Buyer Package

Mortgage Terminology
Agreement of Purchase and Sale:
A legal agreement that offers a certain price for a home.
The offer may be firm (no conditions attached), or conditional
(certain conditions must be fulfilled before the deal
can be closed).
Amortization Period:
The amount of time over which the entire debt will be
repaid assuming the same Interest rate. This is normally
25 years for a new mortgage.
Appraised Value:
An estimate of the market value of the property.
Closing Date:
The date on which the sale of a property becomes final
and the new owner takes possession.
CMHC Insurance Premium:
Mortgage insurance insures the lender against loss in
case of default by the borrower. Mortgage insurance is
provided to the lender by CMHC and a premium is paid
by the borrower.
Conventional/High-Ratio Mortgages:
A conventional mortgage is one that does not exceed
80% of the purchase price or the appraised value of the
property, whichever is less. Mortgages that exceed this
limit must be insured against default and are referred to
as high-ratio mortgages.
OA SL
Home Equity:
The difference between the price
for which a home could be sold
(market value) and the total
debts registered against it.
Interim Financing:
Short-term financing to help a buyer bridge the gap
between the closing date on the purchase of a new
home and the closing date on the sale of the current
home.
Mortgagee and Mortgagor:
The lender is the mortgagee and the borrower is the
mortgagor.
Mortgage Pre-Payment:
As defined in the mortgage agreement, this gives the
mortgagor an opportunity to make special payments
over the regular payment schedule.
P.I.T:
Principle, Interest and Taxes. Together, these make up
the regular payment on a mortgage if you elect to
include property taxes in your mortgage payments.
Porting:
A feature of some mortgages that Iets you keep the
actual interest rate and remaining term you have on the
outstanding balance of your current mortgage, if you
move. Any additional money that your borrow will
receive the current rate in effect at that time for those
funds.
Pre-Approval:
A pre-approval gives you the confidence you need
when making an offer to buy a home. lt lets you know
how much you could reasonably borrow and allows you
to focus on properties In your price range. A preapproval
also gives you an idea of what your payments will be
and guarantees an interest rate and term for a set
amount of time.
Principle:
The amount of money borrowed for a new mortgage or
now owing on an existing one.