Muskoka & Parry Sound Real Estate
Glossary of Terms

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Acceptance: An offer is considered accepted by the Seller or Buyer only when both parties have a WRITTEN agreement signed by all parties. An offer in Sign-back is not an accepted offer.

Additional Principal Payment: funds paid to the lender over and above the established payments  used directly against the loan principal to shorten the length of the mortgage.

Adjustable-Rate Mortgage: a mortgage that doesn't have a fixed interest rate and changes over time. During the duration of the mortgage the interest rate can change and is usually tied to the Bank of Canada prime rate. Sometimes these type of morgages are called variable-rate mortgages.

Adjustment Date: the actual date that the interest rate is changed for an Adjustable Rate Mortgage.

Affidavit: a signed, sworn statement made by an individual regarding the truth of information he or she has provided.

Amenity: This refers to a properties "extras" such as proximity to schools, pools etc. Often real estate listings have a list of amenities to help sell homes and cottages.

Amortization: This is a term used in accounting that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time.

Annual Percentage Rate (APR): a measure of the cost of credit, usually as a yearly rate. It includes interest as well as other charges. 

Application: one of the first steps for getting a loan or mortgage approval. Every lender has their own application process but filling out the forms accurately and completely is essential.

Application Fee: a fee charged by some banks and lenders to process a loan application. Not all lenders charge this fee so it's a good idea to shop around.

Appraisal: a document from a real estate professional that gives an estimate of a property's fair market value. There are several methods that can be used to determine value but the most comman is based on the sales of comparable properties. Sometimes appraisals can be required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraisal Fee: fee charged by an appraiser to estimate the market value of a property. Some banks absorb these fees or blend them with other fees.

Appraised Value: the estimate of the current market value of a property by an appraiser.

Appraiser: a qualified real estate professional who uses their experience and knowledge to prepare the appraisal estimate.

Appreciation: an increase in property value over time.

Arbitration: a legal method of resolving a dispute without going to court.

As-is Condition: the purchase or sale of a property in its existing condition without repairs.

Asking Price: the amount a Seller lists his or her property for.

Assessed Value: the value of a property that MPAC (Ontario) has determined.

Assessments: the method of placing value on an asset for taxation purposes. In Ontario this is done through MPAC, the Municipal Property Asessment Corporation.

Assets: an item with measurable value. In real estate terms this can apply to many things including land, buildings, equipment, good will etc.

Assumable Mortgage: when a property changes owners, the seller may be able to transfer the mortgage to the purchaser. This means the mortgage is assumable. Lenders can require a credit review of the purchaser and may charge a fee for this. Not all mortgages are assumable.

Assumption Clause: a provision in the terms of a loan that allows the purchaser to take legal responsibility for the mortgage from the seller.

Automated Underwriting: loan processing completed through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system removes the possibility of personal bias against the buyer.

Average Price: an average price is a representative measure of a range of prices that is calculated by taking the sum of the values and dividing it by the number of prices 

                                                                                        

Bankruptcy: a  law whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this can happen when someone owes more than they have the ability to repay.

Biweekly Payment Mortgage: a mortgage paid twice a month instead of once a month which can reduce the total interest to be paid during the duration of the mortgage.

Borrower: a individual who has been approved for a loan or mortgage and and is then responsible to repay it.

Bridge Loan: a short-term loan that can sometimes be arranged to "bridge" the time a borrower requires funds and is coming into funds.

Broker: in real estate this is a licensed professional that charges a fee to serve as the mediator between the buyer and seller. Mortgage brokers on the other hand are individuals in the business of arranging funding for puchasers, but who do not themselves loan the money. 

Building Code: there is both a provincial building code and city / town / municipal codes which are based on agreed upon safety standards within a specific area.  The code determines the design, construction, and materials used in building. 

Capital Gain: the profit one can earn based on the difference of the original purchase price and the total sale price less any additional costs.

Capital Improvements: improvements to property that will enhance its overall value or will increase the useful lifespan.

Capital or Cash Reserves: an individual or corporations savings, investments, or assets.

Certificate of Title: a document provided by a qualified source, such as a title company, that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Clear Title: a property title that has no defects, liens or encumbrances. 

Closing: the last stage in the buying process where the title is transferred from the seller to the buyer. At the closing the seller receives payment for the property which is also called the settlement.

