Are you a little lost with all of the real estate lingo you’re hearing? You’re not alone.
There’s a lot to learn when you’re buying a home for the first time, or even your second or third time around. The lingo or jargon that’s used can be difficult to understand. So, we created a list of common terms you’ll hear realtors used.
Adjustable mortgage interest rate: With this, the interest rate and the mortgage payment both vary depending on mortgage conditions. A mortgage with this kind of rate could be referred to as an Adjustable-rate mortgage.
Amortization: This refers to the amount of time given to pay off your mortgage. So basically, make payments within the timeline, until the mortgage is paid off.
Appraisal: The process to determine how much your house is worth so the bank can determine how big your loan should be.
Closing costs: These are the additional fees you’ll need to pay on the day your house closes and you officially become a homeowner. To learn more about these check out our other blog
Conditional offer: You might have heard this term before; it’s often used when submitting an offer to purchase a home. In a nutshell, it’s your way of saying you want the home but you need to have a few things figured out first i.e. home inspection or mortgage approval. Once the items are taken care of, the house becomes yours.
Counteroffer: A counter offer involves the seller revising your offer, changing for example the price or closing date. You have the option to accept or reject the offer, or even counter back!
Deed: This is a legal document that says you’re now the official owner of the home!
Equity: Simply put… this is the monetary difference between the market value of your house and the amount you still owe on it.
Fixed Mortgage Interest Rate: If you want your mortgage interest rate to stay the same and not fluctuate throughout the term of the mortgage, you’ll want to consider a fixed mortgage interest rate.
Lien: A lien is a claim against the property for money that’s owed. For example, you can grant the bank a lien on your home when you take out a mortgage. If you’re unable to pay the mortgage, the bank can seize your property.
Maturity date: Hooray! Welcome to the last day of your mortgage! You should have completed one of two things – your last mortgage payment OR a new agreement on your mortgage.
Mortgage loan insurance: We’ll try to simplify this for you… Any residential loan with a loan-to-value ratio of more than 80% has to have mortgage loan insurance to protect the lender in case you can’t pay your mortgage.
Offer to purchase: Referred to as “the contract setting out the terms under which you agree to buy the home”. It’s pretty self-explanatory – you set the criteria you would like to adhere to when you make the home purchase.
Principal: The total amount that you borrow from the lending institution, not including interest.
Vendor Take-Back Mortgage: In this situation, the seller finances the mortgage. When you buy the home you’d make your mortgage payments directly to the seller instead of a lending institution.
