Windermere/Coeur d'Alene Realty, Inc.

Nancy Johnson

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Glossary

GLOSSARY

ADJUSTABLE RATE MORTGAGE (ARM)      interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index.

AMMORTIZATION     a method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal changes over time.

ANNUAL PERCENTAGE RATE     the actual finance charge for a loan, including points and fees,  in addition to the stated rate.

APPRAISAL     an expert opinion of the value or worth of a property.

ASSESSED VALUE     the value placed on property by a municipality for purpose of levying taxes. It may differ widely from appraised or market value.

BALLOON PAYMENT     a large principal payment due all at once at the end of some loan terms.

CAP     a limit on how much the interest rate can change in an adjustable rate mortgage.

CERTIFICATE OF TITLE     a document, signed by a title examiner, stating that a seller has an insurable title to the property.

CLOSING     the deed to property is legally transferred from seller to buyer and documents are recorded.

COMMISSION     a fee (usually a percentage of transaction) paid to an agent or broker for services performed.

COMPARATIVE MARKET ANALYSIS     a survey of attributes and selling process of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for seller’s property.

CONTINGENCY    a condition in a contract that must be met for the contract to be binding.

DEED     a legal document that formally conveys ownership of property from seller to buyer.

DOWN PAYMENT     a percentage of the purchase price that the buyer must pay in cash and may not borrow from lender.

EQUITY     the value of the property actually owned by the homeowner: purchase price, plus appreciation, plus improvements, less mortgage and liens.

ESCROW     a fund or account held by a third-party custodian until conditions of a contract are met.

FIXED RATE MORTGAGE     interest rate on this type of mortgage remains the same over the life of the loan.

INTEREST     the cost of borrowing money, usually expressed as a percentage rate.

LIEN     a security claim on property until a debt in satisfied.

LISTING CONTRACT     an agreement whereby an owner engages a real estate company to f specified period of time to sell property, for which, upon the sale, the agent receives a commission.

MARKET VALUE     the price that is established by present economic conditions, location, and general trends.

MARKET PRICE     the actual at which a property sold.

MORTGAGE     security claim by a lender against property until the debt is paid.

MULTIPLE LISTING SERVICE (MLS)     a system that provides to its members detailed information about properties for sale.

ORIGINATION FEE     an application fee(s) for processing a proposed mortgage loan.

PITI     principal, interest, taxes and insurance, forming the basis for monthly mortgage payments.

POINT     one percent of the loan principal. Charged in addition to interest and fees.

PREPAYMENT PENALTY     a fee paid by a borrower who pays off the loan before it is due.

PRINCIPAL      one of the parties to a contract; or the amount of money borrowed, for which interest is charged.

PRORATE      divide or assess proportionately.

SETTLEMENT     all financial transactions required to make the contract final.

TITLE      a document that indicates ownership of a specific property.

TITLE SEARCH     detailed examination of the entire document history of a property title to make sure there are no   legal encumbrances.