Everything has its own jargon; its own terminologies. Real estate is no exception. Are you searching for the meaning of some words listed in your contract, or looking to understand a word you heard your Realtor say, but were too afraid to ask? Never fear, C21 Able is here. We've made a small dictionary of real estate terms for you! Bookmark or favourite this page to have as a handy reference while you're going through the home buying or home selling process.



Active contingent

When a seller accepts an offer from a buyer, that offer hinges on the buyer’s ability to meet certain conditions before sale finalization. Contingencies might include the buyer selling their home, receiving mortgage approval, or reaching an agreement with the seller on home inspection.


Adjustable-rate mortgage (ARM)

This type of mortgage has an interest rate that fluctuates throughout the life of the loan. Mortgage payments increase and decrease depending on how the interest rate fluctuates. ARMs often start out with a tempting, low, fixed-interest rate for the first few years, and then begin to fluctuate after that. These mortgages can be the better decision for those who know they will be paying off the loan sooner, such as expected inheritance receivers, those close to retirement or those expecting any large sum of money.


Adjustment date

The specific date your mortgage begins to accrue interest. The adjustment date most often falls on the first day of the month after mortgage funds are sent to the lender.



This is the schedule of mortgage payments spread out over time. As a common example, a buyer's amortization schedule is usually one monthly payment scheduled over a 15-40 year period of time.


Annual percentage rate (APR)

APR is the amount of interest charged on your loan each year.



An objective estimate of how much a home is worth. A lender will appoint an appraiser to survey the house in person, taking in the location of the home, its age, its condition, its additions/renovations and the recent sales of comparable homes nearby to determine its value. Home buyers generally cover the cost of an appraisal, where the fee is included in the closing costs.



The amount a property increases in value over time.


Assessed value

An assessment is used to determine how much in taxes the owner of a property will pay. An assessor calculates the assessment of a home’s value by looking at comparable homes in your area and reviewing an inspection of the home in question.



An assignment is when the seller of a property signs over rights and obligations to that property to the buyer before the official closing.


Assumable mortgage

Assumption is when a seller transfers all terms and conditions of a mortgage to a buyer. The buyer takes on the seller’s remaining debt instead of taking out a new mortgage of their own.




Balloon mortgage

Instead of a traditional fixed-rate mortgage in which the owner pays on the loan in installments, a balloon mortgage is paid in one lump sum (e.g., the balloon payment). It’s usually associated with investment or construction projects that are issued for the short term and don’t require collateral.


Bi-weekly mortgage

A bi-weekly mortgage payment means a homeowner pays their monthly mortgage payment in two monthly installments instead of one. With a bi-weekly mortgage, you'll make 26 payments per year instead of 12. The end result is that you'll pay the equivalent of 13 monthly payments each year lowering interest rates and your principal balance at a faster pace.


Bridge loan

A bridge loan is a short-term loan a homeowner takes out against their property to finance the purchase of another property. It’s usually taken out for a period of a few weeks to up to three years.



A broker has passed a broker’s license exam and received education beyond what the state requires of real estate agents. They understand real-estate law, construction, and property management. Real estate agents are required to work under the supervision of a broker.



A buydown is a mortgage-financing technique lowering the buyer’s interest rate for anywhere from a few years to the lifetime of the loan. Usually, the property seller or contractor makes payments to the mortgage lender lowering the buyer’s monthly interest rates, which, in turn, lowers their monthly payments.




Cash-out refinance

A cash-out refinance, also known as a cash-out refi, is when a homeowner refinances their mortgage for more than it’s worth and withdraws the difference in cash. To be eligible for this kind financing, a borrower usually needs at least 20% in equity.


Clear title

Also known as a "just title," "good title," or a "free and clear title" -- a clear title doesn’t have any kind of lien or levy from creditors. It means there's no question of legal ownership of the property such as building code violations or bad surveys.



Closing is the final stage of the real estate transaction. The date is agreed upon when both the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.


