There is a lot of information to digest when buying a home. All of the real estate jargon can get overwhelming. We discussed the vocabulary of buying a house back in January, so here are some more terms and definitions of real estate to help you better understand the process.
Annual Percentage Rate (APR): The rate of interest on your mortgage. It can be at a fixed or variable rate depending on the terms of your mortgage.
Blended Payment: A payment combining principal and interest with the long term effect being a decrease in interest but an increase in principal.
Closed Mortgage: A mortgage type which doesn't allow you to pay it off in full before the agreed upon length without imposing penalty fees.
Depreciation: In real estate depreciation means a home has less value now than it did at the time of purchase.
Estoppel Certificate: A certificate specific to condominium corporations to illustrate their financial and legal standing. Involves a fee to acquire.
Flexhousing: A method of construction founded on the philosophy of flexibility to add to the home in the future with minimal inconvenience.
Grantee: In a real estate transaction the grantee is the person taking over ownership of the property.
Household Budget: The amount of money you set aside specifically for things like mortgage, property taxes, and home maintenance.
Insurance Premium: The amount of money you pay for homeowner's insurance.
Lump Sum Prepayment: A substantial payment made with the purpose of decreasing the overall amount owed.
Manufactured Home: A home built in a factory as opposed to built on site. It is shipped already assembled and placed onto a foundation.
Net Worth: A calculation of your wealth done by subtracting the value of your liabilities from the value of your assets.
Operating Costs: All of the costs regarding operating a home. This includes everything from taxes to mortgage payments to utility costs.
Property Taxes: taxes charged by the local government based on the value of a home or property. These vary from municipality to municipality.
Qualifying Ratio: The ratio your lender uses during the mortgage approval process. This includes the front-end ratio and back-end ratio. The front-end ratio is the borrowers gross income vs the total value of the home. The back-end ratio is the borrowers cumulative debt vs. the total value of the home.
Row House: Single family homes which share a wall with adjacent homes. Also known as a Townhouse.
Reserve Fund: A fund created by a condominium corporation to take care of property maintenance. Incorporated into monthly costs of the homeowner.
Single-Family Detached Home: A home made for one family which is free from attachments to adjacent homes.
Title: The official document proving ownership of a property. A leasehold title gives person ownership of building for specific period but not ownership of the land on which it was built. A freehold title gives you complete ownership of both land and building indefinitely.
Total Debt Service Ratio: percentage of your income used for paying of debts including mortgage payment, interest, heating costs, and property taxes.
Vendor: The person who sells a property
Vendor Take-Back Mortgage: A mortgage which is financed by the vendor of a property instead of a financial institution.
These are just a few of the dozens of real estate terms involved in the buying and selling process. And remember, the definitions we’ve used here are the most common use of the word. It's possible for some of these terms to have a different meaning, depending on the context.
Posted by Terry Paranych on
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