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Glossary of Terms

Abandonment: When the condition of ownership for a property becomes troublesome to the owner, he or she may choose to become a nonpayer and abandon the property

Adjustable Rate Mortgage (ARM): This is the type of mortgage where the interest rate fluctuates periodically based on bank prime rates. With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions. This is also known as a variable rate mortgage.

Amortization: The number of years it will take to pay back your mortgage loan. Most common amortization periods are 15, 20, or 25 years

Anchors: Anchorage systems serve to secure the home to the home site. Anchors need to be installed in compliance with CSA-Z240.10.1-08 Standard for the Site Preparation, Foundation and Anchorage of Mobile Homes, unless the home is being placed on steel auger pilings. When a home gets placed onto pilings, it is then welded or clamped onto the pilings, eliminating the need for a separate anchoring system.

Anniversary: Most lenders allow borrowers to make payments against the principal on the anniversary of the mortgage.

Appraisal: The act of estimating the market value of a property. The value is determined by either a direct comparison, cost or income approach.

Appreciation: The increase in value of a home from when the home was first purchased.

Assumption Agreement: A legal document signed by the homebuyer that requires the buyer to assume responsibility for the obligations of a mortgage by the builder or the previous owner.

Balanced Market: A market condition where the demand for property equals the supply of available properties for sale. There are typically a good number of homes available to choose from, at fair and stable prices.

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.

Blocking/Cribbing: Single section modular homes (or manufactured homes in other provinces) are often placed onto a gravel pad and wood blocking/cribbing systems, also called a pier or surface mount foundation. The piers must be constructed to carry all live and dead loads and must meet the criteria outlined in CSA Z240.10.1-08.

Breach of Contract: The failure to fulfill an obligation under a contract.

Broker: An individual who is arranging financing for a client who does not personally loan the funds himself. Brokers are normally compensated by charging a set up fee or receive a direct commission from the financial institution they are setting their client up with.

Buyer’s Market: A market condition where there are a higher number of homes to choose from, than buyers able to purchase. Houses will typically remain unsold for longer periods and tend to sell at a lower price, allowing for increased negotiating leverage for buyers.

Carriage Home: A carriage, or link home, is joined by a garage or carport. The garage or carport gives access to the front and back yards. Builders sometimes join basement walls so that link houses can appear to be single family dwellings on small lots.

Census Metropolitan Area (CMA): a grouping of census subdivisions comprising a large urban area (the “urban core”) and those surrounding “urban fringes” and fringes” with which it is closely integrated. To become a CMA, an area must register an urban core population of at least 100,000 at the previous census.

Certificate of location (or land survey): A document that shows property boundaries and measurements specifies the locations of buildings on the property and states easements or encroachments.

Certificate of Status (Estoppel Certificate): A certificate that requires a condominium corporation’s financial and legal status.

Closed Mortgage: A mortgage loan that has a locked-in payment schedule and cannot be prepaid or renegotiated before the term’s end (unless included in the terms).

Closing Costs: Costs, in addition to the purchase price of the property, such as legal fees, transfer fees and disbursements. Closing costs are typically about 2% of a property’s selling price and are payable on the closing day.

Closing Date: The date at which the sale of a property becomes final and the new owner takes possession. The property, title ownership and money legally change hands.

CMHC – Canada Mortgage and Housing Corporation: Canada Mortgage and Housing Corporation (CMHC) is Canada’s national housing agency. Established as a government-owned corporation in 1946 to address Canada’s post-war housing shortage, the agency has grown into a major national institution. CMHC is Canada’s premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research. CMHC provides High Ratio Mortgage Insurance (usually mortgages with less than 20% down payment) by protecting lenders and guaranteeing payment on the funds they are lending out.

CMHC Insurance Premiums: The CMHC Mortgage loan insurance premium is calculated as a percentage of the loan and is based on the size of a buyers down payment. The higher percentage of the total house price that is borrowed, the higher the insurance premiums are.

Commitment Letter/Mortgage Approval: Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Compound Interest: Interest that is calculated on both the principal and the accrued interest.

Conditional Offer: An Offer to Purchase that is subject to specified conditions, for example, on approved financing or upon an approved home inspection. Conditional offers typically have a stipulated time limit within which the specified conditions must be met.

Condominium Fees or Strata: Payments made by owners of condominiums or townhouses to the property management of a complex that is allocated to pay expenses, such as maintenance, repairs and management costs. In a condominium, you own the unit you live in and share ownership rights for the common space of the building or community. Condominium owners together control the common areas through an owners association. The association makes decisions about using and maintaining the common space.

