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A
|
| Adjustments:
Property
taxes, mortgage interest and/or utility bills (electricity, gas, fuel)
that have already been paid out by the vendor for future service and must
be pro-rated and paid by the purchaser to the vendor on closing. |
| Advance
Fee: A fee charged by a broker to a seller to cover all or a
portion of the broker's costs of promoting the property. |
| Amenities:
Attractive
or desirable features of a property. |
| Amenity
Value: The value of the pleasures a property offers, such as
a good neighborhood, schools, parks, a view, or other tangible or intangible
assets. |
|
|
| Amortization:
The number of years it takes to repay
the entire amount of a mortgage (usually between 15 and 25 years). If you
have shorter amortization period you will pay less interest. The proportion
of principal to interest changes over time. In the early part of the loan,
principal repayment is very small and interest repayment very high and
at the end of the loan that relationship is reversed. |
| Amortized
Loan: A loan that is completely paid off, interest and principal,
by a series of regular payments that are equal or nearly equal. |
| Appraisal:
An
estimate of a property's market value used by lenders in determining the
amount of the mortgage. This value may or may not match the purchase price
of the home. |
| Appreciation:
The
increase of a property's value over time. |
| Assessment:
The
value of a property, set by the local municipality, for the purposes of
calculating property tax. |
| Assumable
Mortgage: The buyer assumes liability
for an existing loan held on a property by the seller. This is subject
to approval by the lender. |
| Assumption
Agreement: A legal agreement signed by
a buyer which requires the buyer to assume responsibility for the obligations
of a loan made by a former owner. |
| Auctioneer:
A
professional who sells property at public auctions. |
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B
|
| Balloon
Payment: A large principal payment due all at once at the end
of some loan terms. |
| Bachelor
Apartment: A small rental unit which combines living and bedroom
spaces into one room (known also as studio apartment). |
| Bankruptcy:
The state of being unable to pay your debts. A person or business may voluntarily
assign himself into bankruptcy or may be petitioned into bankruptcy by
his creditors. Once in bankruptcy, the person or a business surrenders
his assets to a trustee in bankruptcy who sells the assets for the benefit
of the bankrupt's creditors (first secured then unsecured creditors). |
| Beneficiary:
The person designated to receive the income from a estate, trust or a deed
of trust. |
| Biannual
(Semiannual): Occurring every six months or twice per year. |
| Blanket
Insurance Policy: A single policy that covers more than one
piece of property or more than one person. |
| Blended
Mortgage: A
combination of mortgages - one with a higher interest rate than the other
to create a new mortgage with an interest rate between the two original
rates. |
| Blended
Mortgage Payments: Mortgage
payments consisting of both a principal and an interest component. |
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|
| Bona
Fide: In
good faith, without fraud. |
| Broker:
A
person licensed by the provincial or territorial government to trade. |
| Building
Permit: A
certificate that must be obtained from the municipality by the property
owner or contractor before a building can be erected or renovated. |
| Bundle
Of Rights: A group of rights, such as the right of use, occupancy,
and enjoyment, the right to sell, the right to control the use, the right
to lease, etc. |
| Buyer's
Agent: A licensee who has declared to
represent only the buyer in a transaction, regardless of whether compensation
is paid by the buyer or the listing broker through a commission split.