Closing Costs: fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a Buyer's closing costs is 2 to 4 percent of the purchase price of the home. A common estimate for Seller's closing costs is 3 to 9 percent.

Cloud On The Title: any condition which affects the clear title to real property.

Co-Borrower: an additional person that is responsible for loan repayment and is listed on the title.

Co-Signer: a person that signs a credit application with another person, agreeing to be equally responsible for the repayment of the loan.

Collateral: security in the form of money or property pledged for the payment of a loan. For example, on a home loan, the home is the collateral and can be taken away from the borrower if mortgage payments are not made.

Collection Account: an unpaid debt referred to a collection agency to collect on the bad debt. This type of account is reported to the credit bureau and will show on the borrower's credit report.

Commission: an amount, usually a percentage of the property sales price that is collected by a real estate professional as a fee for negotiating the transaction. Traditionally the home seller pays the commission. The amount of commission is determined by the real estate professional and the seller and can be as much as 6% of the sales price.

Comparative Market Analysis (COMPS): a property evaluation that determines property value by comparing similar properties sold within the last year.

Condominium: a type of property ownership in which individuals purchase and own a unit in a multi-unit complex. The owners also shares financial responsibility for common areas as well as the overall property costs.

Consideration: an item of value given in exchange for a promise or act.

Construction Loan: a short-term, to finance the cost of building a new home. The lender pays the builder based on milestones accomplished during the building process. These type of mortgages can be very challanging and frustrating for both buider and home owner.

Contingency: a clause in a purchase contract outlining certin conditions that must be fulfilled before the contract is executed. Both, buyer or seller may include contingencies in a contract, but both parties must accept the terms.

Counter Offer: a rejection to all or part of an offer to purchase. A counter offer can be done by buyer or seller and is part of the regular negotiations to reach an acceptable sales contract for both parties..

Covenants: legally enforceable terms that govern the use of property. These terms are transferred with the property deed. Discriminatory covenants are illegal and unenforceable. Also known as a condition, restriction, deed restriction or restrictive covenant.

Credit Counseling: education on how to improve bad credit and how to avoid having more debt than can be repaid.

Credit Grantor: the lender that provides a loan or credit.

Credit History: a record of an individual that lists all debts and the payment history for each. The report that is generated from the history is called a credit report. Lenders use this information to gauge a potential borrower's ability to repay a loan.

Credit Loss Ratio: the ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit Related Expenses: foreclosed property expenses plus the provision for losses.

Credit Related Losses: foreclosed property expenses combined with charge-offs.

Credit Repair Companies: Private, for-profit businesses that claim to offer consumers credit and debt repayment difficulties assistance with their credit problems and a bad credit report.

Credit Report: In Canada the two most common reporting companies are Equifax and Transunion. This report is generated by a credit bureau and can contain the borrower's credit history. Banks use this information to help determine risk.

Credit Risk: a term used to describe the possibility of default on a loan by a borrower.

Credit Score: a credit score calculated by using a person's credit report to determine the likelihood of a loan being repaid on time. Scores range from about 360 - 840: a lower score meaning a person is a higher risk, while a higher score means that there is less risk.

Credit Union: an alternative to traditional banks, credit unions are non-profit financial institutions owned by the members. In the Muskoka area, the Kawartha Credit Union is very popular.

Creditor: the lending institution providing a loan or credit.

Creditworthiness: the way a lender can measure the ability of a person to qualify and repay a loan.

Debtor: The person or entity that borrows money. 

Debt-to-Income Ratio: a comparison or ratio between gross income to housing and non-housing expenses. 

Deductible: the amount of cash payment that is made by the insured to cover a portion of a damage or loss. 

Deed: a document that legally transfers ownership of property from one person to another. The deed is recorded on public record with the property description and the owner's signature. Also known as the title.

Default: the inability to make timely monthly mortgage payments or otherwise comply with mortgage terms. A loan is considered in default when payment has not been paid after 60 to 90 days. Once in default the lender can exercise legal rights defined in the contract to begin foreclosure proceedings

Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement.

Deposit : money put down by a potential buyer to show that they are serious about purchasing the property. the amount can vary widely depending on several factors including purchase price.

