Taking out a mortgage with your bank can be intimidating, what with all the numbers and lingo your mortgage agent throws at you.
At Mortgage Design Group, we try to change that by meeting with you one on one to discuss every option available and making sure you understand your choices. In fact, we never even charge you for your visits; we don’t ever charge you for anything, actually.
That being said, there will still be several words that might be unfamiliar to you as you’re going through the process. Here are 10 mortgage terms we think every homebuyer should know.
Paying off the principal balance of the mortgage, usually by regular, equal payments, but which can also be combined with extra payments. Standard amortization is 25 years, and the Canadian maximum is 40 years.
This is a professional estimate of the current value of the property.
The value of a property as determined by a municipal government as a basis for calculating annual property taxes. It may differ from the appraised value.
4. Credit report
A record of one’s payment history. It’s available through a credit bureau.
5. Down payment
The amount of cash paid by the buyer toward the cost of the property. Lenders use down payments as a way to gauge buyer commitment to paying the mortgage.
The difference between the value for which you could sell your property and what is still owing. The longer you own your home, the higher the equity, which will be basically cash in your pocket when you finally sell.
7. Home inspection report
A report that verifies the condition of a property before finalizing a real estate transaction. It is commissioned by the property owner or the buyer and indicates any problems and the cost to fix them.
8. Mortgage broker
A registered agent who negotiates with lenders on behalf of the borrower to find the best mortgage for that borrower’s circumstances.
The amount still owing on your mortgage, including any accrued, unpaid interest.
Obtaining a new mortgage on an existing property. You might refinance to take advantage of lower interest rates, better prepayment terms, or extract equity (for renovations or a down payment on another property, for example).
Are there any other terms you’d like us to go over in a future post? Let us know in the comments below.