(known as "Purchaser's Agent") |
| 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 installments. |
| Buyer
Agency Agreement: A written contractual
agreement in which an agent commits to provide services necessary to secure
a transaction and the purchaser commits to working exclusively with that
agent for a specified time period. |
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C
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| Cap:
The limit on how much an interest rate or monthly payment can change, either
at each adjustment or over the life of the mortgage. |
| Certificate
Of Location: A document specifying the
exact location of the property and describing the type and size of the
house including additions. |
| Closing
Statement: The financial disclosure statement that accounts
for all of the funds received and expected at the closing, including deposits
for taxes, hazard insurance, and mortgage insurance. |
| Client:
The
person being represented by an agent. |
| Closed
Mortgage: A type of mortgage that cannot
be prepaid, renegotiated or refinanced during its term. |
| Closing:
The date on which a property legally changes hands from seller to buyer. |
| Closing
Costs: Costs, in addition to the price of the property itself,
that are due at closing ( origination fees, title insurance, attorney's
fees, surveys, prepayments of real estate taxes, insurance premiums held
by the lender. |
| Closing
Date: The final step of the sale transaction
in 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 providing information services and mortgage loan insurance. |
| Code
of Ethics: The set of standards that a professional is bound
to observe. |
| Commission:
An
amount of money agreed to by the seller and the real estate broker/agent
and stated in the listing agreement. It is payable to the broker/agent
on closing and shared, if applicable, among those salespeople involved
in the sale. |
| Common
Elements: The portions of a condominium
development owned in common (shared) by the unit owners. |
| Conditional
Offer: An offer to purchase subject to
specified conditions. |
| Condominium
(Condo): A type of real estate ownership where the owner has
title to a specific unit and shared interest in common areas. |
| Contingency:
A condition that must be satisfied before
a contract is binding. For example a sales agreement may be contingent
upon the buyer obtaining financing. |
| Contract:
Binding legal agreement between two or more parties that delineates the
conditions for the exchange of value. |
| CREA
(Canadian Real Estate Association): A
national association representing the real estate industry on federal public
policy matters, providing member services and education. |
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D
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| Debt
Service Ratio: The percentage of a borrower's
gross household income which may include in addition to the main wage earner's
salary, salaries of other wage earners, bonuses, commissions, overtime,
etc., and can be used for housing costs, including mortgage payment and
taxes. |
| Deed:
A legal document that formally conveys ownership of property from seller
to buyer. |
| Deed
of Trust: A legal document used in place of a mortgage or a
deed to secure debt. There are only two parties involved in a mortgage,
the borrower and the lender, there are three parties involved in a deed
of trust: the borrower, the lender and the trustee. The borrower transfers
the legal title for the property to the trustee who holds the property
as a security for the debt. If the borrower pays the mortgage as agreed,
the trustee gives the legal title to the owner. If the borrower does not
pay the mortgage as agreed, the trustee can sell the property. |
| Default:
A
failure to pay the installments
due under the terms of the mortgage or other loans.. |
| Discharge:
The
removal of all mortgages and other financial encumbrances on a property. |
| Document
Preparation Fee: A
charge by the lender that is paid at closing for preparing all of the loan
documents; only charged to the buyer on Conventional loans. |
| Down
Payment: Initial payment made at the time
of a purchase. In real estate, percentage of the purchase price
that the buyer must pay in cash and may not borrow from the lender. |
| Dual
Agent: A person who acts as agent for both the seller and the
buyer in the same transaction. |
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E
|
| Encumbrance:
A
registered claim for debt against a property. |
| Equity:
The value of the property actually owned by the homeowner. |
| Escrow:
The closing of a real estate transaction through a neutral third party
who holds funds and documents until specific conditions have been met. |
| Escrow
Fee: An amount charged by the escrow company to execute the
instructions of the buyer and the seller. |
| Examination
of Title: A
review which reveals the previous owners of the property, and the encumbrances
on a piece of real estate. |
| Exclusive
Right To Sell: A listing agreement executed and agreed to between
a agent and owner giving the broker the right to market and sell the property
and collect a commission regardless of who sells the property over the
term of the listing agreement. |
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F
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| Fair
Market Value: An appraisal term for the price that the buyer
is willing to pay and that the seller is willing to accept for a piece
of property. |
| Fee
Simple: An estate in which the owner has unrestricted power
to dispose of the property as he wishes, including leaving by will or inheritance.
