Takeout Mortgage Loan

Mortgage given to the company upon completion of construction project, in order to pay for construction loan and finance property long term. For example, YYY company finished construction of the condominium. Upon completion, TD Bank forwarded a takeout mortgage to the company, so it can pay for construction loan from another lender and have time to market and sell the property.

Tangible Personal Property

Assets other then real estate property. For example, cars, equipment, materials, etc.

Tax & Insurance Impound

Monthly payments that the lender may require to cover taxes and insurance.

Tax Bracket / Tax Rate

Rate at which person is taxed. People with higher income pay higher taxes, while people with lower income pay fewer taxes. Tax brackets are structured as follows:

Example(fictional):

$10.000 – $20.000 per year – 12% of the total annual income
$20.000 – $35.000 per year – 20% of the total annual income
$35.000 – $50.000 per year – 28% of the total annual income
            …and so on

As people earn more, they progress within the tax brackets, hence pay more in taxes.

Tax Credits

Tax credits reduce amount of taxes owned. As opposed to tax deductions, which deduct a percentage from overall taxes, tax credits reduce tax amount by applying a given credit. For example Ron owes $400 in taxes. He has tax credits for $300, meaning that he will only pay $100 in taxes(400-300=100). Tax credits are provided under certain conditions, some of which are:

• Having a child with a certain yearly income
• Mortgage interest credits, to make homes more affordable
• Business investments, to help individual achieve business goals

Tax Deduction

Amount of money that can be held away from paying taxes. For example, if you earned $100.000 and spent $25.000 on business expenses you can declare $25.000 as a business expense and only pay taxes on $75.000. All businesses take advantage of this, as it saves quite a lot of money.

Tax Deed / Tax Deed Sale

Every homeowner must pay taxes on the property. If he fails to, government will take away the property and sell it for profit. Tax Deed is the purchase of the property, which was taken from the owner by the government for non payment of taxes. Tax deed sale is usually thousands of dollars cheaper of original market price.  

Tax Deferral

When obligation to pay taxes is postponed, but not eliminated. This is done by businesses in order to pay less taxes and to circulate money is something more productive.

Tax Exempt

To be excluded from taxation partially or in full. For example provincial government may forgive payment of provincial taxes, while federal government still requires payment of federal taxes.

Tax Impound / Tax Hold Back

Money deposited an impound account, to be spent for payment of taxes.

Impound Account: A bank account where money for insurance and taxes is held until paid in full. When you make mortgage payment, part of that payment goes towards taxes and insurance. In order to make it more convenient, this money is deposited to an impound account. Money is held there until it is time to pay the amount due for insurance and taxes.

Tax Liability

Tax amount owed to the government. For example, taxes on your property is a form of tax liability.

Tax Home

Your primary place of work. Tax Home is used to determine if your travel expenses are taxable or can be deducted.

Tax Lien

Every homeowner must pay taxes on his/her property. If one does not, government can take away the property and sell it for profit. Tax lien is claim on property by the government, to sell the property in order to get the withheld taxes.

Tax Sale

Every homeowner must pay taxes on his/her property. If one does not, government can take away the property and sell it for profit. Tax sale is sale of the confiscated property by the government, in order to get unpaid taxes.

Tax Service Fee

Fee charged by lenders to cover taxes that must be paid on a mortgage and real estate property.

Tax Schedules / Tax Tables

Document published by the IRS(US) for people with more than a $100.000 income, in order to calculate their taxable income.

Tax Shelter / Tax-sheltered

Calculated investment made for the purpose of paying less taxes.

Tax Stamp / Tax Stamps

Tax on property for change of ownership. For example, Ron sold his property Alex. Ron will be charged Tax Stamp for change of ownership.

Tax Savings

The amount of money that home owner is permitted not to pay in taxes, because of interest rate payments on the mortgage. This amount may vary, depending on province(state) and mortgage amount.

Taxable Estate

Property of a diseased that is subject to taxation.

Taxable Income

Earned money that is subject to taxation by local and state government. For example the amount of money you make at work is taxable income.

Tear-down Condition

House in bad condition that is bought in order to build a new house in its place.

