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ATB Mortgage Solutions:
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This section provides a brief explanation of terms applicable to mortgages.
Amortization:
- With a mortgage, the borrower agrees to pay back the amount borrowed
over a period of time. This breaking of the loan into smaller parts
to be paid back over uniform blocks of time is amortization.
Amortization Period:
- The actual number of years it will take to repay a mortgage in full.
This period can be longer than the loan's term. For example, a mortgage
may have a five-year term and a 25 year amortization period.
Appraised Value:
- An estimate of the market value of the home (and property) that the
borrower pledges as security for the mortgage. This value may be more
or less than the purchase price of the property.
Assets:
- The things of value that you own.
Blended Mortgage:
- A mortgage that combines the amount the borrower owes under an existing
mortgage with additional mortgage money required by the borrower. The
interest rate for the new amount borrowed is a "blend" (or combination)
of the interest rate of the "old mortgage" and the interest rate for
the additional amount to be borrowed.
Carrying Costs:
- The expenses of living in, and maintaining a home (and property).
This includes mortgage payments, property taxes, heating, repairs and
so on.
Closed Mortgage:
- A mortgage that cannot be prepaid, or renegotiated, unless the lender
agrees and the borrower is willing to pay an interest penalty.
Closing Date:
- The date the purchase of the property becomes final and the new final
and the new owner takes possession.
Conventional Mortgage:
- A first mortgage for the purchase of a home, of up to 80% of the
property's appraised value or purchase price, whichever is lower.
Down Payment:
- The amount of money put forward by the buyer toward the purchase
price of a home.
Equity:
- The difference between the price for which a property could be sold
and the total amount owing on it.
First Mortgage:
- A mortgage which is registered first against the property. This mortgage
has to be paid first in the event of sale or default.
Fixed Rate Mortgage:
- A mortgage for which the rate of interest is fixed for the term (i.e.
a set period of time.
High Ratio Mortgage:
- A mortgage for more than 80% of either or both a property's appraised
value and purchase price. In other words, the down payment amount is
less than 20% of the purchase price/appraised value.
Interest:
- Interest is the cost of borrowing. It is the amount paid on the money
borrowed. It is represented as an annual percentage rate applicable
to the mortgage.
Liabilities:
- What you owe. For example: taxes, mortgages, car loans and credit
card balances.
Maturity Date:
- The last day of the term of your mortgage agreement. The mortgage
must be paid in full, or the agreement renewed, by this date.
Mortgage:
- A mortgage is both a loan used to purchase a home and a security
for the repayment of the loan since the property purchased is pledged
by the borrower to guarantee repayment.
Mortgage Disability Insurance:
- Insurance that pays the mortgage installments should the insured
borrower become ill or disabled and unable to work.
Mortgage Life Insurance:
- Insurance that pays off the mortgage debt should the insured borrower
die.
Mortgage Payment:
- The regular installments made towards paying back the principal and
paying interest on a mortgage.
Mortgagor:
Open Mortgage:
- A mortgage that can be prepaid or renegotiated at any time and in
any amount without interest penalty.
Pre-Arranged Mortgage:
- A mortgage for a set maximum amount and interest rate that is arranged
prior to the purchaser finding a house. Often arranged prior to home-shopping,
this option can help the purchaser establish an affordable price range.
Prepayment Options:
- Allows the borrower to prepay a portion, or all of the principal
balance, with or without penalty. These options are typically restricted
to specific amounts and times.
Principal:
- The amount initially borrowed, under the mortgage.
Rate (Interest):
- The annual percentage amount charged in return for borrowing funds.
Term:
- The length of time a lender will lend mortgage funds to a borrower.
Most mortgage terms run from six months to five years. Certain lenders
may offer longer terms (eg. 5 years). After this period, the borrower
can either repay the balance (the remaining principal plus interest)
of the mortgage, or renew the mortgage for another term. The total
length of a mortgage is usually made up of several terms.
Variable Rate Mortgage:
- A mortgage for which the rate of interest fluctuates as the Bank=s
prevailing prime rate changes. While the regular payments you make
stay the same for the term, the amount applied toward the principal
changes according to the change (if any) in the rate of interest.
For more information on ATB Financial's mortgage solutions, visit any
branch of ATB Financial, or call us today at 1-877-424-4045 (toll
free). For the branch hours and address of the ATB Financial location nearest you, please use the Branch
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