Closing costs

Closing costs are usually comprised of between 2-5% of the total purchase price of the home. These fees are paid on or by the closing date.



If a buyer is having trouble getting approved for a loan, they can elicit the help of a co-borrower. This person is usually a family member or friend who's added to the mortgage and guarantees the loan. They're listed on the title, have ownership interest, sign loan documents, and are obligated to pay monthly mortgage payments if the buyer is unable to.



Real estate commission in Saskatchewan is usually 6% of the home’s sale price. That commission is split between the buyer’s and seller’s agents, and is paid by the seller at the time of closing.


Comparable sales

Comparable sales are used by an appraiser to establish how much a home is worth based on what other similar homes in the area have sold for recently. Only homes that have legally closed count as a comp -- and most lenders and insurance providers require appraisers to use at least three closed sales.


Construction loan

A construction loan -- or self-build loan -- is a short-term loan used to finance the construction of a home or real estate project. This type of loan covers project costs before long-term funding can be financed.



If a property is contingent, or the contract contains a contingency, certain events must transpire or the contract can be considered null. A contingency might be that the home must past an appraisal or receive a clean inspection.

 The sale of a home could also be contingent on the buyer selling their home by a specified date. If either the buyer or seller fail to meet the expectations of the contingency, either party can exit the contract.


Contingent vs. pending

When a property is contingent, it means the owner has accepted an offer -- but certain contractual expectations must be met or the offer will be void. If all contingencies are met, the property changes status to “pending.” While contingent offers are still considered active listings, pending offers are taken off the market and other offers will not be entertained.


Conventional mortgage

A conventional mortgage is a loan not guaranteed or insured by the federal government. These borrowers usually make larger down payments (at least 20%), don’t require mortgage insurance, and are at a lower risk of defaulting on their home loan payment.


Convertible ARM

A convertible adjustable rate mortgage (ARM) allows buyers to take advantage of low interest rates by receiving a loan at a “teaser” loan interest rate. The monthly mortgage payment stays the same, but interest rates fluctuate (usually every six months). The borrower has the option of converting their ARM to a fixed-rate mortgage, but there are generally fees for the switch.


Cost of funds index (COFI)

A cost of funds index is an average of the regional interest expenses acquired by financial institutions. It’s used to calculate variable rate loans.





A housing deed is the legal document that transfers a title from the seller to the buyer. It is a written document, and is sometimes referred to as the vehicle of the property interest transfer.



If a homeowner defaults on their loan, it means they have not paid the sum they agreed to pay. Typically, a mortgage default means the homeowner hasn’t made a home loan payment in 90 days or more.



A mortgage is considered delinquent when a scheduled payment is not made. If a payment is more than 30 days late, a lender might begin collection or foreclosure proceedings.


Down payment

The down payment is the amount of cash a homebuyer pays at the time of closing. Conventional home loans require a 20% down payment. In todays housing market, many first-time buyers are unable to afford a conventional down payment, even with two people contributing. Instead, they will pay 5% down, with mortgage insurance added on to their loan. This increases the total cost of the loan, but makes paying for a house more affordable on a month-to-month basis.




Earnest money deposit

Earnest money is a deposit (usually 1-2% of the home’s total purchase price) made by a homebuyer at the time they enter into a contract with a seller. Earnest money demonstrates the buyer's interest in the property and is generally deducted from the total down payment and closing costs.



An easement grants someone else the legal right to use another person’s land or property, while still leaving the title in the owner's name.


Eminent domain

The right of eminent domain gives the government the ability to use private property for public purposes. It's only exercisable when and if the government fairly compensates the owner of the property.



When a property owner violates the rights of a neighbour by building or adding on to a structure that extends onto a neighbor’s land or property line.



A claim against a property that restricts its use or transfer, including an easement or property tax lien.


Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) was put into place on October 28, 1974 and rules it unlawful for creditors to discriminate against applications because of race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.



