Mortgages Glossary R

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Radon / Radon Gas

Natural gas (non man made) that can contaminate water or air in buildings. Radon is found to cause cancer in humans. Too well insulated homes may increase the chances of radon build up.

Rate

Charge for the privilege of borrowing money, expressed as the percentage rate. For example, I borrow $1.000 from YYY bank. YYY bank will charge 6% rate for the privilege of lending me money.

Rate After Intro

Interest rates charged on adjustable rate mortgages after the intro period is over. Adjustable rate mortgages come at low starting rates, known as intro rates.

Rate Cap

Limit on the interest rate for an adjustable rate mortgage. For example Ron has an adjustable rate mortgage starting at a rate of 6%, but with the rate cap of 8%. No matter the market, his interest rates will not go higher than 8% in an adjustable rate mortgage.

Rate Hold / Rate Lock / Rate Lock-in / Rate Protection

Guarantee by the lender or a mortgage broker that the interest rates quoted will not change when the borrower signs up for a mortgage. For example Ron quoted interest rates on July 10th, but wanted to sign up on July 25th. Brokers will lock the quoted rate for Ron to make sure they get his business.

Rate Index

In mortgage context, index refers to the interest rate from which the rate for an adjustable rate mortgage is calculated. As index changes, so do the rates in an adjustable rate mortgage.

Rate-improvement Mortgage Loan

Fixed rate mortgage feature that allows a one time interest rate reduction without refinancing. For example, Ron got a fixed rate mortgage at 5% with rate-improvement option. If the rates go below 5% Ron has a chance of getting lower rates. Some lenders may charge a fee for the privilege.

Rate Sheets

Papers with interest rates and points that mortgage lenders distribute to their loan officers, and mortgage broker affiliates.

Ratified Sales Contract

Contract signed by both the seller and the buyer, indicating that both have come to an agreement.

Rebate

Refund offered by sellers to encourage the purchase of real estate property. For example, a condominium owner may offer a $2500 rebate on taxes, meaning that the buyer will not have to pay taxes as in a regular transaction.

Ratio

A comparison of two figures, expressed as a fraction or a percentage. For example when buying a house, lender will look at borrower’s income and estimated monthly mortgage payments, to determine financial capabilities of the borrower.

Reaffirmation Agreement

An arrangement by the borrower to reinstate the debt that was erased by bankruptcy, for the purpose of getting a new loan.

Real Estate / Real Property / Realty

Piece of land with buildings on it. For example a house or an office building.

Real Estate Agent / Real Estate Broker / Realtor / Realtist

Licensed agent who represents buyers or sellers of real estate property. Real estate agents negotiate price, take care of the paper work, assist their clients and act on their behalf. Real estate agents work for a commission from the sale of real estate property.

Real Estate: Piece of land with buildings on it. For example a house or an office building.

Real Estate Attorney

Lawyer who specializes in real estate taxes, land transfer and other legal procedures involved in real estate transactions.

Real Estate: Piece of land with buildings on it. For example a house or an office building.

Real Estate Appreciation Rate

Real estate property tends to go up in price with time. Real estate appreciation rate is the approximate rate at which the price is going up.

Real Estate Bubble / Property Bubble / Housing Bubble

Rise in real estate prices reaching unaffordable levels to the middle class, followed by fast decline. Real estate bubbles are uncommon. Bubble may be a sign of recession or national economic hardship.

Real Estate Investment Trust

Organization that invests in real estate or mortgages for profit and then sells like stock to individual investors.

Real Financing Cost

The actual price of a mortgage calculated over the term that includes points, taxes, insurance etc. Prices calculated with mortgage calculators only consider interest rates and the amount borrowed, giving a very rough estimate. Real financing cost takes into account unavoidable fees such as taxes, points(commissions), appraisal, closing costs, etc.

Rebate Card

Type of credit where users receive a small bonus for its usage, such as AirMiles.

