There are many stresses associated with home buying – both financial and emotional. And frankly speaking, it doesn’t help that the process comes with its very own foreign language. While your mortgage broker can help de-mystify these terms, it helps to have a bit of a primer on what some of these terms mean. After all, it’s your money and your home we’re talking about; as a Mortgagor, you have a right to understand what you’re reading. (You didn’t know you were a mortgagor? Read on…)

We’ll start with Amortization” and “Term”. Both refer to periods of time in the life of your mortgage, and you’ll want to be sure that you understand the difference.

The amortization” of your mortgage is the length of time that would be required to reduce your mortgage debt to zero, based on regular payments at a specified interest rate. The amortization period is typically 15, 20 or even 25 years, although it can be any number of years or part-years. You could establish that you are able to make a certain payment each month of say $950 for your $130,000 mortgage at 5.5%. In this case, your amortization period will be just under 18 years. Or you could tell your broker that you’d like to be mortgage-free in just 10 years. With an amortization period of 10 years at the same interest rate, your $130,000 mortgage will cost you about $1,407 per month. That’s a tougher monthly payment, but you would save thousands of dollars in interest. (More than $35,000, in fact.) As you arrange your mortgage, then, keep in mind that your amortization period may be fairly long — although the shorter you can make it, the less you’ll wind up paying for your home in the long term.

The “term” of your mortgage will typically be shorter. The “term” is the duration of your mortgage agreement, at your agreed interest rate. This will be a very specific length of time, although you will have several choices. A 6-month mortgage is a very short-term mortgage. A 10-year mortgage will be one of the longest terms, generally with a higher rate of interest to represent the higher degree of uncertainty in the economic outlook. After your mortgage term expires, you will need to either pay off the balance of the mortgage principal, or negotiate a new ontario mortgage at whatever rates are available at that time.

Now, back to the term “Mortgagor”. This is one of three very similar terms: “Mortgagee”, “Mortgagor”, and “Mortgage”. A Mortgagee is the lender of the money: a bank, company, or individual. A Mortgagor is the borrower: the person or persons (or company) that is borrowing the money, and who will pay it back to the mortgagee. The Mortgage, of course, is the legal document that pledges the property as a security for the debt.

Still confused? Speak with a mortgage professional. Get the best mortgage suited to your needs and all your questions answered in plain talk.

Statistically, foreclosures and short sales have engulfed the housing market as homeowners anxiously seek for ways to improve their own financial difficulties. As people are laid off and hours are curbed, many people are perplexed and wonder if the right plan of action is to sell or relinquish their home. The first thing to consider is the distinctions between a foreclosure and a short sale, including advantages and disadvantages for each.

The Logistics of a Foreclosure

A foreclosure ensues when a mortgage lender secures a court order. Such a court order ends the mortgagor’s equitable right of redemption. This denotes that the borrower has defaulted on their loan and has lost the ability to pay the remaining debt to the lender. The mortgagor’s house has been repossessed by the lender, and the borrower will have to leave the property when the home is sold. On the other hand, some states give borrowers from four months to a year to stay in their foreclosed homes free-of-charge. Regrettably, this has been the outcome for thousands of Americans, who in the last couple of years, have been unable to make payments and bear the painful task of waiting for their home to be sold before they move.

If you are a homeowner who is having trouble paying your mortgage, prior to allowing your home go into foreclosure, determine whether your financial situation is short-term. If so, you may be able to refinance your mortgage to your benefit, keeping you in your home.

How Short Sales Operate

If your mortgage holder agrees to cut its losses, it may grant a discount on a mortgage to avoid a foreclosure. This course can only succeed when the homeowner and bank work together to sell the home. Some lenders will reject a short sale, which makes it essential to hire either a lawyer or a realtor to assist you. Also, if you have cash resources, the lender may confiscate those assets in payment for the defaulted loan. A short sale does not ensure that your house will not fall into foreclosure but may be the best choice to paying off some of your mortgage. With a short sale, if you owe $500,000 on your mortgage and you negotiate with the lender to give them $430,000 from the sale of the home, then if the lender accepts this proposal you can walk away from the home. But why would the lender choose to give up $70,000? At this point, a lender merely wants to recoup as much of its funds as it can and not become responsible for the upkeep of a home.

Your Credit After Foreclosure or Short Sale

It may shock and depress you that your credit score will be affected by a foreclosure and a short sale in a very negative. However, the amount of time that it takes for a lender to loan you money for another home is significantly shorter when you decide in a short sale. A homeowner who has gone through a foreclosure will have to wait up to 24 to 75 months to be able to take out another loan. Conversely, a homeowner who has gone through the short sale course will only have to wait 18 to 27 months.

In short, it is wise to examine your financial predicament before choosing such a crucial decision and get advice from a real estate agent who specializes in short sales will help you make the right option.