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 Real Estate Glossary:

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Terms and Definitions

Amortization Period

The actual number of years it will take to pay back your mortgage loan. [ top ]

Appraised Value

An estimate of the value of the property and not always the Purchase Price. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection. [ top ]

Assumability

Allows the buyer to take over the seller's mortgage on the property. [ top ]

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 a closed term. [ top ]

Condominium

The owner has title to a single unit, as well as a share in the common elements such as elevators or surrounding land. [ top ]

Condominium Fee

A monthly common payment among owners which is allocated to pay expenses. [ top ]

Conventional Mortgage

A mortgage loan issued for up to 75% of the property's appraised value or purchase price, whichever is less. [ top ]

Down Payment

The buyer's cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan. [ top ]

Equity

The difference between the home's selling value and the debts against it. [ top ]

High-Ratio Mortgage

A mortgage that exceeds 75% of the home's appraised value. These mortgages must be insured for payment. [ top ]

Interest Rate

The value charged by the lender for the use of the lender's money. Expressed as a percentage. [ top ]

Land Transfer Tax

A fee paid to the government for the transferring of property from seller to buyer. [ top ]

Maturity Date

The end of the term, at which time you can pay off the mortgage or renew it. [ top ]

Mortgage

See also: | closed mortgage | conventional mortgage | high-ratio mortgage | mortgagee | mortgagor | mortgage insurance | mortgage life insurance | open mortgage | pre-approved mortgage | second mortgage | variable-rate mortgage | vendor take-back mortgage | [ top ]

Mortgagee

The person or financial institution that lends the money. [ top ]

Mortgagor

The borrower of the money. [ top ]

Mortgage Insurance

Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage. [ top ]

Mortgage Life Insurance

Pays off the mortgage if the borrower dies. [ top ]

Open Mortgage

Allows partial or full payment of the principal at any time, without penalty. [ top ]

Portability

A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty. A transfer fee may apply. [ top ]

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. [ top ]

Prepayment Privileges

Voluntary payments in addition to regular mortgage payments. [ top ]

Principal

The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount. [ top ]

Refinancing

Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage. [ top ]

Renewal

Re-negotiation of a mortgage loan at the end of a term for a new term. [ top ]

Second Mortgage

Additional financing. Usually has a shorter term and higher interest rate than the first mortgage. [ top ]

Term

The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender. [ top ]

Title

Legal ownership in a property. [ top ]

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. [ top ]

Vendor Take-Back Mortgage

When the seller provides some or all of the mortgage financing in order to sell their property [ top ]