Equity is the part of your property you actually own. While you do “own” your home, your mortgage lender has interest in the property until it’s paid off. To calculate your home’s equity, subtract your outstanding loan balance from the current market value of your property. Home equity will increase as you pay down your loan or the market value of your home increases.



Escrow is a part of the homebuying process. It happens when a third party holds something of value during the transaction. Most often, the “value” the third party holds onto is the buyer’s earnest money check. When the transaction is complete (usually at closing), the third party will release those funds to the seller.


Examination of title

A title examination reviews all public records tied to a property. It reviews all previous deeds, wills, and trusts to ensure the title has passed cleanly and legally to every new owner.




Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) was put into place in 1970, which ensures fairness, accuracy, and privacy of personal information contained in files maintained by credit reporting agencies. The goal of this act is to protect consumers from having misinformation used against them.


Fair market value

A property’s fair market value is its accurate valuation in a free and open market under the condition that buyers and sellers are knowledgeable about the asset, acting in their best interests, and free of pressure to complete the transaction.


Fee simple

Fee simple refers to the most common type of property ownership. It means the owner’s rights to the property are indefinite and can be freely transferred or inherited when the owner chooses. It is most often associated with single-family homes, since condominiums and townhouses are purchased with conditions and/or restrictions.


Fixed-rate mortgage

A fixed-rate mortgage is the most common type of loan. It comes with an interest rate that stays the same for the lifetime of the loan, and provides the borrower with more stability and predictability over the lifetime of their loan. While mortgage payments can fluctuate as property taxes and homeowner’s insurance change, many people prefer the fixed-rate mortgage for its long-term reliability.


For sale by owner

Homes listed as, “For Sale by Owner” (FSBO). They sold without the help of a real estate agent. The biggest benefit to the seller is that they avoid paying commission fees; there are few benefits to the buyer.



If a homeowner doesn’t make a mortgage payment (usually for more than 90 days), foreclosure is a legal process during which the owner forfeits all property rights. If they are unable to pay off outstanding debt on the property or sell it via a short sale, the property enters a foreclosure auction. If no sale is made there, the lender takes control of the property.




Home inspection

A home inspection is carried out by an objective, third party to establish the condition of a home during the real estate transaction. An inspector will report on such things as a home’s heating system, the stability of the foundation, and the condition of the roof. The inspection is meant to identify major issues that might affect the value of the home and the stability of your and your lender’s investment and return.


Homeowner’s insurance

When you purchase a home, it's also necessary to purchase homeowner’s insurance to cover any losses or damages that might incur, such as natural disaster, theft, or damage. It also protects the homeowner from liability against any accidents in the home or on the property. Insurance payments are usually included in the monthly mortgage payments.




Lease option

A lease option is like rent-to-own for real estate. It gives a person the ability to lease property with the option to buy. It includes a legal agreement with a monthly rental amount due, while also including an option to buy the property for a predetermined price at any time during the length of the agreement.



In real estate, the lender refers to the individual, financial institution, or private group lending money to a buyer to purchase property, with the expectation that the loan will be re-paid with interest, in agreed-upon increments, by a certain date.



A property lien is the unpaid debt on a piece of property. It's a legal notice and denotes legal action taken by a lender to recover the debt they are owed. It can come from unpaid taxes, a court judgement, or unpaid bills and can slow down the homebuying process when unattended.


Life cap

A life cap refers to the maximum amount an interest rate on an adjustable rate loan can increase over the lifetime of the loan. A life cap is also known as an absolute interest rate or interest rate ceiling, and keeps interest rates from ballooning too high over the term of the loan.


Loan officer

Residential loan officers, or mortgage loan officers, assist the homebuyer with purchasing or refinancing a home. Loan officers are often employed by larger financial institutions and help borrowers choose the right type of loan, compile their loan application, and communicate with appraisers.


