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VWXYZpartial 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.
PUD - Planned Unit Development
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.