Heritage Group Ltd.,
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Real Estate Broker
(905) 727.0075 or 1-800.463.0002 Ext.2216
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Real Estate Terms
The following glossary, an excerpt from the Ontario Real Estate Association’s “How to Buy Your Home” book (that I provide FREE to my clients), provides definitions of some of the most common real estate terms you are likely to come across.

Amortization:  The number of years it takes to repay the entire amount of a mortgage.
Appraisal: An estimate of a property's market value, used by lenders in determining the amount of the mortgage.
Appreciation: The increase of a property’s value over time.
Assessment:  The value of a property set by the local municipality, for the purposes of calculating property tax.
Assumable Mortgage:  A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility   for making the mortgage payments.
Blended Mortgage: A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates.
Blended Mortgage Payments:  Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases, although the total payment doesn't change. (Exception - see variable rate mortgages.)
Bridge Financing: Money borrowed against a homeowner’s equity in a property, usually for a short term, to help finance the purchase of another property or make improvements to a property being sold.
Buy-down:  When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender or to the purchaser, in one lump sum or monthly instalments.
Closing:  The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.
Conventional Mortgage:  A first mortgage issued for up to 75 per cent of the property's appraised value or purchase price, whichever is lower.
Counteroffer: One party's written response to the other party's offer during purchase negotiations between buyer and seller.
Debt Service Ratio:  The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, when applicable).
Deed:  A legal document that conveys (transfers) ownership of a property to the buyer.
Easement:  A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.
Encroachment: An intrusion onto an adjoining property -- such as a neighbour's fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property.
Equity:  The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's "stake" in a property.
Foreclosure:  A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligations.
High-Ratio Mortgage: A mortgage for more than 75 per cent of a property's appraised value or purchase price.
Land Transfer Tax:  Payment to the provincial government for transferring property from the seller to the buyer.
Lien: Any legal claim against a property, filed to ensure payment of a debt.
Mortgagee:  The lender.
Mortgage Insurance: Government-backed or private-backed insurance protecting the lender against the borrower's default on high-ratio (and other types) of mortgages.
Mortgagor:  The borrower.
Multiple Listing Service (MLS): A system for relaying information to REALTORS about properties for sale.
Prepayment Privilege:  A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.
Principal:  The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.
Status Certificate:  A written statement of a condominium unit's current financial and legal status.
Variable-Rate Mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.
Vendor-Take-Back Mortgage:  When sellers use their equity in a property to provide some or all of the mortgage financing in order to sell the property.
Zoning Regulations: Strict guidelines set by municipal governments regulating how a property may or may not be used.

What is a Short Sale?
Short Sales are becoming more and more popular throughout the United States.  A Short Sale is a series of actions taken to sell a property “HOME” for less than the amount owed on a mortgage if/when the lender agrees to reduce the loan balance.   According to “The Citizen, Aubrun, New York (Sunday June 17th, 2012) newspaper” in January 2012 alone there were 35,000 short sales in the United States.

Why do owners want to sell this way?  Short sales are less traumatic and damaging than a foreclosure. A foreclosure will stay on your credit report for 10 years.  The disadvantages of a Short Sale are the following;  1. your credit rating will be negatively affected  2. you will be forced to move  3. you may still be obligated to pay back some or all of the loan balance.   

A Short Sale can take up to a year but there is new legislation trying to speed up the process.  

If you plan to proceed with a Short Sale do your research.  Insure you have all your finances in order.  Create a hardship letter.   Only speak to professionals who have experience and are designated with Short Sales for your own protection.    Always create an alternative plan just in case the Short Sales does not firm up.  Speak to your solicitor to ensure you comply with any laws in your province / state to protect you against the lender filing a deficiency judgement against you.  

  • There are a number of First Time Buyer Programs / Incentives available depending on your location and the mortgage source you use.
  • How much will my closing cost be?  As your Realtor, I can give you specific information on the items that are customarily paid for by buyers and/or sellers within your area.
  • Outdoor lighting does wonders in the evening hours when many prospective home buyers do their drive-by of potential properties.
  • Do you really require a Realtor to buy a property?  Without a Realtor you may be missing valuable representation of your interest.  Give me a call to represent your best interest when buying a property.
  • Make your house smell nice.  Open windows set out flowers, burn candles or bake.  Add some cedar chips or hangers in your closet.  Place fresh flowers on the dining room table.
  • How much house should I buy?  It depends on your income, your debt load and the type of mortgage for which you are applying.
  • Un-clutter your home.  Remove almost everything from the countertops, tables and bookshelves.  Discard or store items not being used.
  • Make windows sparkle, inside and out.  Clean drapes and window coverings.  Open the drapes in the daylight and use soft lights in the evening.
  • Curb appeal is an important part of the home selling process.  Keep the lawn cut and trimmed and the bushes pruned.  Call me for lawn and garden ideas.
  • A house may suit you in terms of size, location, number of rooms and price, but remember to consider other factors such as repairs, plumbing and wiring.  Call me for details.
  • Consider having your home professionally clean for that “ready to move in” condition.  I can recommend a professional.
  • A home inspection give you, the buyer, peace of mind and can also provide you with maintenance and repair tips.  Call me for help in selecting the right home inspector.
  • When selling your home, its important to set a competitive price.  For a comparative market analysis of properties within your area, give me a call.

® Copyright 2003 – 2024 Eric McCartney All rights reserved.
* Century 21 Heritage Group Ltd., Brokerage is independently owned and operated.
® and TM Registered Trademarks of Century 21 Real Estate LLC Used Under License.
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