Depreciation: a decrease in the value of property due to changes in market conditions, wear and tear or other factors.

Disclosures: the release of relevant information about a property that may influence the final sale, especially if it represents defects or problems. "Full disclosure" usually refers to the responsibility of the seller to voluntarily provide all known information about the property. Some disclosures may be required by law, such as the federal requirement to warn of potential lead-based paint hazards in pre-1978 housing. A seller found to have knowingly lied about a defect may face legal penalties.

Down Payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made.

Double-ending: When an agent acts as both as both the Buyer's Agent and Seller's Agent on the same property. When this happens, among other things, no advice can be given to the Buyers as to offer amounts or the Seller's on what to accept.

Duration: the number of years it will take to receive the present value of all future payments on a security to include both principal and interest.

Easements: the legal rights that give someone other than the owner access to use property for a specific purpose. Easements may affect property values and are sometimes a part of the deed.

Encroachments: a structure that extends over the legal property line on to another individual's property. The property surveyor will note any encroachment on the lot survey done before property transfer. The person who owns the structure will be asked to remove it to prevent future problems.

Encumbrance: anything that affects title to a property, such as loans, leases, easements, or restrictions.

Equity: an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escape Clause: a provision in a purchase contract that allows either party to cancel part or the entire contract if the other does not respond to changes to the sale within a set period. The most common use of the escape clause is if the buyer makes the purchase offer contingent on the sale of another house.

Escrow: funds held in an account to be used by the lender to pay for home insurance and property taxes. The funds may also be held by a third party until contractual conditions are met and then paid out.

Escrow Account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Estate: the ownership interest of a person in real property. The sum total of all property, real and personal, owned by a person.

Exclusive Listing: a written contract giving a real estate agent the exclusive right to sell a property for a specific timeframe. These type of listing generally don't appear on the MLS system.

Expropriation : the taking of property without the consent of an "owner" by an "expropriating authority" in the exercise of its statutory powers. The expropriating authority (the Federal, provincial or municipal governments or any person empowered by statute to expropriate land) must pay compensation to the owner for the land taken.

FSBO (For Sale by Owner): a home that is offered for sale by the owner without the benefit of a Real Estate agent or Broker.

Fair Market Value: : the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

First Mortgage: the mortgage with first priority if the loan is not paid.

Fixed Expenses: payments that do not vary from month to month.

Fixed-Rate Mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Fixture: personal property permanently attached to real estate or real property that becomes a part of the real estate.

Flood Insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower. Foreclosure laws are based on the statutes of each state.

Grantee: an individual to whom an interest in real property is conveyed.

Grantor: an individual conveying an interest in real property.

Gross Income: money earned before taxes and other deductions. Sometimes it may include income from self-employment, rental property, alimony, child support, public assistance payments, and retirement benefits.

Home Equity Loan: a loan backed by the value of a home (real estate). If the borrower defaults or does not pay the loan, the lender has some rights to the property. The borrower can usually claim a home equity loan as a tax deduction.


Home Inspection: an examination of the structure and mechanical systems to determine a home's quality, soundness and safety; makes the potential homebuyer aware of any repairs that may be needed. The homebuyer generally pays inspection fees but there can also be "pre-inspections" done by the seller.

Homeowner's Insurance: an insurance policy that combines protection against damage to a dwelling and its contents including fire, storms or other damages with protection against claims of negligence or inappropriate action that result in someone's injury or property damage. Most lenders require homeowners insurance to be in place before releasing funds. Flood insurance is generally not included in standard policies and must be purchased separately.                                                                                                   

HVAC: Heating, Ventilation and Air Conditioning; a home's heating and cooling system.

Indemnification: to secure against any loss or damage, compensate or give security for reimbursement for loss or damage incurred. A homeowner should negotiate for inclusion of an indemnification provision in a contract with a general contractor or for a separate indemnity agreement protecting the homeowner from harm, loss or damage caused by actions or omissions of the general (and all sub) contractor.

Inflation: the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.

Interest: a fee charged for the use of borrowing money usually calculated as a percetage for mortgage purposes.

Interest Rate: the amount of interest charged on a monthly loan payment, expressed as a percentage.

Insurance: protection against a specific loss, such as fire, wind damage or others over a period of time that is secured by the payment of a regularly scheduled premium.

