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.
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.
personal
property
Any property that is not real property.
PITI
See principal, interest, taxes and insurance (PITI) below.
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 below.
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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