Engel Volkers Buyer & Seller Guide Bozeman - Manual / Resource - Page 78
E n g E l & Vö l k E r s | B oz E M a n
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.
Market Value an appraisal term denoting the highest price that a buyer, willing but not compelled to buy, would pay, and the
lowest a seller, willing but not compelled to sell, would accept.
Montana Land Title Association (MLTA) a montana statewide association of title insurers and underwritten title
companies. the association adopts standard title policy forms.
Mortgage Payment a payment that is owed to the bank/lender each month toward repayment of the loan. The amount is
determined by the terms of the loan: principal, interest rate, length of the loan, and periodic adjustments, if applicable.
Multiple Listing Service an exclusive listing, submitted to all members of an association, so that each may have the
opportunity to sell the property.
Negative Amortization occurs when monthly payments fail to cover the interest cost. the interest that isn’t covered is
added to the unpaid principal balance, which means that even after several payments you may owe more than you did at the
beginning of the loan. negative amortization can occur when an arM has a payment cap that results in monthly payments that
aren’t high enough to cover the interest.
Note a unilateral agreement containing an express and absolute promise of the signer to pay to a named person, order, or
bearer a definite sum of money at a specified date or on demand. usually provides for interest and, concerning real property,
is secured by a mortgage or trust deed.
Origination Fee a fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one
percent.
PITI ( Principal, Interest, Taxes and Insurance) the four major components of a usual monthly mortgage payment.
Point an amount equal to 1% of the principal amount of the investment or note. The lender assesses loan discount points at
closing to increase the yield on the mortgage to a position competitive with other types of investments.
Power of Attorney an authority by which one person (principal) enables another (attorney-in-fact) to act for him.
(1) general power authorizes sale, mortgaging, etc., of all property of the principal. Invalid in some jurisdictions. (2) special
power specif es property, buyers, price and terms.
Prepayment Penalty a penalty under a note, mortgage, or deed of trust imposed when the loan is paid before it is due.
Pre-Qualification Letter a letter that states a potential borrower’s fi nancial status to determine the size and type of
mortgage available to him/her.
Principal (1) the amount of debt, not including interest. (2) the person who is served by an agent or attorney.
Private Mortgage Insurance (PMI) insurance written by a private mortgage insurance company protecting the mortgage
lender against loss occasioned by a mortgage default and foreclosure. the premium is paid by the borrower and is included in
the mortgage payment. Typically required if down payment is less than 20% of purchase price.
Processing (or Origination) Fees Fees that cover the administrative cost of processing the loan. these charges vary from
lender to lender.
Promissory Note a promise in writing and executed by the maker to pay a specified amount during a limited time, on demand
or at sight to a named person, or on order to bearer.
Proration the method used in dividing charges into that portion which applies only to a party’s ownership up to a particular
date.
Quitclaim Deed a deed operating as a release; intended to pass any title, interest, or claim, which the grantor may have in the
property, but not containing any warranty of a valid interest or title in the grantor.
Reconveyance the conveyance to the landowner of the title, held by a trustee under deed of trust, when the performance of
the debt is satisfied.
78
