Engel Volkers Buyer & Seller Guide Bozeman - Manual / Resource - Page 77
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Glossary of terms
These definitions are to acquaint the home-buyer with terms commonly used in real estate transactions.
the terms are intended to be general and brief and are not complete and wholly accurate when applied to all
possible uses of the term.
Due on Sale Clause an acceleration clause that requires full payment of a mortgage or deed of trust when the secured
property changes ownership.
Earnest Money a deposit made to bind the conditions of a sale of real estate.
Easement a limited right of interest in land of another that entitles the holder of the right to some use, privilege or benefit over
the land.
Escrow the process in which a neutral third party holds money and documents for delivery to the respective parties in a
transaction on performance or established conditions.
Federal National Mortgage Association Commonly known as Fannie Mae. a privately owned corporation created by
Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHa or
guaranteed by va, as well as conventional home mortgages.
Finance Charge The total cost a borrower must pay, directly or indirectly, to obtain credit according to regulation z.
Foreclosure the legal process by which property is sold to satisfy an unpaid debt in the event of default on terms or payments
of a mortgage.
Good Faith Estimate (GFE) a document that tells borrowers the approximate costs they will pay at or before settlement,
based on common practice in the locality. under requirements of the Real estate settlement Procedures act (ResPa), the
mortgage banker or mortgage broker, if any, must deliver or mail the gFE to the applicant within three business days after the
application is received.
Graduated Payment Mortgage a residential mortgage with monthly payments that start at a low level and increase at a
predetermined rate.
Grant Deed one of many types of deeds used to transfer real property.
Hazard Insurance Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc.,
depending upon the terms of the policy.
Homeowner’s Association (1) an association of people who own homes in a given area, formed for the purpose of improving
or maintaining the quality of the area. (2) an association formed by the builder of condominiums or planned developments and
required by statute in some states.
Impound Account an account held by a lender for the payment of taxes, insurance or other periodic debts against real
property.
Index a measure of interest rate changes used to determine changes in an aRm’s interest rate over the term of the loan.
Joint Tenancy a means of ownership in which two or more persons own equal shares in real property. upon the death of one
tenant, his/her share passes to the remaining tenant(s) until title is vested in the last survivor.
Legal Description a description by which real property can be definitely located by reference to surveys or recorded maps.
sometimes referred to simply as “the legal address.”
Lien a legal hold or claim on property as security for a debt or charge.
Loan Commitment a written promise to make a loan for a specified amount on specifi c terms.
Loan to Value Ratio the relationship between the amount of the appraised value of the property and the loan, expressed as a
percentage of the appraised value.
Lock-in a guarantee by the lender of a particular loan rate. The loan must fund before the lock expiration in order to receive
the guaranteed or “locked” rate.
Margin the number of percentage points the lender adds to the index rate to calculate the aRm’s interest rate at each
adjustment.
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