A Glossary Of Mortgage Terms
Every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific sector, and the mortgage business is no exception.
To help you understand the terms, acronyms, and phrases regularly used when applying for a mortgage, Jodie Erwin an expert mortgage broker at Mortgage Architects, has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your mortgage needs effectively.
The rate at which a mortgage is paid off. Most borrowers start with a twenty-five year amortization period.
A mortgage term is the length of time, usually in years, in which the parameters of a mortgage has legal effect.
The difference between the value of the home and the mortgage loan is called equity. Over time, as the value of the home increases and the amount of the loan decreases, the equity of the home generally increases.
The typical financial calculation that is done is called the Loan-to-Value (LTV) ratio. This is calculated by dividing the amount of the mortgage by the value of the home. Lenders will generally require the LTV ratio to be at least 80% to qualify for a mortgage.
The term used to describe the amount of money that is borrowed for the mortgage. The principal amount that is owed will go down when borrowers make regular monthly or bi-weekly payments.
The lender uses the home as collateral for the mortgage transaction, and because of this, they need to be certain that the title of the property is clear of any liens which could jeopardize the mortgage. So, lenders usually require borrowers to get a title insurance on the property, which will ensure that the homes are free and clear.
The amount of the purchase price that the buyer is paying. Generally, lenders require a specific down payment to qualify a borrower for the mortgage.
If you’re looking for a mortgage broker in Cambridge, ON, reach out to Jodie Erwin at Mortgage Architects. I offer my services to clients across Cambridge, Kitchener, Guelph, Woodstock, and Waterloo. As a top-class mortgage specialist, I help you find different mortgages for your various needs from mortgage purchasing, mortgage refinancing, to mortgage renewal, mortgage pre-approval, and chip mortgages. Simultaneously, I also provide my clients with an extensive network of lenders, and my professional mortgage services are 100% free for all my clients.