Teaser Rate

Also called introductory interest rate. Teaser Rate is the initial rate on an adjustable rate mortgage, which is lower than actual interest rates on the market. Teaser Rate always goes up with time. It is used to lure in borrowers.

Temporary Buydown

Option that 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.  

Temporary Lender

Lender who sells loans it originates on a secondary mortgage market. Once mortgage is issued to the borrower, it can be sold on a specialized mortgage market to other lenders and banks. Borrowers are not notified of the sale and are usually unaffected by it.

Tenant

Person rents property. 

Tenant Improvements

Person who renovated or upgrades rented property. Such as getting new floors in a rented apartment, getting new bathroom, etc.

Tenancy by the Entirety

Ownership of the property by two people, where if one dies, ownership automatically passes to the co-owner. For example, husband and wife.

Tenancy In Common / Tenancy In Partnership / Tenants in Common

Shared ownership of the property by two or more people, where each member has the right of leaving the share to any beneficiary. For example, Ron and Kate own the same property together, 50/50. When Ron dies, he has a right of leaving his 50% to anyone he wants.

Tenure

The difference between ownership rights. Tenure can be by owners or people who rent. For example, if you own a house your tenure is ownership. If you rent an apartment, your tenure is tenant(renter).

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).

Term Deposit / Time Deposit

When funds are deposited to the bank for a fixed period of time at an interest rate. For example when you open savings account and freeze the money, it can be referred to as term deposit.

Term Loan

Loan given for an average of 10 years, designed to finance machinery, upgrades and other business necessities.

Term Life Insurance

Life insurance that stays active only for a limited period of time. For example if you have term life insurance for 10 years, you will only get benefits if you die within 10 years.

Testamentary Trust

Testamentary Trust is Trust created by Will, after person’s death.

Trust: Trust is an arrangement where property is transferred to another person, for the benefits of other beneficiaries. For example, Ron died and Trusted his house to Maria, for the benefit of her children. Ron and Maria were not related by blood and were not engaged.

The Fed / Federal Reserve

The Fed is an abbreviation from Federal Reserve Board, which is a US Central Bank. Federal Reserve Lends money to other banks and is charged with printing American Dollars. Though people think that Federal Reserve is a governmental bank - it is not. Federal Reserve is a private bank.

Federal Reserve Board http://www.federalreserve.gov/

The 72-hour Clause

72-hour Clause is an option given to all new borrowers, where they have a choice of canceling new mortgage contract. Once you get a new mortgage, you will have 72 hours(3 days) to change your mind and cancel the contract for any reason.

Third-party Administrator / Third Party Administrator

Company charged with different administrative tasks. For example, lenders may give out loans, but find it not cost effective to actually maintain them, so they outsource the task to a third-party administrator.

Third Party Costs / Third Party Fees

Costs from third party companies involved in a mortgage transaction. Those include credit report, appraisal fee, inspection fee, lawyer costs, etc.

Third-Party Origination / Third-Party Origination

Process where lender uses another company to originate (give out) loans. The process includes underwriting, closing, funding, etc.

Third-Party Originator / Third Party Originator

Company hired to originate loans(give out) by another lender.

Three Month Penalty

This is a penalty charged by most lenders for paying off your mortgage balance earlier than specified in a contract. Your current mortgage is multiplied by your interest rate and then by 3 again. For example, if your current mortgage balance is $114.000 at 5.6% interest, and you decide to pay it off earlier, this is the formula that lender will use to charge you:

$114.000 x 0.057(5.7%) x 3 = $19.494

Timeshare / Time share

A form of vacation getaway packages that offer people recurring vacations to a number of locations. For example, time share package for 5 years to Caribbean, may give a chance for people to visit Caribbean 2 times per year, for 2 weeks, for 5 years.

Title

Title simply refers to the ownership of a property. For example, you have a title to house, meaning that you own the house.

Title Company

Company that checks ownership of the property before the sale. Title Company will look at previous owners, possible lawsuits and other records to ensure that the property belongs to the seller and no one else.

Title Defect / Cloud on Title / Clouded Title / Title Risk

Property where its hard to prove real ownership of the property. This may be due to past lawsuits, relatives or other liens. Title defect property is hard to sell or may be unlawful to sell.