Construction Loan: A type of loan where the borrower obtains financing to cover the cost of construction. The lender advances funds to the borrower in intervals known as draws. As the portions of the construction process are completed, more funds are then released in order to complete the next step in the construction process.

Conventional Mortgage: A mortgage loan up to a maximum of 80% of the lending value of the home. Mortgage loan insurance is usually not required for this type of mortgage.
Counter Offer: When an original offer to the seller is not accepted, the seller may counteroffer.

Credit Bureau: A company that collects information from various sources and provides credit information on a person’s borrowing and bill paying habits to help lenders assess whether or not to lend money.

Credit Report: A report that provides information to the brokers and financial institutions about the applicant’s current and past credit history.

CSA Certification: Modular (factory built) construction must meet all federal and provincial building codes and must be certified to Canadian Standards Association (CSA) standards. Three organizations are accredited to certify homes to CSA standard: Canadian Standards Association, Intertek and Quality Auditing Institute. Labels will be placed inside the building to confirm its compliance.

Deed: A legal document that is signed by both the vendor and the purchaser, transferring ownership. This document is registered as evidence of ownership.

Default: Failure to abide by the terms of a mortgage loan agreement.

Delinquency: Failing to make a mortgage payment on time.

Deposit: A sum of money placed in trust by the purchaser when an Offer to Purchase is made. The real estate representative or lawyer holds the sum until the sale is closed, and then it is paid to the vendor.

Depreciation: The decrease in value in a home from when the home was first purchased.

Discharge of Mortgage: A signed document by the mortgage lender given to the borrower when a mortgage loan has been repaid in full.

Down Payment: The portion of the house price the buyer must pay up front, before securing a mortgage. Deposits generally range from 5% – 25% of the purchase price.

Duplex: A duplex is a building that contains two single family homes, either located side by side or on top of each other.

Easement: A right acquired for access to or over another person’s land for a specific purpose, such as a driveway or public utilities.

Egress window: A window that is required in specific locations in a dwelling and is intended to provide an emergency means of exiting a dwelling. Windows must meet specific size and requirements to qualify as an egress window.

Equity: The difference between the price for which a property could be sold and the total debts registered against the property.

Foreclosure: A legal process in which the lender takes ownership of a home if the borrower defaults on the mortgage loan.

First Home Loan Insurance (FHLI): A product of the CMHC (Canada Mortgage and Housing Corporation) which allows qualified first-time buyers to purchase a home with as little as 5% down.

First Time Home Buyer Tax Credit: To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 — a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009.

Fixed Rate Mortgage: A type of mortgage where the interest rate is set for a specific period of time. The rate cannot fluctuate and a fixed payment is set during the term negotiated between the lender and the borrower.

Freehold: Ownership of the land and/or buildings by one person (two in the event of spouses). Freehold owners can usually do what they want within municipal bylaws, subdivision agreements, building codes, and federal and provincial laws.

Garden suites: A garden suite, sometimes called a granny flat, is a self-contained dwelling without a basement. It is installed in the rear or side yard of a lot with an existing, permanent, single-family house.

Gross Debt Service Ratio (GDS): The percentage of the borrower’s gross monthly income that will be used for monthly payments of principal, interest, taxes, heating costs, half of any condominium maintenance fees, and all of any land lease.

Gross Monthly Income: Monthly income before taxes and deductions.

Heat Tape: Also known as electric heat tracing, heat tape or surface heating, is a system used to maintain or raise the temperature of pipes and vessels. Trace heating takes the form of an electrical heating element run in physical contact along the length of a pipe. The pipe must then be covered with thermal insulation to retain heat losses from the pipe. Heat generated by the element then maintains the temperature of the pipe. Trace heating is used in self contained modular homes to protect pipes from freezing.

Heat Recovery Ventilator: An HRV is a mechanical ventilation device that continuously replaces stale indoor air with fresh outdoor air. HRVs are sometimes called air-to-air heat exchangers because they preheat or cool incoming air using exhaust air.

High-Ratio Mortgage: A mortgage loan higher than 80% of the lending value of the property. Such types of mortgages may need to be insured.

Holdback: The amount of money withheld by the lender during construction of a property to ensure that construction at every state is satisfactory.

