Speak Like A Realtor: A Glossary of Real Estate Terms

Posted by Ryan Dutka . on Friday, April 27th, 2018 at 2:44pm.

Glossary of Real Estate Terms

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.

APPRECIATION
The increase of a property's value over time.

APPROVED LENDER
A lending institution authorized by the Government of Canada to make loans under the terms of the National Housing Act. Only Approved Lenders can negotiate mortgages that require mortgage insurance.

ASSESSMENT
The value of a property, set by the local municipality, for the purposes of calculating property tax.

ASSUMABLE MORTGAGE
A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

ASSUMPTION
A legal document signed by a homebuyer which requires the buyer to assume responsibility for the obligations of a mortgage by the builder or original owner.

BLENDED MORTGAGE
A combination of two mortgages, one with a higher interest rate than the other,

BLENDED MORTGAGE PAYMENTS
Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases,
although the total payment doesn't change. (Exception: see Variable-Rate Mortgages)

BUY-DOWN
When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender, or to the purchaser, in one lump sum or monthly instalments.

CLOSED MORTGAGE
A mortgage that cannot be prepaid, re-negotiated or refinanced during its term.

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.

CLOSING COSTS
Expenses in addition to the purchase price for buying and selling a property. such as legal fees, transfer fees, and disbursements, which are payable on the closing date. Closing costs typically range from 2%-4% of a home's selling price.

CLOSING DATE
The date on which the title and keys to the property are transferred from the seller to the buyer, and the money is paid.

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 creates and sells mortgage loan insurance products.

COMMON ELEMENTS
The portions of a condominium development owned in common (shared) by the unit owners.

CONDOMINIUM
Shared ownership in property. Owners have title (ownership) to individual units  and a proportionate share in the common elements.

CONVENTIONAL MORTGAGE
A first mortgage issued for up to 75% of the property's appraised value or purchase price, whichever is lower.

CONVEYANCING
In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien.

COUNTER OFFER
One party's written response to the other party's offer  during negotiation of a real estate purchase between buyer and seller.

DEBT SERVICE RATIO
The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes. (and condominium fees, when applicable)

DOWN PAYMENT
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

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.

ENCROACHMENT
An intrusion onto an adjoining property. A neighbour's fence, storage shed, or overhanging roof line that partially (or even fully) intrude onto your property are examples of encroachments.

EQUITY
A homeowner's financial interest in a property. The difference between the value of the property and the amount owing (if any) on the mortgage.

ESTOPPEL CERTIFICATE
A written statement of a condominium unit's current financial and legal status.

FIRST MORTGAGE
The first security registered on a property. Additional mortgages secured against the property are "secondary" to the first mortgage.

FORECLOSURE
A legal process by which the lender takes possession and ownership of a property when the borrower doesn't meet ("defaults on") the mortgage obligations.

HIGH-RATIO MORTGAGE
A mortgage for more than 75% of a property's appraised value or purchase price.

INTEREST
The cost of borrowing money.

JOINT TENANCY
A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of a property. In the event of one owner's death, his or her share is automatically transferred to the surviving owner(s), apart from the deceased's will.

LEVERAGE
Controlling a large asset with a relatively small amount of cash. In real estate, $25,000 down payment (or less) can be used to purchase (control) a $100,000 home, for example.

LIEN
Any legal claim against a property, filed to ensure payment of a debt.

LISTING AGREEMENT
The contract between the listing broker and an owner, authorizing the REALTOR® to facilitate the sale or lease of a property.

LISTING BROKER  
The REALTOR® who signs a contract with an owner to sell the property.

MAINTENANCE FEE
A monthly fee paid by condominium owners for maintaining the development's common areas.

MORTGAGE
A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt.

MORTGAGE BROKER
A licensed individual who, for a fee, brings together a borrower in search of a mortgage and a lender willing to issue that mortgage.

MORTGAGEE
The lender.

MORTGAGE INSURANCE
Government-backed or privately-backed insurance protecting the lender against the borrower's default on high-ratio (and other types of) mortgages.

MORTGAGE LIFE INSURANCE
Insurance that pays off the mortgage debt, should the insured borrower die.

MORTGAGE PAYMENT
The regular instalments made towards paying back the principal and interest on a mortgage.

MORTGAGE TERM
The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage,
or re-negotiate the mortgage for another term.

MORTGAGOR
The borrower.

MULTIPLE LISTING SERVICE® (MLS®)
A system for relaying information to REALTORS® about properties for sale.

OPEN MORTGAGE
A mortgage which can be prepaid or re-negotiated at any time and in any amount without penalty.

PARTIALLY OPEN MORTGAGE
(Also called a "partially closed" mortgage.) Allows the borrower to prepay a specific portion of the mortgage principal at certain times with or without penalty.

PORTABILITY
A mortgage feature that allows borrowers to take their mortgage with them without penalty, when they sell their present home and buy another one.

PREPAYMENT PRIVILEGE
A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.

PRINCIPAL
The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.

RATE (Interest)
The return the lender receives for advancing the mortgage funds required by the borrower to purchase a property.

REALTORS®
Real Estate Professionals who are members of a local real estate board  and the Canadian Real Estate Association. Only these professionals can call themselves REALTORS®.

REFINANCING
The process of obtaining a new mortgage, usually at a lower interest rate, to replace the existing mortgage.

RESERVE FUND
The portion of a condominium maintenance fee that is set aside to cover major repair and replacement costs.

SECOND MORTGAGE
A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage.

SECONDARY FINANCING
Second, third, fourth, etc. mortgages, secured by a property "behind" the first mortgage.

TAKE-BACK MORTGAGE
See Vendor-Take-Back Mortgage

TERM
See Mortgage Term

TITLE
The legal evidence of ownership of a property.

TITLE SEARCH
A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller's ownership claim.

UNIT
Term used to describe the individual home or apartment held by the owner within a condominium development.

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 large 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.

WEEKLY PAYMENTS
 Mortgage payments made weekly or 52 times per year.

ZONING REGULATIONS
Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used.

LET US HELP YOU ACHIEVE YOUR GOALS!

Click below or phone us at 780.988.0001 and tell us what you're hoping to accomplish as a buyer or seller of Edmonton real estate. We'll guide you every step of the way!

Contact Ryan Today

 

 

 

Leave a Comment

Have a Question?

Contact Us

Follow Us