Joint Tenancy: when two or more owners share equal ownership and rights to the property. If a joint owner dies, his or her share of the property passes to the other owners, without probate. In joint tenancy, ownership of the property cannot be willed to someone who is not a joint owner.

Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source. 

Late Payment Charges: the penalty the homeowner must pay when a mortgage payment is made after the due date grace period. The fee for late payments can vary greatly.

Land Transfer Tax : Land transfer tax is payable on every conveyance of land tendered for registration and every unregistered disposition of a beneficial interest in land, unless specifically exempt under the Act or regulations. Currently in Ontario the provincal rate is .5% for the first $55,000, 1% for $ 55.01 - $250,000, $250,000.01 - $ 400,000 is 1.5%, $400,000.01 - $2,000,000 is 2% and finally over $2,000,000 is 2.5%. The city of Toronto has their own additional tax.

Lease: a written agreement between a property owner and a tenant (resident) that stipulates the payment and conditions under which the tenant may occupy a home or apartment and states a specified period of time.

Lender: A term referring to an person or company that makes loans for real estate purchases. Sometimes referred to as a loan officer or lender.

Liabilities: a person's financial obligations such as long-term / short-term debt, and other financial obligations to be paid.

Liability Insurance: insurance coverage that protects against claims alleging a property owner's negligence or action resulted in bodily injury or damage to another person. It is normally included in homeowner's insurance policies.

Lien: a legal claim against property that must be satisfied when the property is sold. A claim of money against a property, wherein the value of the property is used as security in repayment of a debt. Examples include a mechanic's lien, which might be for the unpaid cost of building supplies, or a tax lien for unpaid property taxes. A lien is a defect on the title and needs to be settled before transfer of ownership. A lien release is a written report of the settlement of a lien and is recorded in the public record as evidence of payment.

Line of Credit: an agreement by a financial institution such as a bank to extend credit up to a certain amount for a certain time to a specified borrower.

Liquid Asset: a cash asset or an asset that is easily converted into cash.

Listing Agreement: a contract between a seller and a real estate professional to market and sell a home. A listing agreement obligates the real estate professional (or his or her agent) to seek qualified buyers, report all purchase offers and help negotiate the highest possible price and most favorable terms for the property seller.

Loan: money borrowed that is usually repaid with interest.

Loan Acceleration: an acceleration clause in a loan document is a statement in a mortgage that gives the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed.

Loan Fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan Officer: a representative of a lending or mortgage company who is responsible for soliciting homebuyers, qualifying and processing of loans. They may also be called lender, loan representative, account executive or loan rep.

Loan Origination Fee: a charge by the lender to cover the administrative costs of making the mortgage. This charge is paid at the closing and varies with the lender and type of loan. A loan origination fee of 1 to 2 percent of the mortgage amount is common.

Loan to Value (LTV) Ratio: a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-in Period: the length of time that the lender has guaranteed a specific interest rate to a borrower.

Market Value: the amount a willing buyer would pay a willing seller for a home. An appraised value is an estimate of the current fair market value.

Maturity: the date when the principal balance of a loan becomes due and payable.

Median Price: the price of the house that falls in the middle of the total number of homes for sale in that area.

Mitigation: term usually used to refer to various changes or improvements made in a home; for instance, to reduce the average level of radon.

Mortgage: a lien on the property that secures the Promise to repay a loan. A security agreement between the lender and the buyer in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met.

Mortgage Broker: a firm that originates and processes loans for a number of lenders. Most mortgage brokers take buyer's situation and shop multiple banks, credit unions and private lenders to find the best interest rate.

Mortgage Interest Deduction: the interest cost of a mortgage, which is a tax - deductible expense. The interest reduces the taxable income of taxpayers.

Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Mortgage Qualifying Ratio: Used to calculate the maximum amount of funds that an individual traditionally may be able to afford. A typical mortgage qualifying ratio is 28: 36.

Mortgagee: the lender in a mortgage agreement. Mortgagor - The borrower in a mortgage agreement.

Mortgagor: the borrower in a mortgage agreement

Multifamily Housing: a building with more than four residential rental units.

