When Buying or Selling property, you can get lost in some of the lingo used if you you’re not used to it. Here is a glossary of Real Estate Terminology for your convenience.
Amortization: Length of time over which your house will be paid off.
Appraisal: Process banks use for estimating the value of your potential new home.
Appraiser: The person who does the appraisal.
Appreciation: The increase in value of your house since you bought it.
Builder: A person or company that builds homes.
Closing costs: Costs other than the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on closing day. They range from 1.5% to 4% of a home’s selling price.
Closing day: Date on which the sale of the property becomes final and the new owner takes possession of the home.
CMHC: Canada Mortgage and Housing Corporation.
CMHC Insurance Premiums: The amount you pay to CMHC for insuring your mortgage. It’s calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.
Commitment Letter (or Mortgage Approval): Letter from the bank that approves the advancement of a specified amount of mortgage funds under specified conditions.
Conditional offer: An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
Contractor: A person responsible for overall construction of a home, including buying, scheduling, workmanship, and management of subcontractors and suppliers.
Conventional mortgage: A mortgage loan up to a maximum of 80% of the lending value of the property.
Counter offer: If your original offer to the vendor is not accepted, the vendor may counter offer. This means that the vendor has amended something from your original offer, such as the price or closing date.
Curb appeal: How attractive the home looks from the street.
Deed: A legal document that is signed by both vendor and purchaser, transferring ownership. This document is registered as evidence of ownership.
Deposit: Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer/notary until the sale is closed and then it is paid to the vendor.
Depreciation: The decrease in value of your house because it’s now worth less than when you bought it.
Down payment: The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.
Easement: This is where someone else has the right for access to or over another person’s land for a specific purpose, such as a driveway or public utilities.
Equity: The difference between the price for which a home could be sold and the total debts registered against it. Equity usually increases as the mortgage is reduced through regular payments. Market values and improvements to the property may also affect equity.
Foreclosure: The legal process where the lender takes possession of your property and sells it to cover the debts you have failed to pay off. When you default on a loan and the lender feels that you are unable to make payments, you may lose your home to foreclosure.
Free hold: Ownership of land and buildings (house) by one person (or two, such as joint ownership by spouses). Detached and semi-detached homes, duplexes and townhouses are usually owned freehold. Freehold owners can do what they want with their property — up to a point. They must obey municipal bylaws, subdivision agreements, building codes and federal and provincial laws, such as those protecting the
Home inspector: A person who visually inspects a home to tell you if something is not working properly, or is unsafe. He or she will also tell you if repairs are needed, and maybe even where there were problems in the past.
Home warranty: (New Home Warranty Program) A guarantee that if something covered under the warranty needs to be repaired it will be. If the builder doesn’t repair it, the repair will be made by the organization that provided the warranty.
Household budget: A plan that allocates income for household expenses.
Land registration: A legal document that records the ownership of a property and land.
Land survey: (Survey or Certificate of Location): A document that shows property boundaries and measurements specifies the location of buildings on the property and states easements or encroachments.
Land surveyor: A professional who can survey a property in order to provide a certificate of location.
Lawyer: A legal advisor who assists people by representing them on legal matters.
Lender: A mortgage lender is an institution (bank, trust company, credit union, etc.) that lends money for a mortgage.
Lien: A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials
but has not been paid.
Mortgage: A mortgage is a security for a loan on the property you own. It is repaid in regular mortgage payments, which are usually blended payments. This means that the payment includes the principal (amount borrowed) plus the interest (the charge for borrowing money). The payment may also include a portion of the property taxes.
Mortgage approval: Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.
Mortgage broker: The job of the mortgage broker is to find you a lender with the terms and rates that will best suit you.
MLS — Multiple Listing Service: A multiple listing service is a real estate agents’ cooperative service that contains descriptions of most of the homes that are for sale. Real estate agents use this computer-based service to keep up with properties they are listing for sale in their area.
New Home Warranty Program: Coverage in the event that an item under the warranty needs to be repaired. If the builder doesn’t repair it, the repair will be made by the organization that provided the warranty.
Notary: In Quebec a notary handles the legal matters related to home buying.
Offer to purchase: A written contract setting out the terms under which the buyer agrees to buy the home. If the Offer to Purchase is accepted by the seller, it forms a legally binding contract that binds the people who signed to certain terms and conditions.
Open-house: A period of time during which a house or apartment for sale or rent is held open for public viewing.
Operating Costs: The expenses that a homeowner has each month to operate a home. These include property taxes, property insurance, utilities, telephone and communications charges, maintenance and repairs.
Property Insurance: Insurance that you buy for the building(s) on the land you own. This insurance should be high enough to pay for the building to be re-built if it is destroyed by fire or other hazards listed in the policy.
Property taxes: Taxes charged by the municipality where the home is located based on the value of the home.
Real estate: Property consisting of houses and land.
Realtor or real estate agent: A person who acts as an intermediary between the seller and the buyer of a property.
Survey or Certificate of Location: A document that shows property boundaries and measurements specifies the location of buildings on the property and states easements or encroachments.
Sustainable neighbourhood: Neighbourhood that meets residents needs while protecting the environment.
Title: A freehold title gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title gives the holder the right to use and occupy the land and building for a defined period.
Title Insurance: Insurance against loss or damage caused by a matter affecting the title to immoveable property, in particular by a defect in the title or by the existence of a lien, encumbrance or servitude.
Vendor: The seller of a property.
Warranty (New Home Warranty Program): Coverage in the event that an item under the warranty needs to be repaired. If the builder doesn’t repair it, the repair will be made by the organization that provided the warranty. All provinces have New Home Warranty programs for newly built homes. However, there are currently no such programs in the Territories.
This list can go on and on. So if there is anything you would like to know and you don’t see it here, send me an email to [email protected] or call me at 250-756-2112.