|
General Information
Buying/Selling Homes : Glossary of Terms
Amortization: Paying off a debt, such
as a mortgage, by installments. The conventional amortization period
for a mortgage is anywhere between 15 and 25 years. The shorter
the amortization period, the less interest you have to pay.
Appraisal: An estimate of a property's
value.
Asking (list) price:The price placed
on the property for sale by the seller. Blended payments: Payments
consisting of principal and interest components, paid during the
amortization period of a mortgage.
Broker: A person licensed by the provincial
or territorial government to trade in real estate. Real estate brokers
may form companies or offices which appoint sales representatives
to provide services to the seller or buyer, or they may provide
the same services themselves. In parts of Canada, brokers are referred
to as agents.
Buyer's Agent (also known as "Buyer's Broker"
or "Purchaser's Agent"): A person or firm representing the
buyer. A Buyer's Agent's primary allegiance is to the buyer. The
buyer is the Buyer Agent's client.
Buyer Brokerage Agreement: A written
agreement between the buyer and the buyer's agent, outlining the
agency relationship between the two parties and the manner in which
the buyer's agent will be compensated. In some provinces, a buyer
agency relationship arises automatically, without a written agreement
establishing the relationship.
Client: The person being represented
by an agent. The agent owes the client the duties of utmost care,
integrity, confidentiality and loyalty.
Closing: The day the legal title to
the property changes hands.
CMHC: Canada Mortgage and Housing Corporation.
A Crown corporation providing information services and mortgage
loan insurance.
Commission: An amount agreed to by the
seller and the real estate broker/agent and stated in the listing
agreement. It is payable to the broker/agent on closing and shared,
if applicable, among those salespeople involved in the sale.
CREA: The Canadian Real Estate Association.
A national association representing the real estate industry on
federal public policy matters, providing member services and education.
CREA promotes adherence to a strict Code of Ethics and Standards
of Business Practice.
Customer: A person who receives valuable
information and assistance from a real estate broker or salesperson,
but is not represented by that individual.
Debt-Service Ratio: The measurement
of debt payments to gross household income which may include, in
addition to the main wage earner's salary, salaries of other wage
earners, commissions, bonuses, overtime, etc.
Dual Agent: A real estate broker or
salesperson who acts as agent for both the seller and the buyer
in the same transaction. Both buyer and seller are the agent's clients.
Equity:The difference between the value
of the property and the amount owing (if any) on the mortgage.
Financial Institutions: Banks, credit
unions, insurance or trust companies.
GE Capital Mortgage Insurance Company:
GE Capital Mortgage Insurance Company is the only private sector
source of mortgage insurance to lenders in Canada.
Gross Debt Service:The amount of money
needed to pay principal, interest, taxes and sometimes, energy costs.
If the dwelling unit is a condominium, all or a portion of common
fees are included, depending on what expenses are covered.
Gross Debt Service Ratio: Gross debt
service divided by household income. A rule of thumb is that GDS
should not exceed 30%. It is also referred to as PIT (Principal,
Interest and Taxes) over income. Sometimes energy costs are added
to the formula, producing PITE, which moves the rule of thumb GDS
to 32%.
Listing Agreement:The legal agreement
between the listing broker and the seller, setting out the services
to be rendered, describing the property for sale and stating the
terms of payment. A commission is generally payable to the broker
upon closing.
MLS®, Multiple Listing Service®:Trademarks
owned by The Canadian Real Estate Association. They are used in
conjunction with a real estate database service, operated by local
real estate boards, under which properties may be listed, purchased
or sold.
MLS®Online™: Carries MLS® property advertisements
and consumer-related information supplied by individual real estate
boards and associations across Canada.
Mortgage: A contract providing security
for the repayment of a loan, registered against the property, with
stated rights and remedies in the event of default. Lenders consider
both the property (security) and the financial worth of the borrower
(covenant) in deciding on a mortgage loan.
Mortgage Broker: A person or company
having contacts with financial institutions or individuals wishing
to invest in mortgages. The mortgagor pays the broker a fee for
arranging the mortgage. Appraisal and legal services may or may
not be included in the fee.
Mortgage Insurer: In Canada, high-ratio
mortgages (those representing greater than 75% of the property value)
must be insured against default by either CMHC or private insurers.
The borrower must arrange and pay for the insurance, which protects
the lender against default.
Mortgagee: The person or financial institution
lending the money, secured by a mortgage.
Mortgagor: The property owner borrowing
the money, secured by a mortgage.
Offer of Purchase and Sale: The document
through which the prospective buyer sets out the price and conditions
under which he or she will buy the property.
Real Estate Board: A non-profit organization
representing local real estate brokers/agents, salespeople, which
provides services to its members and maintains and operates a MLS®
system in the community.
REALTOR: Trademark identifying real
estate professionals in Canada who are members of The Canadian Real
Estate Association, and as such, subscribe to a high standard of
professional service and to a strict Code of Ethics.
Term: The actual life of a mortgage
contract-- from six months to ten years -- at the end of which the
mortgage becomes due and payable unless the lender renews the mortgage
for another term (See Amortization).
Seller's Agent: The Seller's Agent represents
the seller -- either as a Listing Agent under the listing agreement
with the seller or by cooperating as a Sub-Agent, typically through
the MLS® system. In dealing with prospective buyers -- customers--
the Seller's Agent can provide a variety of information and services
to assist the buyer in his/her decision-making. The Seller's Agent
does not represent the buyer.
Variable-rate Mortgage: A mortgage in
which payments are fixed, but the interest rate moves in response
to trends. If interest rates go up, a larger portion of your payment
goes to the interest; if rates go down, more goes to cover the principal.
©Copyright
2001- 2002. GTAHouse.com.
|
