Macroeconomics

Macroeconomics observes economy status as a whole. It takes note of both falls and rises in: employment rate, growth, domestic production, imports, exports, inflation, housing market, credit and other factors.

Maintenance Fee / Management Fee

Fee collected from each condominium owner in a condominium complex. Maintenance fee pays for maintenance of elevators, heating/cooling, front yards, swimming pools, tennis courts and other amusements. It also pays salary to condominium staff: janitors, supervisor, security, gardeners etc. Maintenance fee is collected monthly and has a tendency of going up with the age of the building.

Manufactured Housing

Factory built houses that can be simply placed on a piece of land or moved. Manufactured Houses can be trailers or small, movable houses. They are low cost and cheap to maintain.

Managed-competition Lots / Managed Competition Lots

House land lots(pieces of land), where buyer has a choice of selecting different builders. For example, Ron purchased a land lot. He has a choice between 3 construction firms that offer different houses with different features.

Mandatory Disclosure

Mandatory disclosure of broker related fees. It discloses all the costs associated with a mortgage. This is done to protect borrowers from overpaying fees and from predatory lenders, who set up borrowers.

Margin

Interest rate added on top of the prime rate. Central banks set prime lending rate(prime rate) also known as the wholesale lending rate. Smaller, national and regional banks borrow from central banks and add more percentage on top of it, gaining profits. For example the prime lending rate is 5%. Banks add 2% to it, making rates 7%. The margin is 2%. Borrowers always get a rate with a margin.

Marital Deduction

Tax deduction that allows transfer of assets between spouses tax free. For example, husband gave ownership of the house to his wife. Transfer will be tax free due to martial deduction.

Market Conditions

Factors that affect prices of real estate property. Factors are: economic conditions, time of year, inflation, interest rates, etc.

Market Value / Fair Market Value

Property value in normal market conditions. Market value is the approximate price of real estate property that buyers will pay.

Market Conditions: Factors that affect the price of real estate property. Those factors are: economic conditions, time of year, inflation, interest rates, etc.

MasterCard

Type of credit card. Master card is available through many bank and financial institutions. Visit Master Card Website. http://www.mastercard.com/index.html

Master-planned Community / Master Planned Communities / Planned Unit Development / PUD

City/Town development which is preplanned in advance. Community development allocates land for amenities such as: parks, swimming pools, playgrounds, golf courses, etc. It also develops housing for families with different income levels and may include areas designated for private houses, condominiums, rentals, hotels, offices, commercial property. Master-planned Communities are very convenient to live in, since basic and entertainment needs are addressed. Usually, local government and a number of construction firms will draw out a master-planned community together, before construction starts. 

Masonry

Building made from cement, brick, blocks, stone etc. Masonry is an old term, not widely used in modern construction world.

Maturity / Maturity Date

Date when a mortgage loan is due date. For example, I borrowed a mortgage for 25 years in 2001. It maturity date will be in 2026, meaning by that time I will have to pay back the amount borrowed.

Maximum Financing

Mortgage with the lowest down payment possible.

Down Payment: The amount of money given upfront on the loan.

Maximum Loan to Value Ratio / Maximum LTV

To understand Maximum Loan to Value Ratio you need to understand Loan-to-Value Ratio.

Loan To Value Ratio: Ratio between mortgage and property price financed with a mortgage. For example, my house costs $100.000. Mortgage that was borrowed to buy that house is $70.000, meaning that it is 70% of the value. In that case loan-to-value ratio will be 70.

Maximum Loan to Value Ratio: Maximum Loan to value ratio accepted by lenders. Different lenders have different requirements. Some may over only 70% while other will offer a maximum of 95%.

Maximum Lock

Maximum Lock is the longest period for which the lender will lock the interest rates. For example, Ron is looking to get a mortgage. His lender quoted him 6% interest rate and promised to lock it for a maximum of 60 days. In that case, Ron has 60 days to decide whether he wants a mortgage from that lender. Even if the rates go up, Ron will be offered 6%, since lender locked it. Maximum lock is the maximum period of time that lenders will lock the rate for new borrowers. It ranges between 60-90. 

