Buying or selling a home is a big step, a decision that will change your life. If you don't understand all the terms and phrases used throughout the process, it can become more daunting than exciting. The Hisey-McDermott Team wants to help you wade through some of the tricky vocabulary of the Real Estate Industry in order to simplify the process and help you feel more comfortable as you manuever the market. Check out Part I of our vocabulary list to brush up on some of the words and phrases commonly used within the process of buying and selling your home.
Adjustable Mortgage Interest Rate: With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions.
Amortization: Length of time over which the debt will be repaid. eg. 25 years
Approved Lender: A lending institution authorized by the Government of Canada through CMHC to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate CMHC insured mortgages.
Blended Payment: A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.
Certificate of Location (or Land Survey): A document that shows property boundaries and measurements, specifies the location of buildings on the property and states easements or encroachments.
Closed Mortgage: A closed mortgage cannot be paid off, in whole or in part, before the end of its term. Many closed mortgages limit prepayment options such as increasing your mortgage payment or lump sum prepayment.
Closing Costs: Costs in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. They range from 1.5% to 4% of a home’s selling price.
CMHC: Canada Mortgage and Housing Corporation. A Crown corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also develops and sells mortgage loan insurance products.
Conditional Offer: An Offer to Purchase that is subject to specifi ed conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specifi ed conditions must be met.
Conventional Mortgage: A mortgage loan up to a maximum of 80% of the lending value of the property. Typically, the lending value is the lesser of the purchase price or market value of the property. Mortgage insurance is usually not required for this type of mortgage.
Counteroffer: If your original offer to the vendor is not accepted, the vendor may counteroffer. This means that the vendor has amended something from your original offer, such as the price or closing date. If a counteroffer is presented, the individual has a specifi ed amount of time to accept or reject.
Curb Appeal: How attractive the home looks from the street. A home with good curb appeal will have attractive landscaping and a well-maintained exterior.
Deed: A legal document that is signed by both vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.
Deposit: Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer/notary until the sale is closed and then it is paid to the vendor.
Down Payment: The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.
Equity: The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity.
Check back next week for Real Estate Lingo - Part II for more words and phrases that will help you understand everything you need to know while buying and selling your home!