Terms with Category Mortgages

  • One-year Adjustable Definition,
    • Mortgage whose annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender.
  • Open Mortgage Definition, Important,
    • A mortgage that can be paid off prior to maturity without penalty.
  • Original Principal Balance Bank,
    • The amount borrowed.
  • Origination Date Bank,
    • The date on which a loan is funded.
  • Origination Fee Bank,
    • The fee a lender charges to process a loan. It usually includes the cost to prepare loan documents, check a borrower's credit history, inspect the property and sometimes conduct an appraisal. CanEquity will in most cases use a lender who doesn't charge this fee or we will cover the cost in full.
  • Owner Occupant Bank,
    • A borrower who resides in the property used as security for the loan.
  • Payment Adjustment Period Definition,
    • The time period where payments on an adjustable-rate mortgage (ARM) may fluctuate.
  • Payment Cap Definition,
    • A contractual limit on the size of the monthly payment of an adjustable-rate mortgage or other variable rate loan.
  • Penalty Bank,
    • In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.
  • Per Diem Interest Bank,
    • Interest that is charged daily; usually refers to the partial month's interest that the buyer pays on the mortgage covering the period from the day of closing to the end of the month.
  • Periodic Rate Bank,
    • The interest rate in relation to a specific amount of time. For example, the monthly periodic rate is the cost of credit per month whereas the daily periodic rate is the cost of credit per day.
  • Periodic Rate Cap Definition,
    • In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease from one adjustment period to the next.
  • Personal Loan Bank,
    • A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.
  • Point Bank,
    • A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate.
  • Portfolio Lender Bank,
    • A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.
  • Porting Definition,
    • A portable mortgage allows you to transfer the terms and conditions from an existing property loan to a new property loan.
  • Posted Rate Bank,
    • The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
  • Power of Sale Bank,
    • The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
  • Pre-approval Bank,
    • A process that mortgage lenders use to determine how much money they would lend you based on a thorough review of your financial situation. Lenders issue a pre-approval letter which strengthens your position when bidding on a home, as it shows sellers that you will be able to raise funds needed to purchase.
  • Pre-Approval Expiry Date Definition,
    • The date when a pre-approved mortgage expires, often 90 - 120 days after being pre-approved.
  • Pre-approval Letter Bank,
    • A document from a lender or broker, estimating how much a potential home-buyer could borrow, based on current interest rates and a preliminary look at credit history.
  • Pre-paid Expenses Bank,
    • also called prepaid items or prepaids -- Recurring costs such as taxes, insurance and interest that are paid at closing and which cannot be financed.
  • Pre-paid Interest Bank,
    • Interest that a borrower pays before it is due, usually to save taxes.
  • Pre-payment Bank,
    • Applying additional payments towards the balance of a mortgage loan.
  • Pre-payment Clause Bank,
    • A clause that stipulates the amount of principal a borrower may prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments.
  • Pre-payment Penalty Bank,
    • A lender's charge to the borrower for paying off the loan before the end of the term.
  • Pre-qualification Bank,
    • An informal process in which a lender will offer an opinion on how much money you may be able to borrow. This opinion is based entirely on the financial information you provide and is neither binding nor necessarily accurate because lenders have not yet verified your financial information.
  • Predatory Lending (PL) Bank, Important,
    • Lending practices that are unfair, deceptive or fraudulent.
  • Prime Lending Rate (PLR) Bank, Very Important,
    • The rate of interest charged on loans by chartered banks to their most creditworthy customers.
    Bank of Canada's prime (best) lending rate.
  • Prime Rate Bank,
    • The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
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