It is the greatest interest a person can have in real estate. |
| Finance
Charge: The total cost, including all fees, points, and interest
payments a borrower pays to obtain credit. |
| Fixed
Rate Mortgage: A mortgage where the rate of interest remains,
fixed throughout the life of the loan. |
| Foreclosure:
A
legal procedure whereby the lender obtains ownership of the property following
default by the borrower. |
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|
|
G
|
| GE
Capital Mortgage Insurance Company: The
only private sector source of mortgage insurance to lenders in Canada. |
| Graduated
Payment Mortgage: A mortgage where your monthly payments start
low and increase at a predetermined rate. |
| Grantee:
The receiver of the title being granted (the person who makes a grant). |
| Gross
Debt Service: The amount of money needed
to pay principal, interest, taxes and sometimes, energy costs. If the dwelling
unit is a condominium, all or a portion of common fees are included, depending
on what is covered. |
| Gross
Debt Service Ratio (GDS): The percentage
of gross household income which you will be using to pay for the mortgage
payment including property taxes. A rule of thumb is that GDS should not
exceed 30%. It is also referred to as PIT (Principal, Interest and
Taxes) over income. Sometimes energy costs are added to the formula, producing
PITE, which moves the rule of thumb GDS to 32%. |
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H
|
| Hazard
Insurance: A
type of insurance that will compensate for property damage from specified
hazards such as fire and wind. More complete coverage is given by all-risk
homeowner's insurance. |
| High
Ratio Mortgage: A type of mortgage where
you have a down payment of less than 25% of the purchase price. This type
of mortgage must be insured against default. |
| Holdback:
An
amount of money withheld by the lender during the progress of construction
of a house to ensure that construction is satisfactory at every stage.
The amount of holdback is generally equivalent to the estimated cost to
complete construction. |
| Home
Equity Conversion Mortgage (HECM): A reverse
annuity mortgage is unique type of mortgage. Instead of making payments
to a lender, the lender makes payments to you. It enables older home owners
to convert the equity they have in their homes into cash, usually in the
form of monthly payments. Unlike traditional home equity loans, a borrower
does not qualify on the basis of income but on the value of his or her
home. In addition, the loan does not have to be repaid until the borrower
no longer occupies the property. |
| Home
Equity Line Of Credit: A mortgage loan, usually in second position,
that allows the borrower to obtain cash drawn against the equity of his
home, up to a predetermined amount. |
| Home
Inspection Report: A qualified inspector's report on a property's
overall condition. The report usually includes an evaluation of both the
structure and mechanical systems. |
| Homeowner's
Warranty: A type of insurance often purchased by home buyers
that will cover repairs to certain items, such as heating or air conditioning,
should they break down within the coverage period. |
|
|
|
I
|
| Impounds:
- Prepayments of taxes and insurance. Different lenders and loan amounts
determine if these are needed, and if so how much these are. |
| Impound
Account: A trust account in which funds are held, usually by
a lender, for the payment of property taxes and insurance premiums required
to protect the lender's security. |
| Inspection:
The
examination of the house by an expert usually selected by the buyer. |
| Insurance:
The
purchaser must have fire insurance arranged and in effect before the transaction
can be closed. A certificate from the insurance company may be required
at the closing. |
| Interest:
The cost of borrowing money, usually expressed as a percentage over time. |
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|
|
J
|
| Joint
Tenancy: The
form of ownership that provides survivorship; title passes automatically
to surviving owner(s) on the death of a co-owner. |
|
L
|
| Lien:
A
charge or claim that a person has upon another's property as security for
a debt or obligation. |
| Liquidated
Damages: An amount determined ahead of
time by parties to a contract as the compensation for an injured party
will receive if the other breaches a part of the contract. |
| Listing
Agent/Broker: The broker/agent representing a home seller. |
| Listing
Agreement: The legal document between
the listing broker and the seller, setting out the services to be rendered,
describing the property for sale and stating the terms of payment. A commission