Recast Trigger / Recast payment

Mortgage option that causes mortgage payments to go up in order to pay for the loan in agreed period of time. For example, negative amortization loan recasts after 5 years, to make sure that the borrower pays back the amount owned. Recast trigger may be also triggered if loan amount reaches a certain point, like 110%. In a negative amortization loan, borrowers have the option of coming short on payments. Every missed payment is added on top of the principal. If it reaches a certain amount(110%), loan recasts and changes the payment rate which ensures that the borrower pays back the amount owed within specific period of time.

Receiver

An appointed person who looks over the property of the debtor, in order to enforce a lien against it(legal binding) or to distribute the profits from sale of the property to the creditors(in case of foreclosure or bankruptcy)

Recession

A significant decline in economy. During recession currency value goes down, people lose jobs, goods become more expensive, stock markets suffer.

Recission / Rescission / Rescind

Cancellation of the contract as agreed by all parties.

Reconciliation

Accounting method that compares two a more records or accounting sheets to make sure they match.

Reconveyance / Reconveyance Clause

Full transfer of ownership rights after mortgage is completely paid off. Since mortgage lenders have a claim on mortgaged property, reconveyance ensures that property belongs solely to the owner.

Recording

Recording of a document and information to it make an official public record. Some companies may require recording before releasing internal or contractual information to the public.

Recorder

Person responsible for recording.

Recording: Recording of a document and information to it make an official public record. Some companies may require recording before releasing internal or contractual information to the public.

Recording Fee

Fee charged for recording.

Recording: Recording of a document and information to it make an official public record. Some companies may require recording before releasing internal or contractual information to the public.

Recourse

Lender’s right to demand money from the borrower on top of borrower’s property, in case borrower defaults (cannot pay back the mortgage).

Recreational Land

Land allocated for sporting activities and relaxation. Recreational Land can refer to tennis courts, parks, etc.

Redemption

Mortgaged property belongs to the borrower and to the lender. Lender has a claim on the property. In case borrower does not pay back the mortgage, lender will sell that property for profit. Redemption is a process of freeing property from such a claim by means of paying for the mortgage. Whenever you pay your monthly mortgage payment – you’re in a process of Redemption.

Refinance / Refinancing / Remortgaging

Paying off existing mortgage with a new mortgage. For example, Ron had a mortgage for 10 years. He currently owns $150.000 to the bank. Ron wants to get lower interest rates. He found another lender who offers competitive rates and Ron decides to refinance. New lender will simply pay $150.000 to Ron’s old lender and refinance will be complete.

Refinance is usually done to get lower interest rates.

Referring Broker

Broker who refers real estate property for sale to a real estate auction company. Referring broker gets a flat fee for referral.

Rehabilitation Mortgage

Mortgage that helps to finance repairs, renovation and upgrades on a property before sale of that property. This helps to raise the price of a property and helps to it sell faster, since buyers appreciate good outlook and property that does not need repairs.

Regional Bank

Bank that operates only in one state or province. Regional Bank lends and makes money only in one province.

Regional Center

Big shopping center that has 2 or more department stores, with variety of smaller stores and is bigger than 300.000 square feet.

Registered Education Savings Plan / RESP

Federally funded program that assists parents saving for higher education of their kids(college, university). It allows parents to save money tax free. Visit this website to find out more.
http://www.hrsdc.gc.ca/en/learning/education_savings/public/cesg.shtml

Registered Retirement Savings Plan / RRSP

Fund registered with Canada Revenue Agency(taxation), for retirement savings. All additions to the fund are tax deductible. Individuals can put stocks, bonds, securities, money, mutuals and mortgage equity into the fund. Registered Retirement Savings Plan has a great tax benefit. For example, if you pay 30% in taxes, for every $100 dollars you put into the retirement plan – you will save $30 on income taxes.

Reliction

Increase in land ownership when water withdraws from the shore line.

Relocation Benefits

Money that employer pays to an employee for moving to another location because of work. This may include moving expenses, benefits, hotels, dinners etc.

