If you're buying a home for the very first time, the process may seem a little daunting. After all, buying a home is probably one of the biggest investments you'll ever make. It helps to have a REALTOR® on your team -- someone who speaks the language of real estate very well. I have provided below a couple of real estate terms and definitions to help you along the way in buying or selling your home.
Amortization: The number of years it takes to repay the entire amount of a mortgage.
Appraisal: An estimate of a property's market value, used by lenders in determining the amount of the mortgage.
Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.
Counteroffer: One party's written response to the other party's offer during purchase negotiations between buyer and seller.
Deed: A legal document that conveys (transfers) ownership of a property to the buyer.
Easement: A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.
Equity: The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's "stake" in a property.
High-Ratio Mortgage: A mortgage for more than 75 per cent of a property's appraised value or purchase price.
Land Transfer Tax: Payment to the provincial government for transferring property from the seller to the buyer.
Lien: Any legal claim against a property, filed to ensure payment of a debt.
Mortgagee: The lender.
Mortgage Insurance: Government-backed or private-backed insurance protecting the lender against the borrower's default on high-ratio (and other types) of mortgages.
Principal: The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.
Status Certificate: A written statement of a condominium unit's current financial and legal status.
Variable-Rate Mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.
Vendor-Take-Back Mortgage: When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property.
Zoning Regulations: Strict guidelines set by municipal governments regulating how a property may or may not be used.