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Amortization
The length of time to pay off the mortgage in full
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Cashback Mortgage
A percentage of the mortgage is determined and paid at closing to homeowner. You pay a higher rate or interest to obtain this type of morgage
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Closed Mortgage
A penalty will be levied if the mortgage is paid out before the original term is due
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Conventional Mortgages
When there is a no risk insurance required. Usually more than 20% equity
(i.e. value of property $100,000, mortgage is $80,000; therefore 20% equity)
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Equity
Difference between the value of the property and the mortgage owed against the property
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Fixed Rate
Constant interest rate charged for a set period of time
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High Ratio / Insured Mortgages
If you have 0 to 19% downpayment or equity with regard to the value of your home and mortgage owed against – by law the mortgage has to be insured
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Home Equity Line of Credit (HELOC)
A limit of credit is established by the equity in your property. This works like an overdraft on your account, you withdraw and deposit $ to the account. Security is the property
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Insurers
There currently (2008) are three mortgage insurers in Canada:
CMHC, Genworth and AIG.
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Open Mortgage
Mortgage may be paid in full at any time without penalty
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Penalty
When a mortgage is paid off in full prior to the end of the contracted term. A penalty is charged by the lender/bank.
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Pre-Approval
Personal and financial information gathered, a credit check completed and a commitment issued by lender
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Pre-Qualify
Personal and financial information gathered, NO CREDIT CHECK, NO COMMITMENT issued from lender
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Prime Interest Rate
A floating interest rate charged by lender to clients
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Refinance
Alterations are made to your mortgage to re-negotiate your mortgage without selling your home
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Term
The interest rate is set for a term (i.e. 3 yr, 5 yr.) at which time the mortgage is either renewed for an addition term or paid off in full
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Variable Rate
Interest rate fluctuates higher or lower as prime interest changes