The one thing about participating in the real estate market that confounds most consumers is the terminology and jargon that must be learned. But as with any business, in order to be successful as a buyer or seller, it is necessary to become familiar with certain concepts and words.

The real estate business is somewhat unique in that it is not confined to one particular set of dealings. Instead, it encompasses a number of professions: financial, legal, governmental, building trades, and of course, real estate itself.

So, from A for Amortization to Z for Zoning regulations, here is a quick run through of some of the important real estate terminology you'll encounter.

Amortization: The number of years it will take to pay off the entire amount of a mortgage. In Ontario, most mortgages are amortized over 25 years

Appraisal: An estimate of a property's market value. This is used by lenders to determine the amount of your mortgage.

Appreciation: Increase of a property's value over time.

Assessment: The value of a property set by the local municipality. The assessment is used to calculate their property tax.

Assumable mortgage: A mortgage held on a property by a seller that can be taken over by the buyer. The buyer then assumes responsibility for making payments. An assumable mortgage can make a property more attractive to potential buyers.

Broker: A real estate professional licensed in Ontario to facilitate the sale, lease or exchange of a property.

Bridge Financing: Money borrowed against a homeowner's equity in a property (usually for a short term) to help finance the purchase of another property or to make improvements to the property being sold.

Buyer Agency Agreement: Establishes a formal and exclusive relationship between a potential buyer and it's representatives.

Buyer's Market: A residential real estate market in which the number of properties available for sale significantly exceed the number of buyers.

Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met and the deed to the property is transferred from the seller to the buyer.

Closing Costs: Expenses in addition to the purchase price for buying and selling a property.

Closing Date: The date on which the title and possession to a property is transferred from the seller to the buyer, and the money is paid

Conditions: Provisions to an Agreement of Purchase and Sale between the seller and the buyer that must be met before the sale's transaction can be completed.

Counter-Offer: One party's written response to the other party's offer during negotiation of a real estate purchase between buyer and seller.

Debt Service Ratio: The percentage of a borrower's gross income that can be used for housing costs (including mortgage payments and taxes). This is used to determine the amount of monthly mortgage payment the borrower can afford.

Deed: A legal document that conveys (transfers) ownership or 'title' of a property to a buyer.

Deposit: The money paid by the buyer at the time an offer is submitted.

Down Payment: The difference between the property's purchase price and the amount financed.

Easement: A legal right to use or cross (right of way) another person's land for limited purpose.

Encroachment: An intrusion onto an adjoining property.

Equity: The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's 'stake' in the property

First Mortgage: The first security registered on a property. Additional mortgages secured against the property are termed 'secondary'.

Fixtures: Permanent improvements to a property that are normally included with the purchase unless specifically excluded in the Agreement of Purchase and Sale.

Foreclosure: A legal process by which the lender takes possession and ownership of a property when the borrower doesn't meet ('defaults' on) the mortgage obligations.

Interest: The cost of borrowing money.

Joint Tenancy: A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of the property.

Listing Agreement: The contract between the listing broker and an owner, authorizing the Realtor to facilitate the sale or lease of a property.

Listing Broker: The Realtor who signs a contract with an owner to sell the properly

Mortgage: A contract between a borrower and a lender where the borrower pledges a property as security to guarantee repayment of the mortgage debt.

Mortgagee: The lender.

Mortgagor: The borrower.

Mortgage Term: The length of time a lender will loan mortgage funds to a borrower. Most terms run from six months to five years, after which the borrower will either pay off the balance or renegotiate the mortgage for another term. Payments are calculated using the interest rate offered for the term, the amount of the mortgage, and the amortization period.

Multiple Listing Service (MLS): A system for relaying information to realtors about property for sale

Open Mortgage: A mortgage that can be prepaid or renegotiated at any time and in any amount without penalty.

Partially Open Mortgage: A mortgage that allows the borrower to pre-pay a specific portion of the mortgage principal at certain times with or without penalty.

Realtor: A trademarked name describing real estate professionals who are members of a local real estate board and the Canadian Real Estate Association.

Selling Broker: The Realtor who actually finds a buyer

Title: The legal evidence of ownership in a property.

Title Insurance: Protects the buyer against defects in the property's title or unknown claims on the property.

Title Search: A detailed examination of the ownership documents to ensure that there are no leans or other encumbrances, and no question regarding the seller's ownership claim.

Transfer Taxes: Payment to the provincial government for transferring property from the seller to the buyer.

Zoning Regulations: Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used.

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