Home Adaptations for Seniors Independence (HASI): The Home Adaptations for Seniors’ Independence (HASI) program offers financial assistance for minor home adaptations that will help low-income seniors to perform daily activities in their home independently and safely.

Home Buyers Plan (HBP): The HBP is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year.

Home Inspector: A person who visually inspects the home to tell you if something is working properly or unsafe. He or she will also tell you if repairs are needed and maybe even if there were problems in the past.

Housing Co-operatives (“co-ops”): Co-ops come in many different shapes and sizes, ranging from collections of single unit townhouses and small buildings with 4-12 units to large apartment-style buildings with hundreds of units. Co-ops are democratic communities where the residents make decisions on how the co-op operates.

ICF Basement: Insulated concrete forms are used, a system of formwork for concrete that stays in place as permanent building insulation for energy-efficient, cast-in-place, reinforced concrete walls, floors, and roofs. The forms are interlocking modular units that are dry-stacked (without mortar) and filled with concrete. The forms lock together somewhat like Lego bricks and serve to create a form for the structural walls or floors of a building. ICF construction is becoming increasingly commonplace for both low rise commercial and residential construction as more stringent energy efficiency and natural disaster resistant building codes are adopted.

Interest Adjustment Date (IAD): A date from which interest on the mortgage advanced is calculated for regular payments. This date is usually one payment period before regular mortgage payments begin. Interest due between the date the mortgage is advanced and the IAD is due on closing.

Indenture: A document or deed expressing certain objects between the parties.

Interest Rate: The percentage which is charged for the use of borrowed money.

Land Lease Community: Developed parcel of real estate designed and serviced specifically to lease home sites to residents. Generally, land lease communities are designed to accommodate single section manufactured homes, but some communities are designed for cottages, or bungalows on crawl space foundations.

Land Transfer Tax or Property Purchase: Money paid to the provincial government for transferring property to the buyer from the seller.

Lien: A legal claim against a property for outstanding money owing.

Listing: A written agreement between a property owner and a real estate representative authorizing the agency to offer the owner’s real property for sale.

Loan-to-Value Ratio: The ratio of the loan to the lending value of a property presented as a percentage. For example, the loan-to-value ratio of a loan for $75,000 on a home which costs $100,000 is 75%.

Lump Sum Prepayment: An extra payment made to reduce the principal balance of a mortgage (with or without penalty). A closed mortgage typically restricts lump sum payments. However, with open mortgages, a lump sum prepayment can be made without penalty.

Manufactured Home: A factory-built single family home that may be constructed in one or more sections. The homes are complete when they leave the factory except for incidental assembly on site. The homes are typically built with an integrated frame that allows them to be placed on a surface-mount foundation. (Generally, the term Manufactured Home has replaced Mobile Home, i.e. a home built to the CSA-Z240 Standard.). Note that in Alberta, there is no “manufactured home” building code            

Maturity Date: The last day of the term of the mortgage. On this day, the mortgage loan must either be paid in full or the agreement renewed.

Modular Home: A factory-built home constructed in compliance with local building codes. The homes are typically shipped to the site in two or more sections. The homes may or may not have a longitudinal sub-frame. Note that the term “modular” denotes a method of construction – not a style of home. Modular homes can be built as bungalows, multi family, bi-levels, two storey, rancher or cape cod.

Mortgage: Security for a loan to purchase property.

Mortgage Life Insurance: Insurance you can purchase to pay your mortgage in full should you die before it is paid off.

Mortgage Loan Insurance: Mortgage loan insurance is required by lenders for high-ratio mortgages (more than 80% of the purchase price). It is available from CMHC (Canadian Mortgage and Housing Corporation) or a private insurer.

Mortgage Payment: A regularly scheduled payment that can be blended to include both principal and interest.

Mortgagee: The lender who provides the mortgage loan.

Mortgagor: The borrower who pledges the property as security for the loan.

Multiple Listing Service (MLS): The multiple listing service is a computer based service that posts homes for sale through realtors in different market areas. While it is available for public searches, only licensed realtors have access to post listings on the MLS site.

Net Worth: An individual’s total financial worth. This is calculated by subtracting total liabilities from total assets.

Offer to Purchase: A written contract detailing the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated.

Open Mortgage: A mortgage that can be prepaid or paid off or renegotiated at any time without penalty. Interest rates for open mortgages are typically higher than the interest rates for closed mortgages.

Operating Costs: The monthly expenses required to operate a home. Typically, this includes property taxes, property insurance, utilities, telephone and home maintenance.

