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Real Estate Terms
Click on a link below for
an alphabetized list of Real Estate and Mortgage Terms.
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Partial payment
A payment that is not sufficient to cover the scheduled
monthly payment on a mortgage loan. Normally, a lender
will not accept a partial payment, but in times of hardship
you can make this request of the loan servicing collection
department.
Payment change date
The date when a new monthly payment amount takes effect
on an adjustable-rate mortgage (ARM) or a graduated-payment
mortgage (GPM). Generally, the payment change date occurs
in the month immediately after the interest rate adjustment
date.
Periodic payment cap
For an adjustable-rate mortgage where the interest rate
and the minimum payment amount fluctuate independently
of one another, this is a limit on the amount that payments
can increase or decrease during any one adjustment period.
Periodic rate cap
For an adjustable-rate mortgage, a limit on the amount
that the interest rate can increase or decrease during
any one adjustment period, regardless of how high or
low the index might be.
Personal property
Any property that is not real property.
PITI
This stands for principal, interest, taxes and insurance.
If you have an "impounded" loan, then your
monthly payment to the lender includes all of these
and probably includes mortgage insurance as well. If
you do not have an impounded account, then the lender
still calculates this amount and uses it as part of
determining your debt-to-income ratio.
PITI reserves
A cash amount that a borrower must have on hand after
making a down payment and paying all closing costs for
the purchase of a home. The principal, interest, taxes,
and insurance (PITI) reserves must equal the amount
that the borrower would have to pay for PITI for a predefined
number of months.
Planned unit development (PUD)
A type of ownership where individuals actually own the
building or unit they live in, but common areas are
owned jointly with the other members of the development
or association. Contrast with condominium, where an
individual actually owns the airspace of his unit, but
the buildings and common areas are owned jointly with
the others in the development or association.
Point
A point is 1 percent of the amount of the mortgage.
Power of attorney
A legal document that authorizes another person to act
on one’s behalf. A power of attorney can grant
complete authority or can be limited to certain acts
and/or certain periods of time.
Pre-approval
A loosely used term which is generally taken to mean
that a borrower has completed a loan application and
provided debt, income, and savings documentation which
an underwriter has reviewed and approved. A pre-approval
is usually done at a certain loan amount and making
assumptions about what the interest rate will actually
be at the time the loan is actually made, as well as
estimates for the amount that will be paid for property
taxes, insurance and others. A pre-approval applies
only to the borrower. Once a property is chosen, it
must also meet the underwriting guidelines of the lender.
Contrast with pre-qualification.
Prepayment
Any amount paid to reduce the principal balance of a
loan before the due date. Payment in full on a mortgage
that may result from a sale of the property, the owner's
decision to pay off the loan in full, or a foreclosure.
In each case, prepayment means payment occurs before
the loan has been fully amortized.
Prepayment penalty
A fee that may be charged to a borrower who pays off
a loan before it is due.
Pre-qualification
This usually refers to the loan officer’s written
opinion of the ability of a borrower to qualify for
a home loan, after the loan officer has made inquiries
about debt, income, and savings. The information provided
to the loan officer may have been presented verbally
or in the form of documentation, and the loan officer
may or may not have reviewed a credit report on the
borrower.
Prime rate
The interest rate that banks charge to their preferred
customers. Changes in the prime rate are widely publicized
in the news media and are used as the indexes in some
adjustable rate mortgages, especially home equity lines
of credit. Changes in the prime rate do not directly
affect other types of mortgages, but the same factors
that influence the prime rate also affect the interest
rates of mortgage loans.
Principal
The amount borrowed or remaining unpaid. The part of
the monthly payment that reduces the remaining balance
of a mortgage.
Principal balance
The outstanding balance of principal on a mortgage.
The principal balance does not include interest or any
other charges. See remaining balance.
Principal, interest, taxes, and insurance (PITI)
The four components of a monthly mortgage payment on
impounded loans. Principal refers to the part of the
monthly payment that reduces the remaining balance of
the mortgage. Interest is the fee charged for borrowing
money. Taxes and insurance refer to the amounts that
are paid into an escrow account each month for property
taxes and mortgage and hazard insurance.
Private mortgage insurance (MI)
Mortgage insurance that is provided by a private mortgage
insurance company to protect lenders against loss if
a borrower defaults. Most lenders generally require
MI for a loan with a loan-to-value (LTV) percentage
in excess of 80 percent.
Promissory note
A written promise to repay a specified amount over a
specified period of time.
Public auction
A meeting in an announced public location to sell property
to repay a mortgage that is in default.
Planned Unit Development (PUD)
A project or subdivision that includes common property
that is owned and maintained by a homeowners' association
for the benefit and use of the individual PUD unit owners.
Purchase agreement
A written contract signed by the buyer and seller stating
the terms and conditions under which a property will
be sold.
Purchase money transaction
The acquisition of property through the payment of money
or its equivalent.
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