Brought to you by Antonio Vargas Real Estate your local White Rock Realtor
Buying a new home can be an education - but sometimes you need a cheat sheet (especially when the professionals refer to complex terms you have never heard of before)! Here at Vargas Real Estate, courtesy of Antonio Vargas, we have compiled a list of the most commonly used borrowing terms in Canadian real estate.
1) Market Value: this refers to the value at which something can be sold in the present market.
2) Pre-Approval: a determination made by a lender approving whether or not a borrower qualifies for a mortgage at the maximum amount at which they are qualified.
3) Back End Ratio: a ratio including all fixed debt from housing expenses to gross income.
4) Adjustable Rate Mortgage (ARM): interest rates are regularly adjusted according to present market interest rates.
5) Private Mortgage Insurance (PMI): In instances of a downpayment of less that 20%, a lender requires PMI for protection in cases of foreclosure.
6) Lien: encumbrance holding property as security for payment of debt
7) Homeowner’s Insurance: designed to insure both property and liability
8) Annual Percentage Rate (API): the mortgage cost as an annual rate including all fees such as mortgage insurance, interest and loan origination fees.
9) Escrow: an account opened by the mortgage company for the payment of insurance and property taxes during the mortgage term.
10) Fix Rate Loan: a loan with an interest rate that never changes for its entire duration