Newcomers to mortgages sometimes find the terminology confusing. So what follows is Mortgage 1.0, a snapshot of the terms you’ll need to know when you go shopping for that first house.
Fixed-rate mortgage: the interest rate that will apply for the term of your mortgage
Term of mortgage: the length of time for which interest rates apply, not to be confused with the amortization
Amortization: the process of spreading out a loan into a series of fixed payments over time to pay off the loan and interest, at an interest rate that changes at the end of each term
Adjustable-rate mortgage: an interest rate that fluctuates throughout the term of the mortgage, usually lower than fixed rate but subject to changes in the “big” interest rate
Pre-approval: a letter from your lender approving you for a specific amount, based on the information you provide to the lender
Final approval: confirmation of your pre-approved mortgage, generally within 90 to 120 days of when it was issued
Appraisal: assessment of the market value, by the lender’s appraiser, of the home you want to buy that will confirm (or not) the amount of the mortgage
Any questions?
Call Jennifer (604-726-8768) or Dale (604-922-3353).