AIDA - An ad-writing acronym used to design ads; the letters stand for Attention, Interest, Desire, and Action.

Adjustment Date - This is the date that is regarded as the official beginning of a mortgage.

Advertising - The use of sales messages communicated through the mass media, usually on a repeated basis, to potential customers.

Amortization Period - A time of arrangement for paying off a mortgage by equal installments or periodic constant payments. Repayments of principal and interest in "blended" amounts. Fully amortized means complete repayment without a "balloon" payment at the end of the amortization period. Usually 25 or 35 years (see "Term").

Amortization Schedule - The amortization schedule shows monthly installments of principal and interest and how much of the payment is allocated to each. It also shows the unpaid principal balance.

Amortization - The gradual retirement of a debt by means of partial payments of the principal at regular intervals; also used to refer to the arrangements for paying off a mortgage by installments or period payments to a sinking fund. The amortization period is a time of arrangement for paying off a mortgage by equal installments or periodic constant payments.

Appraisal - An estimate of value, market value, or value for loan purposes, or value as described by the appraiser of an adequately described property as of a specific date.

Appraised Value - The process of property valuation and the appraisal process may be summarized as a professional appraiser (AACI) assembling various sales, comparisons, market trends and other salient factors in regards to a subject property, forming an opinion of value and expressing same.

Assessed Value - A dollar amount assigned to taxable property, by the assessor, for the purpose of allocating the burden of taxation.

Averaging - Sometimes called "leveling," this is the calculation made to'" determine the interest when a second mortgage is taken out; averaging determines the average interest rate of the two mortgages.

Balance - The remainder or the part left unpaid on the mortgage after a payment or payments have been made.

Blended Payments - The method of repayment where periodic payments of principal and interest are made so that the payments remain constant in amount, although the portions attributed to principal and interest will vary with each payment as the time elapses in the amortization period.

Bonus - Generally a fee to encourage a mortgagee to take the mortgage. May also be the payment of extra funds, expressed in so many months of interest on prepayment. Also may be an extra monetary inducement to the lender to put out money in mortgages. This will increase the yield of the investment.

Bridge or Interim Loans (Mortgages) - Interim loans are used to bridge the gap between the initial construction and the first advances available under the terms of the construction mortgage. Interim loans can also be used for financing between phases of construction, until the construction is completed to a stage where by the mortgagee lender will advance funds to pay for the phase of the construction. Usually, when the mortgage is advanced, the proceeds of the mortgage are used to return the bridge or interim financing. Bridge or interim financing is also used when a sale closes after a purchaser takes possession on a purchase.

Builder's Loan - A builder's loan is granted to an individual or a builder to build a house or project. Usually, there is a mortgage arranged which will be funded (in four phases) as the house or project progresses. When the house or project is complete, the term and amortization of the mortgage begins and the interest rate is established at this time. This type of a loan is granted to an individual the lender normally requires that the mortgagee advance up to 25% of the total cost of the project first, before the loan is advanced. Quite often the first 25% is required to prepare the land. This will allow for the loan to build and the subsequent mortgage to be registered in the owner's name.

Charge - The name given to a mortgage document when title is registered under the Land Titles Act.

Chattels - Moveable or unattached possessions; another name for personal property (generally items that may be removed without injury to the freehold estate).

Chronological (or True) Age - This is the actual age of the improvements on a property.

Closed Mortgage - The restriction or denial of repayment rights until the maturity of the mortgage.

CMHC - Canada Mortgage and Housing Corporation is a Crown Corporation which administers the National Housing Act and provides mortgage insurance to lenders to grant high ratio loans.

Collateral Security - An additional form of security, pledged to reduce the risk to a mortgagee.

Compound Interest - Interest charged not only to the principal sum but also on interest amounts charged in a preceding period;

Conventional Mortgage - A first mortgage, in which the amount of the loan does not usually exceed 75% of the appraised lending value of the property.

Conveyance - The transfer of the ownership of property from one person to another; or the written instrument to effect such a transfer. Conveyance could include a mortgage, charge, and lease, etc.

