Chapter 7 Vocab

Question 1

lease

Answer 1

a legal document that defines the conditions of a rental agreement

Question 2

manufacture home

Answer 2

a housing unit that is fully or partially assembled in a factory before being moved to the living site

Question 3

condominium

Answer 3

an individually owned housing unit in a building with several such units

Question 4

co operative housing

Answer 4

a type of subsidized housing in which half the units have geared - to - income rental prices

Question 5

non profit co-operative housing

Answer 5

rental housing owned by a community group, religious group , or non profit organization to provide affordable housing

Question 6

for - profit co-operative housing

Answer 6

rental housing for which members own shares although they do not own the units in which they live

Question 7

mortgage

Answer 7

a personal loan used to purchase property

Question 8

gross debt service ratio

Answer 8

monthly shelter costs as a percentage of your gross monthly income
(p+i+t+heat / gross monthly income) x 30-32% = maximum allowable amount to spend on housing

Question 9

total debt service

Answer 9

your monthly shelter costs plus any outstanding debt payments and obligations as a percentage of your gross monthly income; a ratio used to determine the maximum affordable mortgage payment, mortgage amount, and home purchase price
((p+i+t+h+debt)/ gross monthyl income) x .40% = maximum allowable amount to spend on housing

Question 10

zoning laws

Answer 10

restrictions on how the property in an area can be used

Question 11

ammortization

Answer 11

the reduction of a loan a balance through payments made over a period of time

Question 12

variable rate mortgage

Answer 12

a home loan with an interest rate that can change during the mortgage term due to a changes in market interest rates; also called a flexible rate mortgage

Question 13

rate cap

Answer 13

a limit on the incr`eases and decreases in the interest rate charged on an adjustable rate mortage

Question 14

refinancing

Answer 14

the process of obtaining a new mortage on a home to get a lower interest rate

Question 15

prepayment penality

Answer 15

a charge imposed by the lender if the borrower pays off the loan early

Question 16

closing costs

Answer 16

fees and charges paid when a real estate transaction is complete; also called settlement costs

Question 17

title insurance

Answer 17

insurance that, during the process mortgage term, protects the owner or the lender against financial loss resulting from future defects in the title and from other unforeseen property claims not exlcluded by the policy.

Question 18

deed

Answer 18

a document that transfers ownership of property from one party to another

Question 19

escrow account

Answer 19

money, usually deposited with the lending instituion, for the payment of property taxes and homeowner’s insurance

Question 20

appraisal

Answer 20

an estimate of the current value of a property

Question 21

Two types of charges in Mortgage

Answer 21

conventional charge

collateral charge

Question 22

conventional charge

Answer 22

registered for the actual amount of mortgage loan - the amount you borrow

Question 23

collateral charge

Answer 23

registered for the actual amount OR greater amount than the amount of the loan

Question 24

Why would anyone want a collateral charge for mortgage?

Answer 24

may allow for access to additional funds through future loans or other credit agreements that can be secured by the existing collateral charge

Question 25

Old time thinking about what was recommended for what would be spent on housing

Answer 25

no more than 25-30% of housing, or 2.5x your income

Question 26

What act protects your rights even if you lease does not cover all the details?

Answer 26

Residential Tenancies Act

protection of being locked out, rent increase, right of legal action for non payment/destruction

Question 27

What protects the right for anyone to rent without discrimination?

Answer 27

The Canadian Charter of Human Rights

Question 28

Mobile HOmes

Answer 28

less than 1000 square feet, same features as conventional house, tends to depreciate, safety sucks

Question 29

How much of RRSP can first time buyers use to pay mortgage down payment?

Answer 29

25,000

Question 30

What percentage down payment is a high ratio mortgage?

Answer 30

20%

Question 31

Fastest way to pay mortgage

Answer 31

bi weekly accelerated

monthly

Question 32

application process to obtaining mortgage

Answer 32

meet to review application and provide proof and other documentation of employment
lender obtains credit report and verifies information
mortgage is approved/ denied

Question 33

mortgages are approved and denied based off

Answer 33

borrower’s credit and financial history
evaluation of home
max amount for which you qualify `

Question 34

max high ratio mortgage amortization

Answer 34

25 years and at 95% of home value

Question 35

max conventional mortgage

Answer 35

30 years and at 80% of home value

Question 36

prefer security of knowing your payment won’t change over term of your mortgage, but wish you could take advantage of the lower rates often found with variable rate mortgage?

Answer 36

choose variable rate but make slightly higher payments - saves time and interest on mortgage

Question 37

second mortgage

Answer 37

home equity loan allows homeowner to borrow on paid up value of property

Question 38

reverse mortgage

Answer 38

if owner is 55 years or older, not required to make monthly payments but will pay back mortgage when home is sold

Question 39

do it yourself mortgage

Answer 39

if you are self employed state

Question 40

defaulting on mortgage

Answer 40

lender is paid back by the insurer