Amortization. Term. Blended payments. Floating rate. Land transfer.

The list goes on and on! For the uninitiated, seeing all these new words on top of trying to buy your first house can be overwhelming. Sit down, relax and let's go through the world of house buying and mortgage financing in its simplest form, the vocabulary. Don't feel bad if you get lost once in a while. Even the seasoned veteran goes through the gauntlet on occasion.

AMORTIZATION: The period of time over which the payment on a mortgage (or loan) is calculated. Most first time home buyers chose 25 years. Most people don't know how to pronounce the word so just use the short form...AM! By the time you finish paying for your house, it will have cost you three times the amount you initially borrowed (that's called compound interest).

TERM: The period of time over which the payments will stay constant. If this is your first house, I suggest you choose a five (5) year term or longer to avoid costly surprises. On a normal mortgage, you can have (as an example) five (5) terms of five (5) years to total an amortization of 25 years. At the end of each term, the Lending institution will send you a letter of "offer to renew" allowing you to extend the mortgage for a new term at whatever the rate is then.

BLENDED PAYMENTS: The payments on the mortgage will comprise of principal and interest. First the interest component gets paid, then whatever is left over from the payment goes to principal. Most Lenders will collect PIT (principal, interest and property taxes).

HIGH RATIO MORTGAGE: Your down payment was less than 25% of the purchase price! Your mortgage must be insured against default through Canada Mortgage and Housing Corporation. Your Lender takes care of all those details. This insurance is not life or disability insurance, it just protects the Lender against losing money. You are forced to buy it, but the premium (cost) can be added to the mortgage.

GDS/TDS: Qualification standards. The acronyms stand for "Gross Debt Service" ratio and "Total Debt Service" ratio. Simply put, the Lending Institutions and Canada Mortgage & Housing (Government) have established that your payments for the house mortgage plus the property taxes and heat must not exceed 32% (35% if you are a first time home buyer) of your Gross Income (that's the GDS part), and that all your payments together including the house must not exceed 42% of Gross Income (that's the TDS). Lenders really look up and pay attention when you start talking "GDS & TDS" to them.

MORTGAGOR: The Borrower! Remember there are two "O"s in the word mortgagor and also two "O"s in the word borrower.

MORTGAGEE: The Lender! Remember there are two "E"s in mortgagee and two "E"s in the word Lender.

LAND TRANSFER TAX: Welcome tax! When you buy land in Ontario, the Province levies a tax equivalent to 1% of the purchase price less $275.00 If this is your first house, by opening an OHOSP (Ontario Home Ownership Savings Plan) you will pay the land transfer tax but if the family income qualifies, you get your money back.

SURVEY: A guarantee by an Ontario Land Surveyor that the house you are buying is entirely on the lot that you are buying, and that your neighbours are not on your land.

APPRAISAL: An opinion of the value of your house and lot by a person trained to give such an opinion. Your Lender needs the appraisal in order to get you the mortgage.

LAWYER: You require this person to certify title to your mortgagee (Lender). The money from your Lender will get sent to your Lawyer who will give it to the Lawyer for the Vendor (Seller) of the property you wish to purchase.

MORTGAGE BROKER: Someone who can probably save you money by shopping the market for the best mortgage rate, if your credit rating is good; someone who you will probably need if your credit rating is tainted.

CONDITIONAL OFFER: An agreement from you, the purchaser, to someone, the vendor, to buy a house subject to certain conditions. Never sign an Agreement of Purchase and Sale unless you adequately cover your ***. There is no "cooling off" period when you buy real estate. Caution is warranted.