Previously, we talked about 12 terms you should know as a first-time home buyer.
Continuing our venture into the specific terms real estate agents and other professionals in the housing industry use, we present this handy dictionary of 20 more terms that every home buyer should know.
1. Anniversary
On the yearly occasion of the day you first began making mortgage payments, most lenders graciously allow you to make an extra payment with no penalties or fees.
2. Appraisal
This refers to an assessment of the fair market value of a property.
3. Appraised Value
The determination made by a certified appraiser of the fair market value of a property.
4. Approved Lender
A bank or other type of lending institution approved by the Government of Canada to issue a mortgage as defined by the National Housing Act.
5. Assumption
A legally binding document used during a home sale that makes the new homeowner responsible for the terms of a mortgage acquired by the original owner or builder of the house being purchased.
6. Balanced Market
An assessment that the number of buyers seeking to buy property matches the amount of property for sale on the market.
7. Buyer's Market
An assessment that the number of buyers seeking to buy property is significantly lower than the amount of property available on the market, giving buyers a significant advantage when negotiating prices.
8. Closed Mortgage
A mortgage that has preset, fixed payment schedules. Penalties are usually assessed for borrowers who want to pay off the mortgage ahead of schedule.
9. Closing Date
The day when a property sale becomes complete and final.
10. Closing Costs
All of the fees and charges that must be paid at the time of the closing date.
11. Condominium Fee
A regular fee paid by condominium or townhome owners towards the maintenance of common property.
12. Deed
A legal document used as proof of ownership of a property.
13. Default
A failure to make payments according to the terms of a mortgage, which gives the debt issuer the right to foreclose on the property.
14. Foreclosure
When the mortgage lender gains ownership of the property if the borrower has defaulted on the loan.
15. Equity
A value calculated as the sum of a home's fair market price (the amount it could be sold for in the current market) minus the total amount of outstanding debts registered against the home. This is what makes your home a valuable asset, as there are a number of things you can use your home equity for.
16. Interest
The amount of additional money that must be paid beyond the amount that was borrowed for a mortgage.
17. Interest Rate
The amount of interest that must be paid during each mortgage payment usually expressed as a percentage of the total amount of money borrowed.
18. Mortgage
A loan issued for the purpose of buying property.
19. Maturity Date
The date when a mortgage agreement ends. On this date, the borrower must either have completely paid off the mortgage or the mortgage agreement must be renewed.
20. NHA Premium
The insurance required by lenders who issue a high ratio mortgage*. The cost of the NHA insurance can either be paid for at the time it's issued to avoid interest costs or as part of regular mortgage payments, in which case it will accrue interest.
*This term is covered in a previous post of defined terms.
By understanding these and other important real estate terms, you'll be fully informed when it comes time to signing important documents relating to the buying and selling of property.
We've got more to come – stay tuned to learn about even more terms you should know!
