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MORTGAGE TERMINOLOGY

Accelerated Payments

A schedule of payments that allows you to pay more towards the principal, reducing both the amount of total interest you pay over the life of the mortgage, and the duration of the mortgage. Payments can be weekly or bi-weekly. Weekly payments are one quarter of the monthly payment; bi-weekly payments are one half of the monthly payment.

If the monthly payment is $2,000, your total payments will be $24,000 for the year. On an accelerated weekly schedule, you will pay $500 per week; one quarter of the monthly payment of $2000, for a total of $26,000. The result is a further $2,000 applied to the mortgage principal.

Agreement of Purchase and Sale (An Offer)

An agreement that offers a certain price for a home. The offer may be firm, with no conditions attached, or conditional, in which case certain conditions must be fulfilled before the deal can be closed. This is a legal document.

Typical conditions might include: satisfactory home inspection, water quality / quantity test, municipal permission to modify the property, such as adding a garage or extension, and the sale of the purchaser’s home. It is usual to specify a time limit in which the specified conditions must be satisfied.

Amortization Period

The time taken to repay the mortgage in full based on the payment amount, payment frequency and current interest rate. Mortgage amortization can vary from 1 to 35 years. The longer the period, the less each payment will be but the more interest you will pay in total.

Anti Money-Laundering Legislation
Federal Anti Money-Laundering Legislation requires the lender to ask you what your intended use of funds is, and whether the financial transaction is on behalf of a third party.

Annual Family Income Before Tax

This is the total gross earnings, (before deductions), by all household applicants for the mortgage.

On salary: your salary income is your gross annual income before taxes not including bonuses. (Although bonuses are sometimes included, depending on the lender, on an exception basis, and averaged over a two or three year period.)

Commission based, or self-employed: base your income on an average of your last three years Notice of Assessments from Canada Revenue Agency.

Annual Property Taxes

Property taxes are dependant on each city's tax rate and the assessed property value. Taxes are generally found on the MLS (Multiple Listing Service) listing, but you should verify this amount with the municipality in which the property is located.

Appraised Value (Appraisal Value)

This is the market value of your home, as determined by a certified appraiser. It should be noted however, that two different values are possible: One is generally ordered, or required, by the lender, and is considered as being ‘for mortgage purposes,’ while the second is generally ordered by the property owner and is considered as being an appraisal ‘for investment or resale purposes.’

The latter will generally be higher than the former, and the lender will typically use the former in determining the amount of your mortgage.

Annual Percentage Rate (APR)

The interest rate charged on your loan on an annual basis. Note that in the U.S. this term may be used to include other applicable costs required by the lender, such as appraisal fees.

Assets

Goods of value you own: investments, property, vehicles, cash and other assets. Generally not including: furniture, jewelry, or antiques.

Assumable Mortgage

A mortgage that can be taken over by another person buying your home. Most mortgages are assumable as long as the person taking over the loan meets the credit requirements of the lender.

Depending on the variation in mortgage rates, it may be quite attractive to a potential buyer of your home to assume the existing mortgage if it is at a lower rate than that available to the buyer at the time of purchase.

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