is generally payable to the broker upon closing. |
| Listing
Contract: An agreement whereby an owner engages a real estate
agent for a specified period to sell property, for which sale the agent
receives a commission. |
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|
|
M
|
| Margin:
An amount, usually a percentage, which is added to the index to determine
the interest rate for adjustable rate mortgages. |
| Mechanic's
Lien: A claim against a property for money
owing to a supplier, sub-contractor or other person or company who has
provided labour or materials. |
Minimum
Payment: The minimum amount that you must
pay on a home equity loan or line of credit (usually monthly). In some
plans, the minimum payment may be simple interest (interest only). In other
plans, the minimum
payment
may include principal and interest (amortized). |
| MLS
(Multiple Listing Service): Trademarks
owned by The Canadian Real Estate Association and performed by the local
real estate boards, under which properties may be listed, purchased or
sold. It is a marketing tool used by members of the Service to expose properties
to a wider market base. |
| Misrepresentation:
A false statement of material fact with the intention of inducing action
of another. |
| Mobile
Home: A type of manufactured home, that
is transported to the home site using wheels attached to the structure
and do not require any foundation or substructure. |
| Month
Too Month Tenancy Agreement: A type of rental agreement that
provides for a one-month tenancy that is automatically renewed each month
unless either tenant or landlord gives the other the proper amount of written
notice (usually 60 days) to terminate the agreement. It is also common
for leases to revert to month-to-month tenancies at the end of the original
lease period, if another lease has not been signed. Some landlords prefer
to use month-to-month tenancies because it gives them the right to raise
the rent after giving proper notice or an easy way to get rid of troublesome
tenants. |
| Mortgage:
A
document providing security claim by a lender against property until the
debt registered against the property is paid. Lenders consider both the
property (security) and the financial worth of the borrower (covenant)
in deciding on a mortgage loan. |
| Mortgage
Broker: A person or company having contacts
with financial institutions or individuals wishing to invest in mortgages. |
| Mortgagee:
The lender in a mortgage loan transaction. |
| Mortgage
Insurer: In
Canada, high-ratio mortgages (those representing greater than 75% of the
property value) must be insured against default by either CMHC or private
insurers. The borrower must arrange and pay for the insurance, which protects
the lender against default. |
| Mortgage
Life Insurance: A type of term life insurance often bought by
home buyers . The coverage decreases as the mortgage balance declines.
If the borrower dies while the policy is in force, the mortgage debt is
automatically covered by insurance proceeds. |
| Mortgagor:
The borrower in a mortgage loan transaction. |
|
|
|
N
|
| Negative
Amortization: Negative amortization occurs when monthly payments
tail to cover the interest cost. The interest that isn't covered is added
to the unpaid principal balance, which means that even after several payments
you could owe more than you did at the beginning of the loan. Usually occurs
when the increase in the monthly payment is limited by a ceiling. |
| Net
Listing: A price, which must be expressly agreed upon, below
which the owner will not sell the property. |
| Net
Worth:
The difference between what you
own (assets) and what you owe (liabilities). |
|
|
|
O
|
| Obsolescence:
A loss in value of real property caused
by changes either internal or external to the property. |
| Offer
of Purchase and Sale: A written document
through which the prospective buyer sets out the price and conditions under
which he or she will buy the property. Upon acceptance by the seller, it
forms a contract, which will form the basis for the final document to be
prepared by a lawyer or notary. |
| Open
House: An opportunity for prospective buyers to view a house
in a low pressure environment. |
| Open
Listing: A listing under which the seller reserves the right
to list his property with other brokers. |
| Open
Mortgage: A type of mortgage which can
be prepaid at any time, without penalty. |
| Option
Agreement: The right to purchase property
within a definite time at a specified price. If the option-holder does
not buy within a specified period of time, he loses his deposit. |
| Option
Fee: An amount of money payed by a prospective
buyer, to asSeller, in order to obtain an option period. |
| Origination