Maximum Claim Amount

Maximum amount that insured person can demand from the insurance company.

McMansion

Multi million dollar luxury house, 5000 – 10.000 square feet.

Mechanical Systems

Building that uses automated electronic machines. Those can be elevators, escalators, plumbing, heating, cooling, etc.

Mechanic's lien / Materialman's Lien

Mechanic's lien is claim on a property by person or company doing labor work on that building. For example, Ron is repairing elevators in a condominium. To make sure that he gets paid and that materials bought to repair the elevator get covered, he enters into a Mechanic's lien with condominium owner. In that case, if the owner of the condominium does not pay Ron for his work, Ron may legally go to court and get ownership of the whole condominium. Mechanic's lien protects workers.

Lien: Claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for the mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Median Price

Price paid for a house, which is half lower and half higher than other houses in the area. For example, houses usually sell at two prices in my area. One price is $300.000, another $100.000. If I sold my house for $200.000 I would’ve sold it at median price.

Mediation

Process of resolving disputes between two parties. When two people or two companies do not agree on something, they may call an independent person in order to come up with a solution that will suite both of them. Mediation is not mandatory and participating parties may withdraw at any time.

Median Income

Median Income is a medium income of all the families in a given area. Median income is calculated by listing income level of all families, from highest to lowest and selecting the one in the middle.

Memorandum

Quick outline of a document/file.

Merged Credit Report

Credit reported merged from 3 credit bureaus Equifax, TransUnion and Experian

Equifax http://www.equifax.com/home/
TransUnion http://www.transunion.com/
Experian http://www.experiangroup.com/

Mezzanine

Floor of a building that has less area than the floors both above and below.

Microeconomics

Study of separate elements in an economy. For example study of employment rate, inflation, households, businesses, consumers, etc.

Mid – Rise / Midrise

Refers to an office building that is more than two floors high, but does not require an elevator.

Mill Rate

Property tax charged on each dollar of property value. It is charged in “mills”. Each mill is equal to one-tenth of a cent. ($0.001)

Minimum Average Balance to Avoid Fees / Minimum Balance to Avoid Fees

Account that balance that must be kept at preset average. If the balance falls below that average, account will be charged interest or other fees. For example, the minimum average balance is $500. If the balance fell below $500 to $450 that account will be subject to interest and other fees.

Minimum Bid Auction

Auction where seller will accept offers below starting bid price. For example, if bidding starts at a $1.000, owner may accept an offer of $900. Of course higher offers are only welcome.

Minimum Opening Bid

Minimum bid from which the auction starts. For example, Ron is selling his car on an auction. His minimum opening bid is $20.000, meaning that anyone who wants the car will have to bid at least $20.000 on it.

Minimum Balance to Open an Account

Minimum amount of money required to open an account.

Minimum Down Payment

Minimum down payment allowed.

Down payment: Amount of money given upfront on the loan. For example, Ron wants to buy a house for $200.000. His lender requires 20% down payment, meaning that Ron will have to pay his lender $40.000 down payment from his pocket, in order to get that loan.

Monthly Debt Service

Total monthly payments made on credit cards, mortgages, car loans, credit lines etc. For example, if you have 2 credit cards, 1 home loan and a car loan, your monthly debt service is the total amount you pay to cover them.

Minimum Monthly Balance

Minimum amount of money on a bank account, before bank starts charging fees. For example, you have a bank account. You must have a minimum of $100 on the account every month, otherwise your bank will charge minimum monthly balance fee.

Minimum Payment

Minimum amount that must be paid towards reducing credit card debt every month. The minimum payment is usually 3-5% of the total amount owed. If the minimum is not paid within a month, an interest rate charge is applied towards total amount owed.

Minimum Credit

Minimum credit rating score that the borrower must have in order to qualify for a specific mortgage product. Minimum credit differs with different mortgages and different lenders.

Minimum Lease Rate / Min Lease Rate

Minimum(lowest) lease rate available.

Minimum Divisible SF / Min Divisible SF

Minimum(smallest) number of square feet available in a property.

Mint Condition

Brand new or like brand new.

Mixed-income Housing / Mixed Income Housing

Neighborhood where people earn different incomes and where incomes vary greatly. 

