specific time period and it is expressed in most cases as a percentage.
A Property held with two or more people with an undivided interest, so if one owner dies the property will then pass on to the other automatically.
LEASE TO PURCHASE
Buying a home by renting for a specified period of time, generally one year with the intention that you will buy said property at the end of the rental agreement for the predetermined sale price.
Outstanding or owing debts such as mortgages, loans, credit card balances than an individual may have.
Charges registered against said property.
The price the property is worth in the current market, usually determined by a comparative market analysis on the said property to others in that area that are similar. (Get at FREE HOME EVALUATION with us today!)
Is a conveyance of property to a creditor, as security for payment of a debt, redeemable on the payment or discharge of the debt at a specified date. (Get PRE-APPROVED with us today!)
Professional with knowledge and experience to find the mortgage and rate that best suits your needs and your current financial situation. The mortgage broker you choose works for you, not the lender. They have a large selection of lenders such as banks, trust companies, and credit unions.
Lender of funds for a mortgage.
Borrower of funds for a mortgage.
Value of your assets minus your liabilities
This mortgage type allows for extra payments, reductions of the principle, or payment in full at anytime with no penalties.
You are able to transfer your existing mortgage including all rates and terms fro your current home to a new property.
A mortgage agreement allowing the mortgage to be paid in full or a percentage before the maturity date.
The actual amount of money borrowed, without the interested.
The lenders commitment to hold a specific rate for a specific amount of time, they can vary from 30 – 180 days depending on the lender.
Pay in full and discharge a mortgage with the needs of a new mortgage.
The amount of time the mortgage has been committed for, the interest rate should remain steady for the entire term unless states otherwise.
Basically in less or more words a title is a LEGAL POSSESSION, title gives the holder ownership of the property.
Assessment of a loan application usually based on: property value, a borrowers credit worthiness and their ability to pay and the lending guidelines from the lender.
VARIABLE RATE MORTGAGE
A mortgage with fixed payments but fluctuating interest rates. Changes in the interest rates doesn’t alter the amount of the said mortgage payment, but determines how much each payment is applied to the principle amount and how much goes to the lender for interest.
Municipal, regional, or provincial laws stating that their is specifications and restrictions on certain land use.
Hopefully all these terms have set you up to better understand the Language of Real Estate in the future!