partial
payment
A payment that is not sufficient to cover the scheduled
monthly payment on a mortgage loan.
payment
change date
The date when a new monthly payment amount takes effect
on an adjustable-rate mortgage (ARM) or a graduated-payment
adjustable-rate mortgage (GPARM). Generally, the payment
change date occurs in the month immediately after the adjustment
date.
periodic
payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount
that payments can increase or decrease during any one adjustment
period. See
cap.
periodic
rate cap
For an adjustable-rate mortgage (ARM), 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. See
cap.
personal
property
Any property that is not real property.
PITI
See principal,
interest, taxes, and insurance (PITI).
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
See PUD.
point
A one-time charge by the lender for originating a loan.
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.
prearranged
refinancing agreement
A formal or informal arrangement between a lender and a
borrower wherein the lender agrees to offer special terms
(such as a reduction in the costs) for a future refinancing
of a mortgage being originated as an inducement for the
borrower to enter into the original mortgage transaction.
preforeclosure
sale
A procedure in which the investor allows a mortgagor to
avoid foreclosure by selling the property for less than
the amount that is owed to the investor.
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
The process of determining how much money a prospective
home buyer will be eligible to borrow before he or she applies
for a loan.
prime
rate
The interest rate that banks charge to their preferred customers.
Changes in the prime rate influence changes in other rates,
including mortgage interest rates.
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. 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
and sale 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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