Fee: A fee for work involved in evaluating, preparing, and submitting
a proposed mortgage loan. |
|
|
|
P
|
| Penalty:
A
sum of money paid to a lender for the privilege of prepaying a mortgage
in part or in full. |
| Percentage
Lease: A lease in which all or part of rental is a specified
percentage of gross income from total sales made upon the premises. |
| Personal
Property: Property which is tangible, movable, and not fixed
to the land. |
| Physical
Deterioration: The loss of value to real property from all causes
due to the action of the elements and old age. It can be either curable
or incurable. |
| PITI:
Principal, Interest, Taxes and Insurance. |
| Points:
A one-time charge paid to the lender for issuing a loan. A point equals
1% of the loan amount. |
| Portable:
A
mortgage that can be transferred from one property to another. This is
particularly useful if you sell one home and buy another. |
| Prepayment:
Paying off all or part of the mortgage before the scheduled date. |
| Prepayment
Clause In A Mortgage: The right to prepay
specified amounts of the principal balance. Penalty interest may be incurred
on prepayment options. |
| Prepayment
Penalty: A fee paid to the lending institution
for paying a loan prior to the scheduled maturity date. Unless it is open,
the mortgage may not be paid off before the Maturity Date without paying
a Prepayment Penalty. The calculation of the penalty can be complex and
it would be good idea to talk to your Mortgage Specialist. |
| Principal:
The
amount owing to the lender at any time. |
| Property
Taxes: Taxes that are paid yearly based on the assessed value
of the real property. |
|
|
|
R
|
| Real
Estate: Refers to land and improvements and the rights to own
or use them. |
| Real
Estate Board: A non-profit organization
representing local real estate brokers/agents, salespeople, which provides
services to its members and maintains and operates a MLS® system in
the community. |
| Realtor:
Trademark
identifying real estate professionals in Canada who are members of The
Canadian Real Estate Association, and as such, subscribe to a high standard
of professional service and to a strict Code of Ethics. |
|
|
|
S
|
| Sales
Contract: A written agreement stating the terms of the sale
agreed to by both buyer and seller. |
| Second
Mortgage: A mortgage usually at a higher
interest rate and represents the difference between the price of the house
and first mortgage plus the down-payment. May be obtained from banks or
other finance companies. |
| Security
Deposit: A payment required by a landlord to ensure that a tenant
pays rent on time and keeps the rental unit in good condition. |
| Seller's
Agent: The Seller's Agent represents the
seller -- either as a Listing Agent under the listing agreement with the
seller or by cooperating as a Sub-Agent, typically through the MLS®
system. |
| Survey:
A
certificate showing the home and other buildings relative to the property
boundary. |
|
|
|
T
|
| Tenancy
In Common: A type of ownership in which two or more people have
an undivided interest in property, without the right of survivorship. |
| Tenant:
Anyone, including a corporation, who rents real property. |
| Tenement:
Everything that may be occupied under a lease by a tenant. |
| Term:
The actual life of a mortgage, at the end of which the mortgage becomes
due and payable unless the lender renews the mortgage. |
| Timeshare:
An arrangement under which a purchaser receives an interest in real property
and the right to use an accommodation or amenities, or both, for a specified
period and on a recurring basis. Used primarily for selling vacation properties. |
| Title:
The
right of ownership of a property. |
|
|
|
U
|
| Underwriting:
The
process of verifying data and approving a loan. |
| Underwriting
Fee: A fee collected by some lenders to
offset expenses incurred in the lending transaction. |
|
V
|
| Variable-Rate:
An
interest rate that changes periodically in relation to an index. Payments
may increase or decrease accordingly. |
| Variable-Rate
Mortgage: A mortgage where payments are
fixed, but the interest rate moves in response to trends (it could change
from month to month depending on market conditions. If interest rates go
up, a larger portion of your payment goes to the interest; if rates go
down, more goes to cover the principal. |
| Variance:
An exception to a zoning ordinance, usually granted by a local government. |
|
|
|
Z
|
| Zoning
Laws: Municipal laws regulating and controlling
the character, size, location and use of land or other property. Zoning
laws divide cities into different areas according to use, from family residences
to industrial plants. |
|
|
|
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