Blog entry for Lance Phillips of Macdonald Realty, North Shore and Vancouver Real Estate Specialist, 604-926-6718 or 604-861-6767

When you’re buying real estate, especially for the first time, sometimes the professionals in the field assume you understand their “language”. And sometimes we pretend we do understand, even though often it sounds like someone is speaking to us with a mouth full of marbles. We try to look intelligent and informed, when inside our head’s we’re thinking, “I haven’t the slightest idea what this person just said to me, but I don’t want to look like an idiot, so I’ll just sit here nodding like one.”

So today, I’m going to explain a few of the more common terms used when purchasing real estate. Some may seem obvious, but just remember there’s a first time for everyone (nudge nudge wink wink). Okay, get your mind out of the gutter - let’s get serious:

Amortization Period: No, this is not something your mother should have discussed with you when you were going through puberty. It is simply the actual number of years it will take to repay a mortgage loan. Your mortgage payments are calculated using an amortization period, which is generally 25 years and no longer. Amortizations can certainly be shortened, however for a first time buyer, usually the goal is to keep the payments within a reasonable range in order to able to qualify for the loan. (I have outlined qualifying in my blog from April 29th.)

Appraised value: This is like when you are left a hideous looking vase by your Auntie Ruth and are told it is worth a chunk of change. You rush down to the Antique Roadshow to find out when you’ll be handing in your notice to your deranged boss, because you are obviously sitting on a gold mine. Okay, maybe its not exactly like that, but at least I got your attention.

The appraised value is a professional assessment of the property you are purchasing. Even though you may have been assured its worth a certain price, you are always well advised to have it confirmed by a certified appraiser, even if you are not obtaining a mortgage loan.

Blended payments: Can’t think of anything funny for this one, so will just forge ahead. This is a mortgage payment consisting of both a principal and an interest component, paid regularly during the term of the mortgage. Most standard mortgage loans are set up this way. When you first start payments on a new mortgage, most of your payment is going towards the interest portion of the loan. However, as time marches on, a little bit more each month peels away from the principal as well. This does take time though, so you can see where the 25 year amortization period comes in handy.

I think that is enough for today, though I will likely do a few each week, so keep visiting!

Should there be any questions regarding the above, or any other real estate queries, please contact Lance Phillips at 604-926-6718 or 604-861-6767.

Thought for the day - “If you think nobody cares if you’re alive, try missing a couple of mortgage payments.”