MAINSTREAM MORTGAGES TERMINOLOGY DICTIONARY 🏠

Term: Noun
Definition: The period for which a mortgage agreement is in force. Common terms include 1-5, 7 & 10 years.

Amortization: Noun
Definition: The process of paying off a loan through regular payments over time. In a mortgage, this includes both principal and interest.

Down Payment: Noun
Definition: An initial payment made when purchasing a home, typically expressed as a percentage of the total home price. It’s a crucial factor in determining the mortgage amount.

Principal: Noun
Definition: The original amount of money borrowed in a mortgage. Payments are applied to both principal and interest over the life of the mortgage.

Interest Rate: Noun
Definition: The percentage charged by a lender for the use of money. It directly influences the amount of interest paid over the term of the mortgage.

Equity: Noun
Definition: The difference between the home’s market value and the outstanding balance of the mortgage. As the mortgage is paid down, equity increases.

Closing Costs: Noun
Definition: The fees and expenses associated with finalizing a real estate transaction. Includes land transfer tax, appraisal fees, title insurance, and legal fees.

Deposit: Noun
A deposit is the amount of money you give a seller when you present a signed offer to purchase to buy a property.  The deposit is written into the contract.  When the sale closes, the deposit forms part of the down payment.

MDI(Mortgage Default Insurance): Noun
Definition: Insurance that protects the lender in case the borrower defaults on the loan. Usually required if the down payment is less than 20%.  In Canada, we have 3 providers; CMHC, Sagen, and Canada Guaranty

Fixed Rate: Adjective
Definition: An interest rate that remains constant throughout the term of the mortgage, providing predictable monthly payments.

Remember, knowledge is key when navigating the world of mortgages! 🏡💡