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Glossary Of Terms In this section I hope to provide you down to earth information, plus links to different agencies and avenues of information. To the "First Time Home Buyer" or "First Time Home Seller", the processes can seem quite intimidating. I'm here to help! My goal is to make your move INTO or AWAY from Cold Lake as stress free as possible. |
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Glossary Terms often used during the home buying process: • Amortization Period The number of years that it will take you to pay back your entire mortgage loan. • Appraised Value An estimated value of a property that is completed by a certified appraiser for mortgage financing. • Assumability When the buyer is allowed to take over (or assume) the seller’s mortgage, which is already in place on the property. • Balanced Market Where demand for property equals the supply of available property. Sellers usually accept reasonable offers and houses generally sell in sufficient time periods. Prices remain stable and there is usually a good number of homes to choose from. • Buyer Brokerage Service Where a buyer retains the broker [Larry Melanchuk] by way of a written agreement to find real estate which the buyer may be interested in purchaseing or leasing and to assist the buyer in negotiating the terms of the purchase or lease. • Buyer’s Market There is a high number of homes to choose from and few buyers in comparison. Prices of homes tend to be lower and they remain available for sale longer. Buyers usually have more leverage in negotiating a purchase. • Closed Mortgage A mortgage loan that has a locked-in payment schedule, which does not vary over the life of the closed term. A buyer who uses a closed mortgage will likely have to pay the lender a penalty if you fully repay the loan before the end of the closed term. • Conventional Mortgage A mortgage loan that is issued for up to 75% of the property’s appraised value, or the property’s purchase price, whichever is lower. The buyer must have 25% or more of the lower value as a down payment. • Conveyancing The transfer of ownership of any property or real estate from one person to another. • Down Payment This is the difference between the purchase price and the total amount of the mortgage loan, which represents the buyer’s cash payment towards the purchase of a property. • Equity The difference between a property’s market value for selling and the mortgage plus other debts taken against the property. • High-Ratio Mortgage When a mortgage loan exceeds 75% of the home’s appraised value. These types of loans are typically used by first time buyers and must be insured for payment. • Interest Rate A figure expressed as a percentage as the value that is charged by the lender for use of the lender’s money. • Maturity Date The end of the term of your mortgage loan. At this time, the buyer can pay off the entire mortgage loan balance or renew it for a longer term. • Mortgagee The individual or financial institution that lends the money for the purpose of a mortgage on property. • Mortgage Insurance Insurance purchased to protect the lender against loss from the borrower being unable to make payments on the mortgage loan. • Mortgage Life Insurance Insurance purchased to protect the mortgagor from the mortgage loan debt if the mortgagee dies. If he/she dies, the mortgage loan is paid off by the insurance company. • Mortgagor The person who borrows from a financial institution to finance a property or home purchase. • Open Mortgage A type of mortgage loan where the borrower can make a partial or full payment of the principal amount at any time, without penalty. • Portability An option available on a mortgage that enables the mortgagor to take their current mortgage loan with them to another property without penalty. • Pre-Approved Mortgage When a lender approves the potential mortgagor for a specified amount, based on how much money the lender is prepared to lend to the borrower. This allows buyers to shop for homes that they already know they can obtain financing for and not homes that are potentially too expensive, or out of the borrowers means to finance. • Prepayment Privileges Allows the borrower to make voluntary payments on the mortgage loan, in addition to the regular, scheduled mortgage payments. • Property Purchase or Land Transfer Tax A toll paid to the provincial and/or municipal government(s) for transferring property to the buyer from the seller. • Principal The amount still owing to the lender or the amount borrowed from the lender, excluding interest. Interest is applied and payable based on the principal amount outstanding. • Refinancing Re-negotiating the current terms of a mortgage loan or paying off the current mortgage loan and obtaining a new one. • Renewal At the end of a mortgage term, the borrower re-negotiates the loan for a new term. • Second Mortgage A type of additional financing on top of your existing mortgage. This second mortgage usually is applied at a higher rate of interest and is negotiated for a shorter term. • Seller’s Market More buyers are looking for homes than there are homes for sale. There is a smaller inventory of homes available for sale and many buyers looking to purchase. House prices generally increase and homes sell quickly. • Strata or Condominium Fee A payment made by all owners of condominiums or townhouses within a particular complex that is allocated to pay expenses such as maintenance, repairs and management costs. • Term The total length of time that the interest rate on a loan is fixed, which also indicates when the principal balance becomes due and is thus payable to the mortgagee. • Title The legal ownership of a property/home. • Variable-rate Mortgage A type of mortgage with fixed payments but fluctuating interest rates. The change in current interest rates doesn’t alter the amount of the mortgage payment, but determines how much of each payment is applied against the principal amount and how much goes to pay interest to the lender. • Vendor Take-Back Mortgage A situation where the seller of a property provides all or part of the mortgage financing in order to sell their property.
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