Title Insurance / Title Insurance Policy

Insurance that protects owner from losing ownership to a property. For example, Ron owns a house. Julie may come in later claiming that her parents used to own that house and that she has rights to it. Insurance title will represent Ron’s interests in court and in case he loses, will pay his a sum of money for losing his property. That sum can be market value of his house or less, depending on insurance title contract.

Title Insurance Premium

Monthly charge for Title Insurance.

Title Insurance: Insurance that protects owner from losing ownership to a property. For example, Ron owns a house. Julie may come in later claiming that her parents used to own that house and that she has rights to it. Insurance title will represent Ron’s interests in court and in case he loses, will pay his a sum of money for losing his property. That sum can be market value of his house or less, depending on insurance title contract.

Title Report / Title Search

Report carried out by specialized company that checks property for past owners, lawsuits and relatives that might have ownership rights to that property. This is done to ensure that the sold property will belong to the buyer and no one else.

Torrens System

System used to register land title(ownership of land), where the government makes the ownership indefeasible(cannot challenge it).

Total Annual Operating Income

Total yearly income of an apartment complex or an office building, minus operating expenses, salaries, taxes, etc – but before mortgage payments, upgrades and leasing commission.

Total Debt Service (TDS) Ratio

The percentage of gross income needed to cover monthly payments for housing and all other debts including other financing obligations. The total should generally not exceed 40% of gross monthly income.

Total Interest Payments

Total interest payments made on a mortgage loan.

Townhouse

Type of property that is maximum 3 stories high, has a backyard, but is inner-connected to other properties.

Trade Equity

Addition to the down payment in form of an asset, such as a car, stock, etc. For example Ron is buying a house from Julie. He may have a down payment of $10.000 and his car worth $30.000, making up a total of $40.000 for down payment.

Trading Down

When expensive property is sold to buy less expensive property.

Trading Up

When less expensive property is sold in order to buy more expensive property at a bigger mortgage.

Trans Union

Credit Reporting Agency. Whenever lenders require credit history report they will request it from one of the 3 credit reporting agencies, one of which is Trans Union.

TransUnion Website http://www.transunion.ca/

Transfer Tax / Transfer Fee

Tax paid on any property that is passed from one person to another.

Transfer of Ownership

Transfer of rights to a property from one person to another.

Transfer of Servicing

Every mortgage has to be serviced and administered. Monthly bills need to be sent out, payments collected, balance updated, interest rates updated. Transfer of Servicing occurs when original lender outsourcers servicing tasks to another company or when servicing is transferred upon sale of your mortgage to another lender.  

Transaction

Record of some kind of financial activity. For example, if you withdrew money from your bank account, you made a transaction and that transaction was recorded.

Transaction Date

Date on which transaction occurred.

Transaction: Record of some kind of financial activity. For example, if you withdrew money from your bank account, you made a transaction and that transaction was recorded.

Travellers' Cheques / Traveler's Check

Checks used by international travelers that are protected from loss and theft. They are taken as regular currency, but can be cancelled when lost or stolen.

Triple-net-Lease / NNN / Triple Net Lease

Type of lease that requires person to pay property taxes, insurance, maintenance and other costs, on top of the lease itself.

Trust

Trust is an arrangement where property is transferred to another person, for use or for the benefit of other beneficiaries. For example, Ron died and Trusted his house to Maria, for the benefit of her children. Ron and Maria were not related by blood and were not engaged.

Trustee

Person to whom the property is trusted.

Trust: Trust is an arrangement where property is transferred to another person, for use or for the benefit of other beneficiaries. For example, Ron died and Trusted his house to Maria, for the benefit of her children. Ron and Maria were not related by blood and were not engaged.

Trust Account

Account where real estate agent holds money that buyer deposited and other funds associated with real estate transaction.

Two-cycle Billing / Two Cycle Billing

Type of interest rate calculation used by credit card companies in order to get more money from borrowers. Two-cycle Billing is used by few credit card companies, while one-cycle billing is used by majority, which is more borrower – friendly.

Two-step Mortgage / Balloon Reset

This is a fixed rate mortgage which adjusts after 5-7 years to new interest rate. The adjustment is one time and borrowers stand a risk of getting higher rates.