Loan servicing

Loan servicing is a term for the administrative aspects of maintaining a loan, from the dispersal of the loan to the time it’s paid in full. Loan servicing includes sending the borrower monthly statements, maintaining payment and balance records, and paying taxes and insurance. Servicing is usually carried out by the lender of the loan, typically a bank or financial institution.



The loan-to-value (LTV) ratio is the mortgage loan balance divided by the home’s value. It shows how much you’re borrowing from a lender as a percentage of your home’s appraised value. The higher your LTV, the riskier you’ll appear during the loan underwriting process, since a lower down payment denotes less equity or ownership in your property, making you more likely to default on your loan (in the eyes of a lender).


Lock-in period

The period of time when a borrower cannot repay their loan in full without incurring a penalty fine by the lender.





A mortgage is the agreement between a borrower and a lender giving the lender the right to the borrower’s property if the borrower is unable to make loan payments (with interest) within an agreed upon timeline.


Mortgage banker

A mortgage banker works directly with a lending institution to provide mortgage funds to a borrower. They can only obtain funds from a specific institution and are responsible for each part of the mortgage process, including property evaluation, financial due diligence, and overseeing the application process.


Mortgage broker

A mortgage broker shops several lenders, acting as a middle man between lending institutions and the borrower. A broker can compare mortgages from several different institutions, giving the borrower a better deal.


Mortgage insurance

If a homebuyer makes a down payment of less than 20% of the purchase price of a home, they’ll usually be required to pay mortgage insurance. It lowers the risk of a lender giving you a loan, but it also increases the cost of the loan.


Multiple Listing Service (MLS)

an extensive database owned and operated by Realtors across Canada. The major aspect that separates this database from a regular work database is public viewing. A house listed by one Realtor is shared with every other Realtor, agency as well as the general public. To participate on the MLS® system in Canada, Realtors must meet professional development requirements and adhere to a code of ethics and rules of cooperation. They must also carry Errors and Omissions Insurance, and follow a strict set of business practices. This ensures that no piece of information is left out of a property listing; marketing is fair and honest.




Negative amortization

Amortization refers to the process of paying off a loan with regular payments, so that the amount owed on the loan gradually decreases. Negative amortization happens when the amount owed continues to rise, regardless of regular payments because one is not paying enough to cover the interest.


Note rate

The note rate is the interest rate stated on a mortgage note. It is also commonly referred to as the nominal rate or face interest rate.




Original principal balance

The original principal balance is the amount owed on a mortgage before the first payment has been made.


Origination fee

The fee a borrower pays a lender to cover the costs of processing their loan application.


Owner financing

Owner financing, also known as seller financing or purchase-money mortgage, takes place when a borrower finances the purchase of a home through the seller, bypassing conventional mortgage lenders and financial institutions.





A sale is considered “pending” if all contingencies have been met, and the buyer and seller are moving toward closing. At this point, it’s unlikely the sale will fall through, and the buyer or seller risk losing the earnest money if they walk out on the deal at this point.


Per Diem

Per diem, or “per day”, fees are charged if a loan isn’t approved by the date the loan was scheduled to be completed. These charges are payable to the lender during closing.



PITI stands for principal, interest, taxes, and insurance. It refers to the sum of each of these charges, typically quoted on a monthly basis. These costs are calculated and compared to the borrower’s monthly gross income when approving a mortgage loan. A borrowers PITI should generally be less than or equal to 28% of their gross monthly income.



Before submitting an offer on a home or engaging with a real estate agent, you’ll likely be required to get pre-approved. This means a lender has checked your credit, verified your information, and approved you for up to a specific loan amount for a period of up to 90 days.



Unlike pre-approval, pre-qualification is an estimate of how much you can afford to spend on a home.


Prime interest rate

The prime interest rate is typically awarded to a bank’s best customers. It’s the best-available loan rate and is usually three points above the federal funds rate - the rate banks charge each other for overnight loans.



The principal of a loan is the amount of money owed on that loan. As you make monthly mortgage payments, your principal goes down. The amount of interest you pay on a monthly loan will affect how much of your monthly mortgage payment goes to paying down the principal. A high interest rate means you’ll pay less on the principal, meaning you’ll pay more on your loan over time.