Relocation Company

Company that helps people move because of their job. For example, you got a job in another city. Relocation company will help move your belongings, provide temporary storage, etc.

Remaining Balance

Amount of money left to be paid on a mortgage. For example, Ron has a $300.000 mortgage. He paid $120.000 over 7 years. His remaining balance is $180.000.

Remaining Term

Amount of time left for the mortgage to be paid out in full. For example, Ron has a 25 year mortgage and had it for 15 years. His remaining term is 10 years.

Renewal

Renewal refers to the end of the mortgage term. Once the term ends, borrowers have the option of going to a new lender or singing up for another term with their previous lender. Terms last from 5 to 40 years.

Renewal Date

Date at which mortgage must be renewed.

Renewal: Renewal refers to the end of the mortgage term. Once the term ends, borrowers have the option of going to a new lender or singing up for another term with their previous lender. Terms last from 5 to 40 years.

Renewal Fees

Money paid for mortgage renewal.

Rent Loss Insurance

Insurance that protects a landlord from loss of rental value due to fire, natural disasters, and floods. In case such an event occurs, insurance will pay a certain amount of money to the landlord.

Renter's Insurance

Insurance coverage of personal belongings of a renter. Renter's Insurance does not cover property being rented, but only the contents inside rented property. For example you rent an apartment. In case it catches fire, insurance will pay a certain amount of money for belongings that were burned.

Rent with Option to Buy / Rent to Own

Rental of a property with an option to buy it.

Rental Payment / Rent Premium

Periodic payment for the use of property or other assets. For example, you may pay every month for an apartment instead buying your own house.

Rent Step-up

An increase in rent payment every period of time, for a fixed amount of time of for the rest of the time. For example, Ron pays rent for his apartment which is $1000. His payment increased by $50 on July 1st until October 15th due to some repairs in a building.

Rent Roll

List of tenants living on a property, specifying their rent payments, expiration of rent agreements and other details.

Rentable Square Feet / Net Leasable Area

Number of square feet available for rent. This excludes areas reserved for heating, cooling, recreation, etc.

Repayment

The act of paying back debt.

Repayment Period

Period in which the debt must be repaid in full.

Repayment Plan / Restructured Loan / Renegotiated Loan

Changes to the mortgage, when borrower misses payments or is unable to make payments on time. Repayment plan may be offered by the lenders as a way to avoid foreclosure. This is not a common practice in Canada.

Replacement Cost

Price to replace an asset with an exact asset. For example, how much would exactly the same car cost, same year, model and specifications.

Replacement Reserve Fund / Replacement Reserve

Fund in an apartment building or a condominium complex specifically allocated for replacement of assets used in common areas. For example, replacing furniture in hall ways, getting new tennis nets, new pool tables, new work-out sets, etc.

Repossession

When borrower doesn’t pay for the property, lender has a right of taking and selling that property. Act of doing so is called Repossession.

Resale Value

The actual price for which the seller sells his real estate property.

Reserve Fund / Reserve Funds

Money set aside for major repairs in a condominium or in an apartment complex.

Reserves

Money set aside by banks for emergency reasons. Reserves are no longer required as it used be.

Reserve Auction / Upset Price

Auction that does not sell until bids reach certain amount. For example house has a starting auction price of $0, but a reserve price of $200.000, meaning it will not sell until bids reach or go over $200.000 mark. Reserve price stays unknown to the bidders.

Reset

In an adjustable rate mortgage interest rates adjust periodically. When interest rates adjust and monthly payments change we can refer to it as reset.

Resident Alien

Person from another country, who lives in Canada, but is not a Canadian citizen.

Residual Value

Value of an asset at the end of the lease. For example, if you leased a car for 5 years, it’s value went down. Residual Value is the total value of that car after the lease.

Retail Banking

Banking for individuals. For example, your local bank branch is a retail branch, where you can perform basic transactions.

Retail Lender

Lenders who offer mortgages directly to the public, avoiding mortgage brokers.

Retained Earnings / Retention Ratio / Retained Surplus

To understand retained earnings you must know what dividends are.