Mixed Use

Building that contains different kids of developments. For example, condominium can contain retail stores, apartments, offices, restaurants, etc.

Multiple Listing Service / MLS

Listing of real estate properties for sale. This can be a number of TV ads, magazines or more recently and more popular – specialized websites.

Modification

Changes to the mortgage. This can be an interest rate adjustment, rate cap adjustment, payment adjustment, etc.

Molding / Moulding

Special wood, usually specially decorated to cover joints between walls and ceilings.

Monetary Policy

Central bank’s ability to influence national economy. Usually achieved by changes in interest rates, money supply, credit. In Canada - Bank of Canada is the central bank with such powers. In the United States it is called Federal Reserve.

Money Factor

Formula used to calculate monthly lease payments.

Money Laundering

Technique used to cover up money made illegally. For example, a number of drugs were sold on the streets worth $100.000. Person who earned the money will invest it in legit businesses, such as casinos, bars, hotels, etc – in order to appear legitimate.

Money Market Account / Money Market Demand Account

Bank account which offers high interest rates on the money, but requires a minimum amount of money to be on the account and sets a limit on monthly transactions. Minimum amount is usually around $500, while transactions are limited to 2-5 per month.

Money Market Mutual Fund / Money Market Fund

Mutual fund that concentrates on investing in short term debt. For more detailed information, please check “mutual fund”.

Monthly Housing Expense

Total interest, house bills, taxes, insurance, mortgage payments made by the borrower each month.

Monthly Fixed Installment

Monthly mortgage payments that pays for the principal(total money owed) and interest.

Monthly Periodic Rate

Monthly mortgage interest rate calculation. It is calculated by taking interest rate, applying it the total balance and then dividing it by 12. For example you borrowed $100.000 at 6% interest rate.

6% of $100.000 gives $6000
$6000 divided by 12 is $500

Meaning that each month you will pay $500 + principal payment(payment to reduce total amount borrowed). As the principal goes down, so will the amount going towards interest.

Monthly Total Expenses

Total monthly household expenses spent on mortgage, insurance, taxes, electricity, phone bill, etc.

Mortgage

Debt borrowed from a lender to buy real estate property. For the privilege of borrowing, lenders apply an interest rate. For example Ron wants to buy a house for $300.000. He only has $50.000. Ron can borrow $250.000 from a lender and buy that house. Lender will apply an interest rate to the amount of money he borrowed. Ron will be required to pay each month for money borrowed + interest rate charged by lender.

Mortgages are taken for many years, around 10 to 40 years. To reduce the amount owed(called principal) you must pay lender each month.

Mortgage Acceleration Clause / Mortgage Accelerator

Mortgage contract provision that allows lenders to demand full payout of the amount owed, under certain circumstances. For example, lenders may have acceleration clause stating that after 15 years you must pay out amount owed or face foreclosure(loss of property). This is primarily used in predatory lending. Lenders bet on borrowers not reading contract terms and agreeing to predatory terms, which demand payout in short periods. Watch out for mortgage acceleration clause. Though good faith lenders may have it in place, it is in your best interest to avoid it.

Mortgage Assumption

Taking ownership of existing mortgage. For example, Ron married Kate. Ron moved to her house and wants to pay for the mortgage. He may sign mortgage assumption, whereby he will become responsible for the payments.

Mortgage Banker

Person who takes care of personal mortgage accounts and sells mortgages on a mortgage market.

Mortgage Broker / Mortgage Brokers

People who work with mortgage loans, find new clients, look for best suitable mortgages, manage mortgage related transactions, inform borrowers and find the best possible deals.

As a mortgage broker company, Canada Mortgages http://mortgagescanada.ca/  represents you and finds mortgages at lowest interest rates and with best suitable packages.

Mortgage Calculator

Calculator that estimates monthly mortgage loan payments. You can use our calculators here.  Several Different Mortgage Calculators

Mortgage Disability Insurance / Mortgage Disability Income Insurance

Insurance that will pay for monthly mortgage payments in case person responsible for the payments becomes temporarily or permanently disabled. For example, Ron broke his leg and cannot work. If he had Credit Disability Insurance, the insurance would pay for Ron’s mortgage for agreed period of time(usually 12-24 months).