Multiple Listing Service (MLS): Our local Real Estate board, the Lakelands Association of Realtors, submit listings and agree to attempt to sell all properties in the MLS. The local MLS has a protocol for updating listings and sharing commissions. The MLS offers the advantage of more timely information, availability, and access to houses and other types of property on the market.

Multiple Offers: When several offers are received on a property at the same time. The Sellers then must choose which offer they will work with or they can reject all offers and ask the Buyers to re-submit.

Net Income: Your take-home pay, the amount of money that you receive in your paycheck after taxes and deductions.

No Cost Loan: there are many variations of a no cost loan. Generally, it is a loan that does not charge for items such as title insurance, escrow fees, settlement fees, appraisal, recording fees or notary fees. It may also offer no points. This lessens the need for upfront cash during the buying process however no cost loans have a higher interest rate.

Note: a legal document obligating a borrower to repay a mortgage loan at a stated interest rate over a specified period of time.

Note Rate: the interest rate stated on a mortgage note.

Notary Public: a person who serves as a public official and certifies the authenticity of required signatures on a document by signing and stamping the document.

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Original Principal Balance: the total principal owed on a mortgage prior to any payments being made.

Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Owner Financing: a home purchase where the seller provides all or part of the financing, acting as a lender.

Ownership: ownership is documented by the deed to a property. The type or form of ownership is important if there is a change in the status of the owners or if the property changes ownership.

Owner's Policy: the insurance policy that protects the buyer from title defects.

PITI: Principal, Interest, Taxes, and Insurance: the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

Payment Due Date: Contract language specifying when payments are due on money borrowed. The due date is always indicated and means that the payment must be received on or before the specified date. Grace periods prior to assessing a late fee or additional interest do not eliminate the responsibility of making payments on time.

Personal Property: any property that is not real property or attached to real property. For example furniture is not attached however a new light fixture would be considered attached and part of the real property.

Pre-Approval: a lender commits to lend to a potential borrower a fixed loan amount based on a completed loan application, credit reports, debt, savings and has been reviewed by an underwriter. The commitment remains as long as the borrower still meets the qualification requirements at the time of purchase. This does not guaranty a loan until the property has passed inspections underwriting guidelines.

Predatory Lending: abusive lending practices that include a mortgage loan to someone who does not have the ability to repay. It also pertains to repeated refinancing of a loan charging high interest and fees each time.

Prepayment: any amount paid to reduce the principal balance of a loan before the due date or payment in full of a mortgage. This can occur with the sale of the property, the pay off the loan in full, or a foreclosure. In each case, full payment occurs before the loan has been fully amortized.

Prepayment Penalty: a provision in some loans that charge a fee to a borrower who pays off a loan before it is due

Pre-Qualify: a lender informally determines the maximum amount an individual is eligible to borrow. This is not a guaranty of a loan.

Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty.

Prepayment Penalty: a fee charged to a homeowner who pays one or more monthly payments before the due date. It can also apply to principal reduction payments.

Prepayment Penalty Mortgage (PPM): a type of mortgage that requires the borrower to pay a penalty for prepayment, partial payment of principal or for repaying the entire loan within a certain time period. A partial payment is generally defined as an amount exceeding 20% of the original principal balance.

Price Range: the high and low amount a buyer is willing to pay for a home.

Prime Rate: the interest rate that banks charge to preferred customers. Changes in the prime rate are publicized in the business media. Prime rate can be used as the basis for adjustable rate mortgages (ARMs) or home equity lines of credit. The prime rate also affects the current interest rates being offered at a particular point in time on fixed mortgages. Changes in the prime rate do not affect the interest on a fixed mortgage.

Principal: the amount of money borrowed to buy a house or the amount of the loan that has not been paid back to the lender. This does not include the interest paid to borrow that money. The principal balance is the amount owed on a loan at any given time. It is the original loan amount minus the total repayments of principal made.

Principal, Interest, Taxes, and Insurance (PITI): the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

Private Mortgage Insurance (PMI): insurance purchased by a buyer to protect the lender in the event of default. The cost of mortgage insurance is usually added to the monthly payment. Mortgage insurance is generally maintained until over 20 Percent of the outstanding amount of the loan is paid or for a set period of time, seven years is normal. Mortgage insurance may be available through a government agency, such as the Federal Housing Administration (FHA) or the Veterans Administration (VA), or through private mortgage insurance companies (PMI).