Covenant - An agreement creating an obligation, contained in a deed, mortgage or other instrument. It may be positive, stipulating the performance of some act. It may be negative or restrictive, forbidding the commission of some act.

Deed - An instrument in writing, duly executed and delivered. that conveys title or an interest in real property.

Deflation - A decline in the general level of prices; or, an increase in the value of money; or, in economics, an increase in the amount of money in circulation.

Disclosure Statement - A statement contained in a consumer credit transaction in order to disclose complete credit terms and interest rates.

Discount - Reduction in product price or cost of a service. A discount is the difference between the nominal face value of a loan and actual cash received by the borrower because interest is paid at the beginning of a loan based on the sum to be repaid at maturity.

Discounted Loan - A loan offered for sale that offers a discount. Easement " A right or benefit given to someone to use the lands of another; common forms of easements are sewage and gas lines and mutual access areas. Effective Age - This is the age a property appears to be; for example, a property that has been renovated and kept up will appear to be much newer than its true age.

Effective Interest Rate - The actual interest rate on investment where a debt or loan was bought at a discount or at a premium. Also known as "true cost."

Encumbrance - Outstanding claim or lien recorded against property, or any legal right to the use of the property by another person who is not the owner.

Equity - The remaining interest or equity an owner has in real property excluding the amount of any mortgages.

First Mortgage - A first charge on property which ranks ahead of any other subsequent mortgages or encumbrances. In the event of foreclosure, the first mortgagee has priority and must be fully satisfied before any subsequent claims.

GE Mortgage Insurance Canada - GE Mortgage Insurance Canada is a private corporation which administers the National Housing Act and provides mortgage insurance to lenders to grant high ratio loans.

General Creditor - A creditor who has no security other than the promise of the debtor.

Gross Debt Service Ratio (GDSR) - The ratio of the borrowers annual income relative to annual mortgage payments, property taxes, condo fees (if applicable) and allowance for heat (on CMHC loans); most lenders prefer this to be not more than 32%.

High-Ratio Mortgage - Usually a mortgage that exceeds 75% of the value of the property and usually CMHC insured.

Highest and Best Use - This refers to the use of land that would most likely produce the greatest net return over a given time. For example, Seller sells house. Closing date May 31, 2010. Seller subsequently purchases a new house. Closing date and possession of March 29, 2010. Purchaser has to arrange interim financing to close on the new purchase as they do not have funds from previous home. Funds arc usually assigned from the previous home to proceeds of interim financing as collateral for the loan.

Inflation - A general increase in consumer prices, most often expressed as an annual percentage rate.

Interest - The rate of charge (or cost) of borrowing money. The price paid to rent money.

Loan-to-Value Ratio (LTV) - The ratio of the amount of the mortgage relative to the value of property.

Market Value - The highest price estimated in terms of money which a property will bring if exposed for sale in the open market, allowing a reasonable time to find a purchaser who buys with the knowledge of the uses to which it is adapted and for which it can be used.

Marketing - The process leading to the transfer of goods, products and services. Marketing comprises the strategies and activities that take place before the actual selling of goods or services. Those activities may include market research, positioning of your product or service, publicity, and advertising and sales promotion.

Maturity Date - The final day in the term of a mortgage; called the "term due date."

Mortgage Banker - A mortgage banker by legislation is a chartered bank authorized under the Bank Act of Canada to take deposits from individuals for placement in mortgages, by pooling these deposits and funding mortgages. The security for the depositor is an interest in the mortgage through the bank. A mortgage broker cannot by law pool money from individual depositors and fund mortgages, unless licensed to do so under other legislation.

Mortgage Agent - The mortgage agent is an intermediary who matches the needs of a borrower with the requirements of a lender on behalf of a brokerage. You are the go-between. You discover the needs of a borrower and match these with the requirements of a lender.

Mortgage Underwriting - This is a procedure followed by a lender in determining whether to grant a loan. In a residential mortgage, factors such as the mortgagor's income and credit is of prime importance.

Mortgagee - The one to whom property is encumbered; the lender; the holder of the mortgage.

Mortgagor - The one who makes the payments; the owner of the property; the borrower.