Mortgage Indemnity Charge / Mortgage Indemnity Insurance / Mortgage Indemnity Guarantee / MIG / Mortgage Indemnity Premium

To understand Mortgage indemnity guarantee(insurance) you must understand Loan-to-Value Ratio.

Loan-to-Value Ratio(LTV): Ratio between mortgage and the price of property financed with a mortgage. For example, my house costs $100.000. Mortgage that was borrowed to buy that house is $70.000, meaning that it is 70% of the value of my house. In that case loan-to-value ratio will be 70.

In some cases, mortgages will outpace the value of the home, making LTV 110, 130 percent and so on. For example my mortgage is $130.000 while my house only costs $100.000. In those cases lenders assign mortgage indemnity insurance that protects them in case borrowers do not pay for the loan.
Borrowers pay for mortgage indemnity insurance with mortgage indemnity charge(premium), charged every month.  Mortgage indemnity insurance only protects lenders. Mortgage Indemnity Insurance is also known as Mortgage Indemnity Guarantee.

Mortgage Insurance / MI /  Private Mortgage Insurance / PMI

Mortgage Insurance is also known as the Private Mortgage Insurance (PMI). Borrowers who provide less than 20% down payment are required to pay mortgage insurance. Mortgage insurance protects lenders in case borrower defaults(does not pay for the mortgage). Once borrower pays 20% of the mortgage, lenders are required by law to take the mortgage insurance off. It is paid monthly by the borrowers, not lenders.

Canada Mortgage and Housing Corporation (CMHC) http://www.cmhc.ca/ 

Mortgage Insurance Premium / MIP

Monthly payments made for mortgage insurance. To find out more about mortgage insurance, please check “mortgage insurance”

Mortgage Interest Expense / Mortgage interest Deduction

Interest paid on a mortgage can be tax deductible. When you file for tax return you may include mortgage loan interest as a “mortgage interest expense”. Certain conditions must be met for the deductions to go through.

Mortgage Lien

Claim on the property by the lender, which states that the lender may take away borrowers property if the borrower does not meet contract obligations(pay for the mortgage). For Example, Ron got a mortgage. In order to get that mortgage, Ron had to enter into a lien, guaranteeing that he will give his property to the lender if he does not pay for the mortgage.

Mortgage lead

Information about a number of people provided to mortgage brokers and lenders that may become new clients. Lenders and brokers might call people, email them, invite to seminars, etc.

Mortgage Life Insurance

Insurance which pays mortgage balance in full in case the insured person dies.

Mortgage Late

Mortgage payment that is late.

Mortgage Note / Promissory Note

This document guarantees to the lender that the amount borrowed will be repaid, plus the interest. It also guarantees that in the case borrower is unable to pay for the mortgage, lender may take away borrowers property.

Mortgage payment

Monthly amount of money given to the lender in order to pay back the amount borrowed plus the interest.

Mortgage Program

Features of a given mortgage. There are numerous mortgages on the market, each of them having their own mortgage program. For example, Fixed Rate Mortgage, Adjustable Rate Mortgage, Balloon Mortgage, Hybrid Mortgage, etc.

Mortgage Rate

Mortgage Rate refers to the interest rate charged to the total amount borrowed. Every month you have to pay a portion that you borrowed, plus the interest rate. Interest rates are also referred to as mortgage rates.

Interest 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 me 6% interest for the privilege of giving me the money. Instead of paying back $1000, I will pay back $1060.

Mortgage Rate Buy Down

Option which allows borrowers to reduce mortgage interest rates, by paying an additional sum. For example, if I want to pay less interest, I can pay a sum of money (for example $5000) to the lender and my interest rates will be reduced for a number of upcoming years. That sum will be deposited in a special account and will help to gradually pay for the interest every month. In a long term context, buy downs reduce interest, since you provide lenders with guaranteed stream of income for a limited time.  

Mortgage Renewal

Mortgage 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 current lender. Terms last from 5 to 10 years.

Mortgage Referrals

Term used by mortgage brokers to describe customers that came as a result of advertising, word of mouth or partnership.

