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. So here is Part II of our vocabulary list to help you brush up on some of the words and phrases commonly used within the process of buying and selling your home. Understanding the language of homebuying will help alleviate some of your stress as you maneuver the market.
Fixed Mortgage Interest Rate: A locked-in rate that will not increase for the term of the mortgage.
Foreclosure: The legal process where the lender takes possession of your property and sells it to cover the debts you have failed to pay off. When you default on a loan and the lender feels that you are unable to make payments, you may lose your home to foreclosure.
Home Inspector: A person who visually inspects a home to inform you if something is not working properly, or is unsafe. An inspector will also tell you if repairs are needed, and maybe even discover evidence of past problems.
Land Survey (Survey or Certificate of Location): A document that shows property boundaries and measurements, specifies the location of buildings on the property and states easements or encroachments.
Maturity Date: The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed.
Mortgage Broker: The job of the mortgage broker is to find you a lender with the terms and rates that will best suit you.
Mortgage Life Insurance: Mortgage life insurance gives coverage for your family, if you die before your mortgage is paid off.
Offer to Purchase: A written contract setting out the terms under which the buyer agrees to buy the home. If the Offer to Purchase is accepted by the seller, it forms a legally binding contract that binds the people who signed to certain terms and conditions.
Operating Costs: The expenses that a homeowner has each month to operate a home. These include property taxes, property insurance, utilities, telephone and communications charges, maintenance and repairs.
Property Insurance: Insurance that you buy for the building(s) on the land you own. This insurance should be high enough to pay for the building to be re-built if it is destroyed by fire or other hazards listed in the policy.
Property Taxes: Taxes charged by the municipality where the home is located based on the value of the home. In some cases the lender will collect a monthly amount to cover your property taxes, which is then paid by the lender to the municipality on your behalf.
Reserve Fund: This amount is set aside by the homeowner on a regular basis so that funds are available for Emergency or major repairs. Setting aside 5% of your monthly take-home pay will give you a well-funded reserve.
Title: A freehold title gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title gives the holder the right to use and occupy the land and building for a defined period.
Vendor Take-back Mortgage: The vendor, not a financial institution, finances the mortgage. The title of the property is transferred to the buyer who makes mortgage payments directly to the seller. These types of mortgages can be helpful if you need a second mortgage to buy a home.
Be sure to check out Real Estate Lingo - Part I from a previous blog posting, to get the down-low on the first half of our real estate vocabulary list, you don't want to miss it!