Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes during the life of the loan according to movements in the Bank Prime Rate. Also known as a variable-rate mortgage..
The length of time required to pay back the entire principal amount of the mortgage.
Annual Percentage Rate (APR)
The cost of credit, expressed as a yearly rate including interest, mortgage insurance, and fees.
A written analysis prepared by a qualified appraiser that estimates the value of a property.
The transfer of a mortgage from one person to another.
An assumable mortgage can be transferred from the seller to the new buyer. Generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a due-on-sale clause, it may not be assumed by a new buyer.
A beacon score (or credit score) measures a consumer's credit risk relative to the rest of the Canadian population, based on the individual's credit usage history. In general, credit scores are critical in the mortgage underwriting process.
A short term loan that allows the future sale proceeds of the present home to be used to close on a new house, before the present home is sold.
The date on which the sale of a property will take place. The buyer signs the legal mortgage documents and pays closing costs.
These are expenses - over and above the price of the property - that are incurred by buyers and sellers when transferring ownership of a property.
A provision in an ARM allowing the mortgage to be converted to a fixed-rate at some point during the term.
A report detailing an individual's credit history that is prepared by a credit bureau and used by a lender to determine a loan applicant's creditworthiness.
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
Failure to make mortgage payments on time.
This is a sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a mortgage.
Part of the purchase price of a property that is paid in cash and not financed with a mortgage.
The primary lien against a property.
The monthly payment due on a mortgage including payment of both principal and interest.
A mortgage with payments that are fixed throughout the entire term.
The regular periodic payment that a borrower agrees to make to a lender.
A mortgage that is protected by the CMHC (Canada Mortgage and Housing Corporation) or by private mortgage insurance.
The fee charged for borrowing money.
Line of Credit
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time.
Loan-to-Value (LTV) Percentage
The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80%.
Lump Sum Payment
A way to reduce the remaining balance on the mortgage by paying more than the scheduled principal amount due.
The date on which the principal balance of a mortgage becomes due and payable.
A legal document that pledges a property to the lender as security for payment of a debt.
An individual or company that brings borrowers and lenders together for the purpose of mortgage origination.
A contract that insures the lender against loss caused by a mortgagor's default on a mortgage. Mortgage insurance can be issued by a private company or by a government agency (CMHC).
Mortgage Insurance Premium (MIP)
The amount paid by a mortgagor for mortgage insurance. This amount is added to the mortgage principal.
Mortgage Life Insurance
A type of term life insurance. In the event that the borrower dies while the policy is in force, the debt is automatically paid by insurance proceeds.
The borrower in a mortgage agreement.
A fee that may be charged to a borrower who pays off a mortgage before it is due.
Prepayment Priveleges The ability to make lump sum payments or increase mortgage payments during the term of a mortgage.
The process of determining how much money you will be eligible to borrow before you apply for a mortgage.
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
The outstanding balance of principal on a mortgage not including interest or any other charges.
Calculations used to determine if a borrower can qualify for a mortgage.
Paying off one mortgage with the proceeds from a new mortgage using the same property as security.
Returned Payment Fee
The penalty a borrower must pay when a payment is made a stated number of days after the due date.
The property that will be pledged as collateral for a mortgage.
The process of evaluating a mortgage application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.
The Mortgage Professionals - Serving Kingston Since 1989