Mortgage Refinance / Mortgage Refinancing

Mortgage refinance means 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.

Mortgage Servicing

Every mortgage has to be serviced and administered. Monthly bills need to be sent out, payments collected, balance updated, interest rates updated. Mortgage Servicing also keeps track of the late payments, penalties, escrow account, insurance and taxes.  

Mortgage Shopping

Comparing different mortgage brokers and different lenders.

Mortgage Scams / Mortgage Scam / Mortgage Fraud

Mortgage fraud is the illegal activity of manipulating borrowers and related documents designed to get hold of the equity, borrower’s property or set them up to pay overly high fees.

Mortgage Suitability

Assessment of individual income, credit score and debt in order to find out whether borrower can pay back the mortgage while living comfortable life.

Mortgage Term

Period of time for which lender will lend money to the borrower. Terms are usually 5 years or less. Once the term expires, borrower can continue with the same lender, or find another one(refinance).

Mortgage Points / Discount Points

Point equals to 1% of a mortgage. Discount points are payments to the lender which reduce interest rates. For example Ron wants to pay less interest. He can payout one point(1%) of the mortgage to do so. If his mortgage is $300.000, he will have to pay $3000.

Mortgagee

Entity that gives a mortgage. Usually banks and private companies.

Mortgagor

Person who takes a mortgage – borrower.

Motivated Buyer

Person with urgent need to buy the property. This may be for personal reasons or due to time.

Motivated Seller

Seller with urgent need to sell the property. This may be caused by personal reasons, time, and market conditions.

Move-in Condition

A go ahead to move in into newly built property. Everything is in working order, appliances are working, everything is cleaned, and structure passed all the audits.

Move-up Buyer

Person who sells property to buy more expensive one.

Moving Expenses

Expenses encountered while moving from one property to another. This includes hiring companies who specialize in moving.

MSRP

Manufacturer's Suggested Retail Price. Selling price recommended by the manufacturer. No retailer is bound to follow it, since it is only recommendation.

Multidwelling property / Multi dwelling property / Multi-dwelling Units

Refers to high rise condominiums and rental apartments.

Multi-Family

Building with more than 4 residences for separate families.

Multifamily mortgage

Mortgage split between two or more families. Each family is equally responsible for the payments. For example, A family wants to buy a house, but does not have enough money. They can find B family and split that house between each other, by taking multifamily mortgage. Both families will have equal equity share and will split monthly dues.

Multiple Offers

More than one offer on a property for sale.

Municipal housing inspector

Representative of the local government whose job is to ensure that new buildings are constructed according to local and federal construction standards. Municipal housing inspector visits without notice, keeping the element of surprise.

Mutual Fund

Mutual fund is an investment tool. To understand mutual funds you have to know what stocks and bonds are.

Stock: Stock is an ownership of the company. Imagine that you own a firm. You decided that you need investors. You slice up your company like a pie and sell each piece of a pie to other people. A piece of a pie can be called stock. Stocks are measured in percents %. If you own 50.000001% of the stock you own the company.

Bond: A document which guarantees that the government or a corporation will pay out amount owed, plus the interest, by specific date, to individual lenders. For example, you as an individual want to lend money to a corporation. You can do so buy buying bonds. Bond are simply papers that guarantee that the corporation to which you lend money will pay you back the amount, plus the interest. You become the lender and corporation becomes the borrower. Bond is a tool to make the transaction possible.

Mutual Fund: As an individual you have a choice of investing in stocks or bonds(there are more terms, but to keep it easy we left them out). You can do so by browsing stocks and bonds yourself and simply investing in what you like and what you think will generate return.

Mutual Funds bring large numbers of investors together and diversify their investments. A large number of investors will get together (for example 100) and create a mutual fund, combining their money. They will hire people to manage their money and invest all of their money into different companies, buying different stocks and bonds.

This minimizes risks associated with investment and increases chances for making profits. Mutual fund managers can look at different stocks, see which are doing good, not so good and bad. Invest a portion in a good stock, in a young company and so forth.

To make it easy for individuals to join mutual funds, all they have to do is buy mutual fund papers, simply known as mutual funds. Rest of the job is done for them.