Panelized Home: Home comprised of pre-fabricated walls, with sheathing already attached. The panelized sections are shipped to site for assembly. The homes are built to local code requirements.

PDI: Post Delivery Inspection (PDI). Modular homes will arrive on their site with fittings and fixtures prepared for transport – appliances strapped down, lights unassembled, furnace stacks packed in boxes awaiting install, etc. The PDI is completed in order put the fixtures together and prepare the home for final possession by the customer.

P.I.T.H. (Principal, Interest, Taxes and Heating): The costs that are used to calculate the Gross Debt Service ratio (GDS).

Pilings: Pilings are timber, metal or concrete columns driven many feet into the ground to support a house, while piers sit above ground. Building a house on pilings requires the assistance of an engineer to calculate the load and the type, length and diameter of the pilings.

Power of Sale: The right of a mortgagee (the lender) to force sale of the property.

Power of Attorney: A legal document authorizing one person to act on behalf or represent another in a legal transaction.

Principal: The amount of money borrowed to purchase the home. Mortgage payments consist of payment against the principal plus the interest the lender is charging for the borrowed money.

Property Manager: Manager with responsibility for, and authority over, two or more income-producing properties, usually within a given geographical region. In some lending institutions and investment houses, these professionals are referred to as asset managers.

Property Taxes: Taxes charged to the homeowner by the municipality where the home is located based on the value of the property.

Property Purchase or Land Transfer Tax: Money paid to the provincial government for transferring property to the buyer from the seller.

Real Estate Broker: A brokerage that represents a principal in a real estate trade.

Resident: Preferred term to describe those living in land lease communities. Although these people are technically lessees or even tenants (the term is commonly associated with commercial properties), resident is a more accurate term, given the commitment involved.

Residential Rehabilitation Assistance Program (RRAP): Canada Mortgage and Housing Corporation (CMHC) offers financial assistance to low-income homeowners for mandatory home repairs that will preserve the quality of affordable housing. The program helps people who live in substandard dwellings and cannot afford to pay for necessary repairs to their home.

Renewal: The borrower renegotiates the mortgage loan for a new term with the lender at the end of a mortgage term.

Second Mortgage: An additional mortgage on a property that already has a mortgage.

Seller’s Market: A market condition where there are a higher number of buyers than homes available to purchase. Houses will typically sell faster and at a higher price.

Skirting: The foundation fascia typically constructed of vinyl sheathing used to enclose the air space between the bottom perimeter of a modular home on a surface mount foundation and the ground below it.

Strata or Condominium Fees: Payments made by owners of condominiums or townhouses to the property management of a complex that is allocated to pay expenses such as maintenance, repairs and management costs.

Surface-Mount Foundation: The term for use of cribbing or piles to place a home when constructed in conformance with CSA-Z240.10.1-94 Standard for the Site Preparation, Foundation and Anchorage of Mobile Homes.

Survey: A document that shows the property boundaries and measurements, specifies the location of buildings on the property, and indicates any easements or encroachments.

Tenant: An individual who occupies land or tenement under a landlord.

Tenure: A method of land holdings for a temporary period of time.

Tenure Agreement: A resident’s lease or rental agreement.

Term: The length of time during which a borrower pays a specific interest rate on the mortgage loan. At the end of the term, the borrower either pays off the mortgage or renews it.

Title (freehold): A title gives the holder full and exclusive ownership of the land and building for an indefinite period.

Transporter: The driver of the tractor designed and equipped to move factory built homes

Total Debt Service Ratio (TDS): The percentage of the borrower’s gross monthly income needed to cover all monthly housing payments and debts, such as car payments and credit cards.

Townhouse: Also called row housing, a townhouse is one of several single family homes, built side by side, joined by common walls.

Variable-rate Mortgage: A type of mortgage with fixed payments, but fluctuating interest rates. The fluctuating interest rates do not alter your mortgage payment, but determines how much of each payment is applied against the principal opposed to how much is applied to pay the interest.

Valuation: The act of ascertaining how much a specific property is worth.

Vendor: A seller of a property.

Vendor take-back mortgage: The vendor, not a financial institution finances the mortgage. The title of the property is transferred to the buyer who makes the mortgage payments directly to the seller.

Warranty: Coverage in the event that an item under warranty needs to be repaired. If the builder doesn’t repair it, the repair will be made by the organization that provided the warranty.

Zoning Bylaws: Municipal or regional laws that direct the use of land.

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