Glossary of terms

AMORTIZATION PERIOD: The actual number of years it will take to pay back your mortgage loan.

APPRAISED VALUE: An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

ASSUMABILITY: Allows the buyer to take over the seller’s mortgage on the property.

CLOSED MORTGAGE: A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.

CONDOMINIUM FEE: A common payment among owners which is allocated to pay expenses.

CONVENTIONAL MORTGAGE: A mortgage loan issued for up to 75% of the property’s appraised value or purchase price, whichever is less.

DOWN PAYMENT: The buyer’s cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.

EQUITY: The difference between the home’s selling value and the debts against it.

HIGH-RATIO MORTGAGE: A mortgage that exceeds 75% of the home’s appraised value. These mortgages must be insured for payment.

INTEREST RATE: The value charged by the lender for the use of the lender’s money. Expressed as a percentage.