When it comes to real estate, there is no shortage of terminology, and plenty of room for confusion. From mortgage types and periods to title searches and conditions, there are countless variables to consider in every real estate transaction.
Ron Abraham, president of the Ontario Real Estate Association (OREA) says that buyers and sellers needn’t be overwhelmed by any of the terms; rather, they should focus on the big picture and let their Realtor work through the details.
“For both buyers and sellers, the sheer volume of information and options can be a little overwhelming. However, it’s important that both buyers and sellers focus on the larger picture. If you have a clear idea of your needs and go in with realistic expectations, the whole process will be very rewarding.”
Here is a cheat sheet of a few common and (commonly misunderstood) real estate terms:
Fixed-rate Mortgage: A set amount is paid each month. The interest payable is predetermined and fixed at the time of taking the loan, and holds for the entire term. Buyers are protected from any increase in prime lending rates in future.
Variable-rate Mortgage: An adjustable interest rate, which can be altered depending on the market situation. These loans may be beneficial if there is a sudden fall in lending rates, but higher interest rates mean greater monthly payments.
Amortization: The number of years it takes to repay the entire amount of the mortgage.
Title/Title Search: Title is the legal evidence of ownership in a property. A Title Search is a detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller’s ownership claim.
Conditions: Sometimes called a “Subject-to” Clause. A statement of a condition to be fulfilled before the contract will become firm and binding; must include a specific deadline for removal.
Multiple Listing Service (MLS): A current and comprehensive listing system for relaying property information. This service offers the widest exposure to properties listed for sale.
REALTORS®: Real estate professionals licensed by the Real Estate Council of Ontario who are members of the various Real Estate Boards and the Ontario and Canadian Real Estate Associations.
Abraham adds, “Often people get tripped up when it comes to sifting through information surrounding financing options, as well as the nuts and bolts of the real estate transaction. Talk to your Realtor about the best way to get equipped with the information you need to make a buying or selling decision that is right for you and your family.”