AMORTIZED LOAN
A loan that is paid off, both interest and principal, by regular payments that are equal or nearly equal.

AMENDMENT
A change, alter, add to, or correct, part of an agreement without changing the idea or essence.

ANNUAL PERCENTAGE RATE (APR)
This term reflects the cost of all credit and finances as determined by the length of a year, including the interest rate, points, broker fees, and other credit charges obligated to the borrower.

APPRAISAL
An estimate of the value of property resulting from analysis of facts about the property; an opinion of value.

ASSUMPTION
Taking over another person’s financial obligation; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.

BENEFICIARY
The recipient of benefits, often from a deed of trust; is usually the lender.

CLOSE OF ESCROW
The date the documents are recorded and the title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

CLOSING COSTS
Closing costs may also be referred to as transaction costs or settlement costs and may include various fees and charges associated with finalization. These may include or be related to application fees, title examination, title insurance, property fees, as well as settlement documents, and attorney charges.

CLOSING DISCLOSURE
A five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

CLOUD ON TITLE
A claim, encumbrance, or condition that impairs the title to real property until disproved or eliminated through such means as a quitclaim deed or a quiet title legal action.

COMPARABLE SALES
Sales that have similar characteristics as the subject property are used as an analysis in the appraisal. Commonly called “comps.”

CONSUMMATION
Occurs when the consumer or borrower becomes legally obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a Seller on a real estate transaction.

CONVEYANCE
An instrument in writing, such as a deed used to transfer (convey) title to property from one person to another.

DEED OF TRUST
An instrument used in many states in place of a mortgage. A written instrument by which title to an interest in land is transferred by the trustor to a trustee for a loan or other obligation.

DEED RESTRICTIONS
Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.

DOWN PAYMENT
Like many transactions involving large sums of money, the mortgage process involves a down payment – the amount a Buyer pays in order to make up the difference between the purchase price and the mortgage amount. Some experts advise no less than 10% to 15%; however, any amount over 20% of the purchase price is often recommended and may be required to avoid having to pay private mortgage insurance (PMI).

DUE DILIGENCE
In a nutshell, due diligence is doing your homework before making a purchase. When purchasing a ranch, it is essential that an in-depth investigation is done in order to ensure that you know exactly what you are purchasing. While this is true for any real estate transaction, it is extremely important when it comes to buying a ranch, farm, or recreational tract of land. Whether it is an agricultural farm or ranch in Montana or Utah or a recreational hunting ranch in Wyoming, there are checklists and protocols that should be followed in order to cover all of your bases and eliminate surprises after the purchase. Although every property is different, there are several items that should not be overlooked. Some of this information can be found in the title commitment, however, it is always good to double-check to confirm that the information provided is correct. Other items will need to be researched on your own, through your real estate broker, or through an attorney.

EARNEST MONEY DEPOSIT
Down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment.

EASEMENT
A right, privilege, or interest limited to a specific purpose that one party has in the land of another. An easement is a right to use or cross another person’s land for a specific purpose. Although this grants the legal right to use the property, the legal title to the land remains with the owner of the property. For example, a neighbor may be granted an easement to cross adjoining land to access the road. Although they cannot build or plant on the land, they may be required to help maintain the road or easement land. Easements are also granted to utility companies for the placement of utility poles, water lines, and sewer lines. Buyers should be aware that easements can restrict what the buyer is allowed to do with a property.

ENCROACHMENT
An encroachment happens when a neighbor builds on an adjoining property without permission or an easement. Upon occasion, especially on a farm or ranch, a fence line will be built on a neighboring property, often due to an incorrect survey or an owner not knowing exactly where a property boundary line is located. Buildings or roads can also encroach on a property. An encroachment should show up on a title report.

HAZARD INSURANCE
Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. The buyer often adds liability insurance and extended coverage for personal property.

IMPOUNDS
A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security.

LEGAL DESCRIPTION
A property description, recognized by law, using a government rectangular survey, metes, and bounds, or a plat map to sufficiently locate and identify a property.

LIEN
A form of encumbrance that usually makes a specific property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, and deeds of trust. A lien, or encumbrance, is a legal claim of ownership listed on the title of a property. Upon obtaining a mortgage, your lender will have a lien on your property until your mortgage is paid off. A lien can be filed on a property by anyone, be it a utility company, a contractor, etc., that is owed money by an owner of a property. This lien could show up on a preliminary title report if you are in the process of buying a home, farm, ranch, or land.

MULTIPLE LISTING SERVICE (MLS)
The MLS is a database of properties listed for sale by REALTORS® who are members of the local Board of REALTORS®.

MORTGAGE
The instrument by which real property is pledged as security for repayment of a loan.

PRELIMINARY TITLE REPORT
The preliminary title report will indicate if anyone other than the seller has ownership or a legal claim on the property, as well as any liens, easements, or encroachments on the property which could put a cloud on the title. Your real estate broker, attorney, or the title company should be able to answer questions or provide information on your report.

PRINCIPAL, INTEREST, TAXES & INSURANCE (PITI)
A payment that combines Principal, Interest, Taxes, and Insurance.

POWER OF ATTORNEY
A legal document that gives someone you choose the power to act in your place.

PRINCIPAL
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

PRIVATE MORTGAGE INSURANCE (PMI)
PMI is to protect the lender from a possible default. It is typically required if a borrower puts a down payment that is less than 20% of the home’s value. The charge is usually included in the monthly mortgage payment.

PRORATE
Used to describe the division of real estate expenses to the proportion of ownership or rental. At closing, any expenses that were prepaid by the Seller are prorated to his portion of ownership.

PURCHASE AGREEMENT
The purchase contract between the Buyer and Seller, is also known as a Purchase and Sale Agreement or a Buy/Sell Agreement. It is usually completed by the real estate agent and signed by the Buyer and Seller.

QUITCLAIM DEED
A deed operating as a release, intending 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 by the grantor.

RECORDING
Filing documents affecting real property with the County Recorder as a matter of public record.

TITLE
A title is a legal document listing the history of ownership of a property, whether a home, ranch, farm, or land. After a property is under contract (the buyer and seller have reached mutual acceptance), an attorney or title company will provide a preliminary title report which will reveal any problems that might prevent the property from being legally sold. The results are written up for the buyer to review in a preliminary title report.

TITLE SEARCH
A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller’s right to transfer ownership and to discover any claims, defects, and other rights or burdens on the property.

TITLE INSURANCE
Title insurance is your policy of protection against loss if any of these problems even a “hidden hazard” results in a claim against your ownership.

VESTING
When a deed is recorded for real property, ownership is described using the name of the owner(s), and often a phrase that describes the legal relationship between multiple owners or married persons.

WARRANTY DEED
A real estate-oriented document is used to convey fee title to real property from the grantor (usually the Seller) to the grantee (usually the Buyer). It includes warranty language from the Seller to the Buyer.