Purchase agreement

A purchase agreement demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell said property. The document outlines the terms and conditions of a sale, and holds each party legally accountable to meeting their agreement.


Purchase-money mortgage

A purchase-money mortgage, also known as owner or seller financing, is issued to the buyer by the seller of a home during the purchase transaction. It is done to bypass a typical mortgage broker or lending channel and allows the buyer to assume the seller’s mortgage.




Quitclaim deed

A quitclaim deed is a document that transfers ownership of property from one party to another. It transfers the title of the property -- but only transfers what the seller actually owns. If two people own a home jointly for example, one person could only transfer their half of the property via quitclaim. This type of transaction is commonly used when property is being transferred between family members not using traditional real estate channels.




Rate lock

A rate lock allows borrowers to lock in an advantageous interest rate before a real estate transaction closes. A rate lock allows the borrower to lock in that interest rate for a specific period of time, protecting them from market fluctuations.


Real estate agent

A real estate agent is licensed to negotiate and coordinate the buying and selling of real estate transactions. Most real estate agents must work for a realtor or broker with additional training and certification.


Real estate owned

Real estate owned (REO) refers to property owned by a bank, government agency, or other lender. Homes usually become real estate owned after an unsuccessful foreclosure auction or short sale.


Real Estate Settlement Procedures Act

The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide disclosures to borrowers informing them of real estate transactions, settlement services, and relevant consumer protection laws. Its goal is to regulate settlement costs, prohibit specific practices such as kickbacks, and limits the use of escrow accounts.



Refinancing replaces an existing loan with a new one. Debt is not eliminated when a borrower refinances. Instead, it typically offers better terms, including a lower interest rate, lower monthly mortgage payments, or a faster loan term.


Right of first refusal

If a third party buyer offers to buy or lease a property owner's asset, the right of first refusal ensures the property holder is allowed a chance to buy or lease the asset under the same terms offered by the third party before the property owner accepts the third-party offer.


Right of ingress or egress

The right of egress is a person’s legal right to exit a property. The right of ingress is the right to enter a property. It is generally used in rental or easement situations where the tenant or person to which easement has been granted needs access to a shared driveway, a private road to the property, etc.


Right of survivorship

The right of survivorship is employed most often when there is joint ownership or tenancy of a property. It ensures that the surviving owner automatically receives the deceased owner’s share of the property, becoming the sole owner of the property.





A sale leaseback occurs when a buyer closes on a home and then leases back tenancy to the seller. This usually occurs when the seller needs more time to vacate the home, in which case, the buyer becomes a sort-of landlord and receives payment from the seller for every day they remain in the home.


Second mortgage

A second mortgage is when a property owner borrows against the value of their home. They are also commonly referred to as HELOCs and draw on the market value of the home to provide the borrower with funds to use however they wish. They are granted in a lump sum or a line of credit that can be paid back using rate choices that help plan payments.


Secured loan

A secured loan is backed by the borrower's assets - including cars, a second home, or other large items. They can be used as payment to a lender if the borrower is unable to pay back the loan.



A mortgage servicer is the person who manages the daily administrative work around a loan, including processing loan payments, responding to borrower inquiries, and tracking principal and interest paid. See loan servicing.


Short sale

A short sale occurs when a homeowner sells their property for less than what’s owed on the mortgage. A short sale allows the lender to recoup some of the loan that's owed to them, but must be approved by the lender before the seller moves forward.





A home’s title represents the rights to the property. Those rights are transferred from the seller to the buyer during a real estate transaction, and give the buyer legal rights to the property upon closing.


Transfer of ownership

In real estate, transfer of ownership refers to transfer of a property’s deed and title from the seller to the buyer at closing.




Under contract

A home is “under contract” when a seller has accepted an offer from a buyer, but the transaction has not yet closed.

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