National Housing Act Mortgage - A first mortgage, originated by an approved lender, granted under the terms of, and insured under, the National Housing Act 1954.

NHA - The National Housing Act (1954) provides for insuring loans made by approved lenders and for direct mortgage lending under a variety of programs by Canada Mortgage and Housing Corporation to improve housing conditions in Canada.

Nominal Rate - In compounding interest, the interest interest rate, or quoted rate, that theoretically stays the same. Often distinguished from the "effective rate."

Objective Value - A value supported by objective and factual market data. Subjective value is not supported by such data.

Open Mortgage - A mortgage that can be repaid prior to the term due date.

Participating Mortgage - The lender receives additional consideration to the interest rate charged by participating in revenue, cash flow or profits from the property. Participating mortgages are most popular in short term situations or other circumstances where unusual risk occurs.

Personal Property - Personal property consists of moveable items that really do not form a part of the real estate as permanent fixtures.

Positioning - Techniques of influencing the way a product or service is perceived by the customer, through effective using of advertising and selling techniques.

Prepayment Clause - A clause inserted in a mortgage which gives the mortgagor the privilege of paying off all or part of the mortgage debt ahead of the maturity date.

Prepayment Penalty - The sum of money (the amount of extra interest as set out in the mortgage document) a mortgagee may require from a mortgagor to exercise the option in a mortgage to prepay any outstanding principal, in advance of the expiry of the term.

Principal - The amount of money borrowed. The amount owing at any point during the amortization period. Property Property includes the physical thing and the rights which an owner enjoys from it. Property therefore, is ownership, and it has value in exchange, and forms part of the wealth of a country.

Qualifying - The process of interviewing the borrower and/or lender to ensure they respectfully have the financial ability and inclination to undertake the mortgage.

Real Estate - Real estate is simply defined as land, buildings, and other fixed improvements. It also includes items that are not moveable such as trees and so on.

Real Property - The term refers to land, buildings and so on. Further use of the terms "property" and "land" will be understood to mean real property.

Secured Creditor - A creditor who has one or more forms of security, which gives a prior claim on the security in case of default.

Subjective Value - That value which lies in the minds of an individual and comes from what the individual believes to be the satisfaction that the property provides; subjective value recognizes cost as only one of the elements that establishes the value of a property.

Supply and Demand - The assumption that competitive pricing in the market is determined by an interaction between the goods and services available (supply) and the consumers' willingness to buy those goods and services (demand).

Term (of Loan) - The "actual" length of time for which the money is borrowed. The term can be anywhere from one month to 25 years. At the end of each term the loan may be renegotiated as to the interest rate, payments, and the amortization period. Subsequently, the loan can be renewed or repaid. There are many irregular terms usually expressed in months.

Term Due Date - Also called the "maturity date," when the balance of the mortgage is due and payable.

Title - The means of evidence by which the owner of land has lawful ownership.

Title Search - An examination of the title(s) to real property as indicated in the public records to determine the ownership of the subject property. It will also indicate the existence of any encumbrances, easements or rights of way.

Torrens System - The system of title recording provided by Alberta Provincial law; it is a system for registering land title, showing the state of the title, including ownership and encumbrances, without the necessity of an additional search of the public records. Also known as the "Land Titles System."

Total Debt Service Ratio (TDSR) - The ratio of total annual income relative to a borrower's total payments, GDS payments plus other debts such as bank loans, finance company loans, credit card payments, car payments, etc.; most lenders prefer this not to exceed 40%.

Transfer - To convey from one person to another.

Transfer of Charge - Assignment of a mortgage under the Land Titles System.

Value - A relationship between people and things wanted, synonymous with worth, desirability, utility.

Seller Take-Back Mortgage - A mortgage which the seller of the property takes back or carries for the buyer as part of the purchase price for that property.

Wrap Mortgage - A special arrangement by which one document encompasses one or even more, already existing mortgages registered on the same property. The mortgagee is responsible for making these payments, while the mortgagor makes just one payment to the mortgagee.

Yield - The return on an investment expressed as a percentage per annum of the amount invested

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