Property: the property is the land within the legally described boundaries and all permanent structures and fixtures on that land. Ownership of the property confers the legal right to use the property as allowed within the law and within the restrictions of zoning or easements. 

Property Tax: a tax charged by local government and used to fund municipal services such as schools, road repairs and libraries. The amount of property tax is determined locally by the " mil rate" usually based on a percent of assessed value of the property. For example the current mil rate in the town of Parry Sound is .0148639 so a property assessed at $100,000 would have annual property taxes of about $ 1,486.00.

Radon: a radioactive gas that can be found in some structures ad in strong enough concentrations, can cause health problems.

Real Estate Agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Real Property: land, including all the natural resources and permanent buildings on it.

REALTOR: a real estate agent or broker who is a member of the CANADIAN REAL ESTATE ASSOCIATION, and its local and provincial associations.

Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Reverse Mortgage: the reverse mortgage is used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home. A lending institution such as a mortgage lender, bank or some credit unions.

Right of First Refusal: a provision in an agreement that requires the owner of a property to give one party an opportunity to purchase or lease a property before it is offered for sale or lease to others.

Right-of-Way: A right of way refers to allowing neighboring landowner the ability to travel over another's property. Said another way, a right of way is a type of easement that allows a person to pass through another's land.

Risk Scoring: an automated way to analyze a credit report verses a manual review. It takes into account late payments, outstanding debt, credit experience, and number of inquiries in an unbiased manner.

Second Mortgage: an additional mortgage on property. In case of a default the first mortgage must be paid before the second mortgage. Second loans are more risky for the lender and usually carry a higher interest rate.

Secondary Mortgage Market: the buying and selling of mortgage loans. Investors purchase residential mortgages originated by lenders, which in turn provides the lenders with capital for additional lending.

Secured Loan: a loan backed by collateral such as real property.

Setbacks are used to assure space between buildings and from roads for a many of purposes including drainage and utilities.

Settlement: another name for funds tranfered on closing.

Shore Road Allowance : (SRA); the area of land determined by measuring 66′ from the high water mark, following the contour of the land. These shore road allowances were established in the 1800’s to create access to and from the water for commercial uses such as fishing and logging and public passage.

Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Surveys are conducted by licensed surveyors and are normally required by the lender in order to confirm that the property boundaries and features such as buildings, and easements are correctly described in the legal description of the property.

Tarion: formerly known as the Ontario New Home Warranty Program, was created by the Government of Ontario in 1976 to administer the Ontario new Home Warranties Plan Act. Its primary purpose is to protect consumers of new homes by ensuring that builders abide the provincial legislation.

Title: a legal document establishing the right of ownership and is recorded to make it part of the public record. Also known as a Deed.

Title Company: a company that specializes in examining and insuring titles to real estate such as Stewart Title and F.T.C Canada.

Title Insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers. An insurance policy guaranteeing the accuracy of a title search protecting against errors. Most lenders require the buyer to purchase title insurance protecting the lender against loss in the event of a title defect. This charge is included in the closing costs. A policy that protects the buyer from title defects is known as an owner's policy and requires an additional charge. Common Title Insurance companies in Canada include Stewart Title Canada and F.T.C Canada.

Title Search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Transfer of Ownership: any means by which ownership of a property changes hands. These include purchase of a property, assumption of mortgage debt, exchange of possession of a property via a land sales contract or any other land trust device.

Trustee: a person who holds or controls property for the benefit of another.

Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

Up Front Charges: the fees charged to homeowners by the lender at the time of closing a mortgage loan. This includes points, broker's fees, insurance, and other charges.

Variable Expenses: Costs or payments that may vary from month to month, for example, gasoline or food.

Variance: a special exemption of a zoning law to allow the property to be used in a manner different from an existing law.

Walk Through: the final inspection of a property being sold by the buyer to confirm that any contingencies specified in the purchase agreement such as repairs have been completed, fixture and non-fixture property is in place and confirm the electrical, mechanical, and plumbing systems are in working order.

Zoning: local laws established to control the uses of land within a particular area. Zoning laws are used to separate residential land from areas of non-residential use, such as industry or businesses. Zoning ordinances include many provisions governing such things as type of structure, setbacks, lot size, and uses of a building.