Home Buyer and House Plan Terms and Definitions
Adjustable Rate Mortgage (ARM) – A loan whose interest rate is adjusted according to movements in the financial market.
Amortization – A payment plan by which a borrower reduces a debt gradually through monthly payments of principal and interest.
Annual Percentage Rate (APR) – The annual cost off credit over the life of a loan,
including interest, service charges, points, loan fees, mortgage insurance, and other items.
Appraisal – An evaluation to determine what a piece of property would sell for in the marketplace.
Appreciation – The increase in the value of a property.
Assessment – A tax levied on a property or a value placed on the worth of property by a taxing authority.
Assumption – A transaction allowing the buyer of a home to assume responsibility for an existing loan on the home instead of getting a new loan.
Balloon – A loan which has a series of monthly payments (often for 5 years or less) with the remaining balance due in a large lump sum payment at the end.
Binder – A receipt for a deposit paid to secure the right to purchase a home at terms agreed upon by the buyer and seller.
Buydown – A subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan.
Cap – A limit to the amount an interest rate or a monthly payment can increase for an adjustable rate loan either during an adjustment period or over the life of the loan.
Certificate of Occupancy – A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations. http://www.rateconnect.ca/