Mortgage brokers in Calgary speak a strange language. This language is full of terms such as “amortization”, “key interest rates”, “penalty clauses”, “principal earnings”, “gross income”, “debt service ratio” etcetera. Unless a person has been to accounting school or just happens to be best friends with a bean counter, wandering to a mortgage office can seem like getting off the plane in a foreign land where nobody speaks your language anymore. The list of terms used in the mortgage industry is long, and can be confusing to the uninitiated.
Josh, who works at Mortgages For Less here in Calgary, has tried to ease that “getting off the plane in a foreign land” feeling, by offering whole glossaries of terms on each of the calculators on the mortgagesforless.ca website. One term that many people trip up over, is what is meant by “gross income”. This term for the average hard-working employee, simply means “your income before the government takes it’s taxes”. In other words, your gross income is the first grand total on your pay stub, not the last one after all your taxes and deductions have been subtracted. We actually call that last line, your net income. It’s important to understand the difference between your gross and net income, because this will affect your mortgage application process.
The other term that many puzzle over, is “amortization”. In it’s simplest definition, this is the number of years you’ve agreed to take to pay off your loan. The higher the number of years, the lower your monthly mortgage payment, but the more interest you’ll end up paying. A decent mortgage broker can help you figure out the shortest amortization period with the least amount of interest to be paid out in the long haul. There are many other terms on Josh’s various glossary lists, but these are two that tend to trip people up the most. When dealing with mortgage brokers in Calgary, be sure to have them define for you any terms you are unfamiliar with.
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