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Definition of P.I.T. (PIT)
Principal, interest and taxes. Together, these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments
interest earned on an investment at periodic intervals and added to Principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of Principal and previous interest earned. Essentially, interest is paid on top of interest.
This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
In England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary.
An insured mortgage protects only the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC [Canada mortgage and Housing Corporation] and is required if a person has a high-ratio mortgage. [A mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.]
Commonly sold in the form of reducing term life insurance by lending institutions, this is life insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional life insurance companies. No matter where it is purchased, the reducing term insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage.
Automatic payment of moneys derived from a benefit.
Account in which interest is accrued daily and credited to the account at the end of a specified time.
interest bearing investment with fixed rate and term.
interest bearing investment with fixed rate and term.
One of several investment accounts in which your premiums may be invested within your life insurance policy.
Rate charged or paid for the use of money, normally expressed as a percentage
Decreasing term life insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage.
An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for purposes of purchasing a loan secured by a home.
A type of insurance policy or annuity in which the owner receives dividends, typically increases the death.
payments consisting of both a Principal and an interest component, paid on a regular basis (e.g. weekly, biweekly, monthly) during the term of the mortgage. The Principal portion of payment increases, while the interest portion decreases over the term of the mortgage, but the total regular payment usually does not change.
Canada Mortgage and Housing Corporation (CMHC)
The National Housing Act (NHA) authorized Canada mortgage and Housing Corporation (CMHC) to operate a mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default.
A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms.
A mortgage that does not exceed 80% of the purchase price of the home. mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages (see below).
A mortgage for which the rate of interest is fixed for a specific period of time (the term).
High Ratio Mortgage
If you don't have 20% of the lesser of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a mortgage Insurer, such as CMHC.
Interest Rate Differential Amount (IRD)
An IRD amount is a compensation charge that may apply if you pay off your mortgage Principal prior to the maturity date or pay the mortgage Principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that we can now charge when re-lending the funds for the remaining term of the mortgage. For more information, click on compensation amounts.
Mortgage Critical Illness Insurance
mortgage Critical Illness Insurance is available as an enhancement to mortgage Life Insurance. It is usually underwritten by the Assurance Company. Complete details of benefits, exclusions and limitations are contained in the Certificate of Insurance. It is recommended for all mortgagors. It can pay off your mortgage -- up predefined limit -- if you are diagnosed with life-threatening cancer, heart attack or stroke.
Mortgagee and Mortgagor
The lender is the mortgagee and the borrower is the mortgagor.
Mortgage Life Insurance
A form of reducing term insurance recommended for all mortgagors. If you die, have a terminal illness, or suffer an accident, the insurance can pay the balance owing on the mortgage. The intent is to protect survivors from the loss of their homes.
The number of years or months over which you pay a specified interest rate. Terms usually range from six months to 10 years.
A mortgage which can be prepaid at any time, without penalty.
The choice of making regular mortgage payments every week, every other week, twice a month or monthly.
A fee charged by the lender when the borrower prepays all or part of a closed mortgage more quickly than is set out in the mortgage agreement.
The ability to prepay all or a portion of the Principal balance. Prepayment charges may be incurred on the exercise of prepayment options.
The amount of money borrowed for a new mortgage.
Variable Rate Mortgage
A mortgage for which the rate of interest may change if other market conditions change. This is sometimes referred to as a floating rate mortgage.
An independent individual (or company) who brings Together borrowers and lenders Together. Unlike a mortgage banker, a mortgage broker does not fund the loan. Instead, the broker originates and processes the loan, and places it with a funding source, such as a bank or thrift. Brokers typically require a fee or a commission for their services.
Private Mortgage Insurance (PMI)
Insurance that protects mortgage lenders against default on loans by providing a way for mortgage companies to recoup the costs of foreclosure. PMI is usually required if the down payment is less than 20 percent of the sale price. Home buyers pay for the coverage in monthly installments. PMI should be terminated when the home buyer has built up 20 percent equity in the property.
A roofing composed of three to five layers of asphalt felt laminated with coal tar, pitch, or asphalt. The top is finished with crushed slag or gravel. Generally used on flat or low-pitched roofs.
Work performed by the electrical Contractor after the plumber and heating contractor are complete with their phase of work. Normally all electrical wires, and outlet, switch, and fixture boxes are installed (before insulation).
Electrical Service Panel
Refers to the high-voltage electrical system's first point of entry into a home beyond the meter.
Provides power for lighting, appliances, and heating & cooling in a home. A meter records usage for billing by your local utility.
GFI -See Ground Fault Current Interrupter
Ground Fault Current Interrupter
An electrical device used to prevent injury from contact with faulty electrical appliances and faulty wiring
Metal Insulation Support
16" or 24" wire rod or crisscrossed wire to hold floor insulation in place.
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