Dividend: Distribution of earnings to shareholders. Whenever corporation makes X amount of profit, it must share it with the shareholders. A portion of the profit that goes to a single share holder is called dividend.

Retained Earnings: Percentage of earnings not paid as dividends, but reinvested back in the company, to pay debt or to finance its operations.

Retained Earnings (RE) = Beginning RE + Net Income – Dividends

Return on Investment / ROI / Return

Measure used to calculate efficiency of an investment. To calculate ROI you must find out the total amount of money spent and total amount profited. You then simply subtract expenses from profits, which give you ROI.

ROI = Profits – Expenses(investment)

For example Ron bought a new house for $200.000 and sold it 3 years later for $240.000. His return on investment is $40.000.

Reverse Mortgage / Reverse Annuity Mortgage / RAM

Mortgage offered to elderly(60+ years of age) people who completely own their properties. Reverse Mortgage allows people to live off the property, until their death or until the home is sold. For example, Jenny is 70 years old and owns her house. She can get a Reverse Mortgage which will give her money to spend. She will not have to pay back that mortgage. When she dies, the house will be sold and lender will get the money back.

Reverse Mortgage Counseling

Counseling that explains how reverse mortgages work.

Revolver

Credit card issuers use this term to describe people who do not pay their credit balance in full and carry it onto the next month. Majority of people are revolvers.

Revolving Credit / Revolving Debt / Revolving Liability / Revolving Line of Credit

Type of credit that does not have a fixed repayment schedule, but includes a monthly minimum payment. Once debt is paid out partially or in full, it can be borrowed again. Revolving credit is used in credit cards and credit lines.

Requested Cash Out / Requested Cash-Out

The amount of cash requested during mortgage refinancing. If you have equity in your home – you can extract it from your house in form of cash. The amount that you request during refinancing is called Requested Cash Out.

Right of Ingress or Egress (Engress)

Right to enter or leave the property. People may be restricted from entering into the property due to legal offences.

Right of First Refusal

The right of one party to match offers of another party before transaction is complete. For example, Ron’s apartment is being converted into a condominium. There is a buyer looking to buy newly converted condo, in which Ron used to live. Ron can offer his landlord same money on exact terms and be the one to buy the property, even though he was second to offer it.

Right of Rescission

Option given to the borrower to cancel new mortgage contract within 3 days after signing up. During the 3 day rescission period property is not funded. It is designed to make sure that borrower has time to think over everything.

Right of Survivorship

Right to the property in case a co-owner dies and person that lived with him lives on.

Roll In / Roll-in Loans

Term that refers to including mortgage closing costs in the mortgage itself. Those costs include appraisal fees, origination fees, settlement costs, etc.

Roll Over Mortgage / Rollover Mortgage

Mortgage which is refinanced every few years to match current interest rates. Rollover mortgage is beneficial to the borrower if interest rates are lower than those on the mortgage and negative if the rates are higher.

Royalty Income

Income gathered from charging fees for using certain products. For example, Microsoft invented an operating system called Windows. It charges manufacturers a royalty fee for using it. All the fees combined from royalties makes - Royalty Income.

RRSP Home Buyer’s Plan / Registered Retirement Savings Home Buyer Plan / HBP

Plan that allows first time home buyers to finance their home purchase from RRSP for up to $20.000. To qualify for the program participants must have rented or owned property within past five years. When money from RRSP is withdrawn, you must pay it back within 15 years. Each year you must put back 1/15 of the total amount withdrawn.

Registered Retirement Savings Plan / RRSP is a fund registered with Canada Revenue Agency(taxation), for retirement savings. All additions to the fund are tax deductible. Individuals can put stocks, bonds, securities, money, mutuals and mortgage equity. Registered Retirement Savings Plan has a great tax benefit. For example, if you pay 30% in taxes, for every $100 dollars you put into the retirement plan – you will save $30 on income taxes.

To find out more about Home Buyer’s Plan, visit Canada Revenue Website http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html