The right of the mortgagee (lender) to demand the immediate repayment
of the mortgage loan balance upon the default of the mortgagor
(borrower), or by using the right vested in the Due-on-Sale Clause.
Adjustable Rate Mortgage (ARM)
Is a mortgage in which the interest rate is adjusted
periodically based on a preselected index. Also sometimes known as the
re-negotiable rate mortgage, the variable rate mortgage or the Canadian
On an adjustable rate mortgage, the time between changes in the
interest rate and/or monthly payment, typically one, three or five
years, depending on the index.
A repayment method in which the amount you borrow is repaid
gradually though regular monthly payments of principal and interest.
During the first few years, most of each payment is applied toward the
interest owed. During the final years of the loan, payment amounts are
applied almost exclusively to the remaining principal.
The amount of time required to amortize the loan. The
amortization term is expressed as a number of months. For example, for
a 15-year fixed-rate mortgage, the amortization term is 180 months.
Annual Percentage Rate (APR)
Is a interest rate reflecting the cost of a mortgage as a yearly
rate. This rate is likely to be higher than the stated note rate or
advertised rate on the mortgage, because it takes into account point
and other credit cost. The APR allows home buyers to compare different
types of mortgages based on the annual cost for each loan.
Fees that are paid upon application. An application fee may
frequently include charges for property appraisal ($200-$400) and a
credit report ($30-50). See also Glossary of Closing Costs.
An estimate of the value of property, made by a qualified professional called an appraiser.
A written report by an appraiser containing an opinion as to the value of a property and the reasoning leading to that opinion.
A local tax levied against a property for a specific purpose, such as a sewer or street lights.
The agreement between buyer and seller where the buyer takes
over the payments on an existing mortgage from the seller. Assuming a
loan can usually save the buyer money since this is an existing
mortgage debt, unlike a new mortgage where closing cost and new,
probably higher, market-rate interest charges will apply.