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Realty Terms Beginning with A

Abstract of Title
An abstract of title is a historical account of all transactions conducted on the title to a specific property or piece of land. This title covers the property from the first sale to the present and is used by the title company to produce a title binder.

Acceptance refers to the formal written approval when a property seller accepts the offer made by the buyer for purchasing the property.

Accredited Mortgage Professional
The Accredited Mortgage Professional (AMP) is Canada's national designation for mortgage professionals. Launched in 2004, the AMP was developed by CAAMP (formerly CIMBL) as part of an ongoing commitment to increasing the level of professionalism in Canada's mortgage industry through the development of educational and ethical standards. Consumers should know that the AMP designation sets a single national proficiency standard for Canada's mortgage professionals.

A plot of land 180 by 242 feet is equal to one acre or 43,560 square feet.

Active Income
Active income refers to wages, tips, and profits from your business or employment that you partake in. It also includes portfolio income such as interest and dividends, but you cannot usually offset active income with passive losses. See also "Non-passive Income."

Add-on Interest
The interest that is calculated at the beginning of the loan and added to the principal amount owing. This means that the added interest must also be repaid, even if the loan is paid off early.

A change, revision, or update made to a contract.

Additional Principal Payment
You can pay extra money in addition to your required loan payment to help pay off the principal loan amount faster. By making the extra payment, you also reduce the amount of interest paid.

Adjustable Rate Mortgage (ARM)
An "Adjustable Rate Mortgage" or ARM refers to the type of mortgage loan where the interest rate and monthly payments can be adjusted to rise and fall with market conditions. The interest rate and payments can be adjusted as frequently as once a month or you can adjust the principal loan balance or the loan term to reflect the rate change.

Adjustment Period
The period of time between interest rate changes in an adjustable-rate mortgage.

An agency generally exists because of a relationship between two parties where one party acts on behalf of the other. For example, an agent will represent a client and conduct transactions with a third party on that client's behalf.

Agency Closing
The use of a title company or agency to supervise the closing meeting where the property is transferred and the mortgage is finalized.

A person who acts on behalf of another person (or client) when dealing with a third party transaction. In real estate, an agent is a person who conducts property transactions on behalf of sellers and buyers. The agent usually works on commission or for a pre-determined fee.

Agreement of Sale
A legally binding document that details the agreement between a property buyer and the property seller. This document specifies the agreed price and any other terms of the title transfer or sale.

Alienation Clause
This clause stipulates that the borrower must pay the mortgage in full upon transferring the property.

Money set aside by builders for amenities or services such as driveways, landscaping, carpeting, and fixtures. These amenities are usually standard, but they can have optional designs.

Amenities are features such as green space, playgrounds, community centers, shopping malls, or swimming pools that make a neighborhood or community more desirable for living.

The gradual reduction of a debt by means of a regular payment. Repayments of principal and interest in "blended" amounts. The normal amortization period for a mortgage in Canada is 25 years but can be as short as 5 years or as long as 25 years.

Amortization Schedule
A schedule or table that details the life of the loan or the amortization. This schedule includes the principal amount owing at the origination of the loan, period payments, interest paid on each payment, principal reduction on each payment, and the final balance. CanEquity has created a mortgage rate calculator to generate a sample amortization schedule to give clients a better understanding of how amortization works.

Amortization Term
The period of time that is required and agreed upon to repay (amortize) an entire mortgage loan.

Amortized Loan
An amortized loan is a loan where the interest and principal are both paid off in their entirety through a series of scheduled payments over a specified amount of time.

Annual Percentage Rate (APR)
A yearly interest rate that includes fees and costs paid to obtain the loan. Lenders are required by law to disclose this interest rate. The rate is calculated in a standard way, taking the average compound interest rate over the loan term, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

A periodic payment made to a policyholder by an insurance company for a certain length of time.

Application Fee
Lenders charge a fee to process the application or document as filled out by a prospective borrower to qualify for a loan. The application generally details the financial situation of the borrower and must be reviewed before a loan decision can be made.

Lenders require an independent assessment of the value of the home you are buying before agreeing to finance the purchase.

Appraisal Report
A detailed evaluation of a property's value that is typically conducted by a professional. The report is then based on an inspection of the property and a review of nearby, comparable properties along with their values.

Appraised Value
An educated opinion or estimate regarding the value (monetary worth) of a property.

A person who is qualified by education, training, and work experience to estimate the value of the real and personal property.

Appreciation refers to the increase in the value of a property or item over time.

An assessment or judgment made by a lender regarding the ability of a borrower to repay a mortgage loan. Being approved also helps the borrower when home shopping because the lender will confirm the amount the borrower can obtain to purchase a home.

As is Where is
The buyer makes the purchase at his or her own risk.

Asking Price
The amount of money the seller requests for the property or item. This is not the same as the appraised value.

Assessed Value
The value placed on land and buildings by a government agency for tax purposes.

A tax or charge levied on property by a taxing authority to pay for improvements such as sidewalks, streets, and sewers.

What the borrower owns. This could include real estate, savings, vehicles, RRSPs, GICs, stocks, bonds, household goods, etc.

Assignment refers to the transfer of a mortgage from one person to another person.

A person who transfers property to another person.

The ability of a mortgage to be taken over from the original borrower by a new borrower.

A loan or obligation that can be taken over from the original borrower by a new borrower.

Assumable Mortgage
An existing mortgage that can be taken over or "assumed" by the buyer from the seller when a property is sold.