When you think of a home, what’s the first thing that comes to mind? For most people, it’s a place of safety and comfort; somewhere they can go to escape…
Lennie Rampone, Aaron Marsh and the whole team at Rampone-Marsh Mortgages are thrilled to partner with the Canadian Mental Health Association in Kelowna for the Mental Health Matters Campaign! Fast…
Canada Day is almost here. Our favourite holiday of the calendar year is celebrated this weekend – Saturday July 1st. From one side of the Central Okanagan to the other…
Lennie Rampone and Aaron Marsh are long-time residents of the Okanagan. They’re fathers, coaches, and community ambassadors. It is a priority for them to take initiatives to help GIVE BACK…
is a type of mortgage where the interest rate fluctuates periodically based on bank prime rates. It is also known as the variable rate mortgage.
Amortization
is the duration of the loan re-payment that is calculated by equal continual payments to pay off the outstanding debt at the end of a fixed period, including accrued interest and principal on the unpaid balance.
Appraisal
is an estimate of the value of a property that is assessed by a qualified professional called an “appraiser.” The value is determined by either a direct comparison, cost or income approach.
Assumption
is the legal agreement that involves the purchaser and the vendor where the purchaser assumes the payments on an existing mortgage from the vendor. Assuming a loan can normally save the purchaser money since there are no closing costs involved.
Broker
is an individual who is involved in arranging financing for a client who does not personally loan the funds himself. Brokers are normally compensated for their work by charging a setup fee or receive direct commission from the financial institution they are setting their client up with.
Closing
is the final step in the mortgage process, which involves a meeting between the purchaser, vendor and lender. It is where the property, title ownership and money legally change hands.
Closing Costs
are costs involved in obtaining financing. The major costs involved in obtaining financing include; appraisal fees, legal fee’s and transfer taxes. The closing costs are normally around 1.5% of the purchase price.
CMHC
is the Canadian Mortgage Housing Corporation. They provide High Ratio Mortgage Insurance by protecting the lenders and guaranteeing them payments on the funds they are lending out. Allows people to obtain homes with less than 20% down.
Commitment
is an agreement in writing between a lender and a borrower to loan funds on a specific date. In a commitment there is a set list of conditions that need to be met prior to funding by the borrower in order for the transaction to be properly executed.
Construction Loan
is a type of loan where borrower obtains financing to cover the cost of construction. The lender advances funds to the borrower in intervals known as draws. As the portions of the construction project are completed, more funds are then released in order to complete the next step in the construction process.
Conventional Loan
a mortgage that is not insured by a mortgage Insurer (CMHC ,Genworth Financial, and AIG. (Under 80% Loan To Value)
Credit Report
a report that provides information to the brokers and financial institutions about the applicants current and past credit history.
Default
is when the borrower fails to meet legal obligations in the mortgage contract. It is specifically when they fail to make their monthly payments on a mortgage.
Delinquency
is when the borrower fails to make their mortgage payments on time. This normally leads to a forced sale on the borrowers home.
Down payment
funds that are provided by the borrower to make up the difference between the mortgage amount and the purchase price. Down payment’s normally range between 20%-25% of the purchase price.
Equity
is the difference between the property value and the financing secured against the home. Whatever portion is not secured by the lending institution constitutes itself as the “owner’s equity”
First Mortgage
a mortgage which is in first lien position. It takes priority over all other liens that are registered against the property. The only way a first mortgage can be pushed into second position is when the government is involved and registers tax liens against the home.
Fixed-Rate Mortgage
is a type of mortgage where the interest rate is set for a specific period of time. The rate cannot fluctuate and a fixed payment is set during the term negotiated between the lender and the borrower.
Gross Monthly Income
the total income that an individual earns per month prior to any expenses or deductions are taken into consideration.
Investor
is a source of funds for a lending institution. The institution then promises a certain rate of return to the investor based on the assessed risk of placing those funds out in the marketplace.
Lien
is a legal entitlement that is secured against a property for an outstanding payment of a debt or obligation.
Loan-To-Value Ratio
is the difference between the amount of the registered lien(s) and the property value expressed as a percentage. For example, if there is a mortgage registered for $100,000 on a $200,000 property, the loan to value ratio is 50%.
Market Value
is the lowest price that a seller would agree to have someone purchase his property for. At the same time the highest price a buyer is willing to pay for that same home. Most of the time a home is purchased within 3-4% of the asking price of the seller under normal circumstances.
Mortgagee
the lender.
Mortgagor
the borrower or homeowner.
Net Effective Income
the borrower’s gross income less all deductions and taxes.
Origination Fee
is a fee that is charged by the lending institution and or broker in order to prepare and organize the loan for the client. Normally a certain percentage of the loan amount is calculated and deducted from the gross proceeds.
P.I.T.H
is an abbreviation for principal, interest, taxes and heat. P.I.T.H. is also known and referred to as a monthly housing expense. This information is taken into consideration when calculating how much an individual can qualify for.
Power Of Attorney (POA)
is a legal document authorizing one person to act on behalf or represent another in a legal transaction.
Prepayment
is when a lender allows the borrower in a mortgage to make additional payments that are not set within the regular payment schedule.
Prepayment Penalty
is a penalty charged to the client due to paying out a mortgage prior to it’s natural expiration.
Principal
is the financial obligation still left on a mortgage. This does not include interest accrued or paid on the mortgage.
Realtor
is a professional who is legally registered with a real estate brokerage firm that provides the services of helping someone find or sell a home, and will usually partner with a preferred mortgage broker.
Second Mortgage
a mortgage which is in second lien position. It takes priority over all other liens that are registered against the property except for the first mortgage.
Title
is a legal document that provides ownership verification of an individual’s property.
Title Insurance
is a certificate that is normally distributed by a title insurance company. It guarantee’s a home buyer’s legal safety against errors in the title search. It also insures that no other mortgages can be registered without acknowledgment and permission from a lawyer and the originating financial institution.
Title Search
is a search that is usually completed by a lawyer or title company in order to obtain municipal records. It is done in order to confirm the legal ownership of the property. Prior to registering any mortgages, a title search is completed to insure that there are no unknown encumbrances secured against the home.
Underwriting
is when a decision is made whether pursue or provide a loan to a potential individual seeking financing. Standard underwriting considerations used to assess a file are credit, employment, and net worth. Based on the information provided an appropriate rate, term and loan amount are provided as offers to the client.
