A real estate transaction or a refinance involves signing lots of documents. Do we know the meaning of all the specific jargon? Some do, but I have met many clients who have only a vague idea about the meaning; however still missing some important details.
Here is a refresher of some of the terms you may see on a mortgage document:
Assumption Agreement: A legal document signed by a homebuyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the previous owner.
Blended Payment: A mortgage payment that includes principal and interest. It is paid regularly during the term of the mortgage. The payment total remains the same, although the principal portion increases over time and the interest portion decreases.
Closed mortgage: A closed mortgage cannot be paid off, in whole or in part, before the end of its term. Many closed mortgages limit prepayment options such as increasing your mortgage payment or lump sum prepayment (usually up to 20% of your original principal amount).
Conditional offer: An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.
Lien: A claim against a property for money owing. A lien may be filed by a supplier or a subcontractor who has provided labour or materials but has not been paid.
Variable mortgage interest rate: Fluctuates based on market conditions but the mortgage payment remains unchanged.
Find a full list of mortgage terms here