When you are thinking of buying a home you need to know some of the terms. The glossary below was taken from the Ontario Real Estate Associations “How to Buy Your Home.” They are some of the most common real estate terms that you may come across:

Amortization: The number of years to pay off an entire mortgage.

Appraisal: This is an estimate of a properties market value. It is used by lenders to determine the mortgage amount.

Appreciation: The increase of property value over time.

Assessment: This is the value of a property that is set by the local municipality. It helps calculate property tax.

Assumable Mortgage: This is a mortgage held on the property by the seller and can be taken over by the buyer. They accept the mortgage payments.

Blended Mortgage: This happens when two mortgages get combined. One has a higher interest rate to get a mortgage with an interest rate between the two originals.

Blended Mortgage Payments: This is equal or regular mortgage payments with both a principal and interest component. With each payment the interest decreases and the principal amount increases. The total payment will not change.

Bridge Financing: This is money that is borrowed against the homeowner’s equity. It is usually for a short time in order to help purchase another property or making improvements to a property you are selling.

Buy Down: The seller reduces the interest rate on the mortgage. They will pay the difference between the reduced rate and market rate to the lender in one lump sum or monthly instalments.

Closing: This is when the parties agree that all the legal and financial obligations have been met. The deed gets transferred from seller to buyer.

Conventional Mortgage: This is the first mortgage for up to 75 percent of the property’s value or purchase price.

Counter offer: A written response form one party to the offer of the other during the buying negotiations.

Debt Service Ratio: This is a part of the borrowers gross income used for housing costs, mortgage payments and taxes.

Deed: A legal document indicating property ownership to the buyer.

Easement: The legal right to cross an individual’s land.

Encroachment: Visiting another individual’s property unlawfully.

Equity: This is the price difference between the selling price and the mortgage on the property.

Foreclosure: This is where the lender takes possession and ownership when the borrower defaults on the mortgage.

High Ratio Mortgage: More than 75 percent of the appraised value or purchase price.

Land Transfer Tax: This is a payment to the government when transferring property from seller to buyer.

Lien: A legal claim against a property.

Mortgagee: This is the lender.

Mortgage Insurance: Protection form a government backed insurance or private backed insurance for the lender against borrowers default on high ratio mortgages.

Mortgager: Borrower

Multiple Listing Service: Relays info from the Realtors about sale properties.

Prepayment Privilege: This allows the borrower to prepay some or all of the principal balance with or without a penalty.

Principal: The borrowed amount still owing on a mortgage.

Status Certificate: This is a written statement on a condo’s financial and legal issues.

Variable Rate Mortgage: Fixed payments but changing interest rates due to changing market rates.

Vendor Take Back Mortgage: Sellers use their equity to provide some or the entire mortgage financing to sell the property.

You can browse this site for lots of useful information on Brampton real estate. Thinking of selling? Consider hiring a Brampton real estate agent who charges low real estate commissions. Only 1 percent commission paid to listing broker.

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