GLOSSARY

This glossary is Alphabetical please choose your letter below.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

 

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Partial Claim
A loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.

 

Partial Prepayment
Making a payment larger than the scheduled payment as a way of paying off the loan earlier.

 

Payment Adjustment Interval
The period between payment changes on an ARM, which may or may not be the same as the interest rate adjustment period.

 

Payment Increase Cap
The maximum percentage increase in the payment on an ARM at a payment adjustment date.

 

Payment Decrease Cap
The maximum percentage decrease in the payment on an ARM at a payment adjustment date.

 

Payment Period
The period over which the borrower is obliged to make payments. On most mortgages, the payment period is a month, but on some it is biweekly.

 

Payment Power
A program begun by Fannie Mae in 2003-4 that allows a borrower to skip up to 2 mortgage payments in any 12 month period, and up to 10 over the life of a loan.

 

Payment Rate
The interest rate used to calculate the mortgage payment, which is usually but not necessarily the interest rate.

 

Payment Shock
A very large increase in the payment on an ARM that may surprise the borrower. Also used to refer to a large difference between the rent being paid by a first-time home buyer, and the monthly housing expense on the purchased home.

 

Payoff Figures
The unpaid principal balance and escrow amounts to be used for payment in full of the mortgage or for closing sale of the property.

 

Payoff Month
The month in which the loan balance is paid down to zero. It may or may not be the term.

 

Per Diem Interest
Interest from the day of closing to the first day of the following month.

 

Percentage Point
One percent of the loan or a measure of the interest rate. See also points.

 

Periodic Refinancing
An ill-advised scheme to tap into equity for cash advances through periodic refinancings.

 

Permanent Buydown
Paying points as a way of reducing the interest rate.

 

Permanent Loan
A long term mortgage, usually ten years or more.

 

Pipeline Risk
The lender's risk that between the time a lock commitment is given to the borrower and the time the loan is closed, interest rates will rise and the lender will take a loss on selling the loan.

 

PITI
Principal, Interest, Taxes and Insurance. Also called monthly housing expense. The four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.
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Planned Unit Development ( PUD )
A comprehensive development plan for a large land area. A PUD usually includes residences, roads, schools, recreational facilities, commercial, office and industrial areas. Also, a subdivision having lots of areas owned in common and reserved for the use of some or all of the owners of the separately owned lots. See also DeMinimus PUD.

 

Plans and Specifications
Architectural drawings, engineering drawings and specifications for construction of a building, home or project. They include a description of materials to be used and the manner in which they are to be applied.

 

PMI
Private Mortgage Insurance. Privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

 

Points (Loan Discount Points)
Prepaid interest assessed at closing by the lender. Each point is equal to one percent of the loan amount.

 

Portable Mortgage
A mortgage that can be moved from one property to another.

 

Portfolio Lender
A lender that holds the loans it originates in its portfolio rather than selling them, as a temporary lender does.

 

Power of Attorney
A legal document authorizing one person to act on behalf of another.

 

Preapprove
Lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

 

Preapproval Letter
A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you are a serious buyer.

 

Predatory Lending
Unscrupulous lender practices designed to take advantage of unwary borrowers.

 

Preferred Stock
Stock that takes priority over common stock with regard to dividends and liquidation rights. Preferred stockholders typically have no voting rights.

 

Preforclosure Sale
A procedure in which the borrower is allowed to sell his or her property for an amount less than what is owed on it to avoid a foreclosure. This sale fully satisfies the borrower's debt.

 

Preliminary Title Report
The results of a title search by a title company prior to issuing a title binder or commitment to insure clear title.

 

Premium Sale
An amount paid on a regular schedule by a policyholder that maintains insurance coverage.

 

Prepaids
Also known as prepaid expenses. Prepaids are necessary to create an escrow account or to adjust the seller's existing account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

 

Prepaid Expenses
Necessary to create an escrow account or to adjust the seller's existing account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

 

Prepayment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date. This can enable the mortgage to be paid off much more quickly, with a major savings in total interest costs.

 

Prepayment Penalty
Money charged for an early repayment of debt. Prepayment penalties are allowed in some form in 36 states and the District of Columbia.

 

Prequalify
A lender informally determines the maximum amount an individual is eligible to borrow. Also known as prequalification.

 

Prepayment Risk
This is the risk to the Lender that the loan will be paid off before the end of the term. It is considered to be a risk because loans are often refinanced when interest rates drop. This means the Lender gets their capital back but have to lend it out at a lower rate.

 

Primary Mortgage Market
Lenders making mortgage loans directly to borrower's such as savings and loan association, commercial banks and mortgage companies. These lenders usually sell their mortgages into the secondary mortgage markets such as FNMA of GNMA, etc. The original lender will usually still service the loan, that is, send the payment coupons or statements to the Borrower.

 

Primary Residence
The house in which the borrower will live most of the time, as distinct from a second home or an investor property that will be rented.

 

Principal
The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.

 

Principal Balance
The remaining balance due on a debt, exclusive of accrued interest.

 

Principal Limit
The present value of a house, given the elderly owner's right to live there until death or voluntary move-out, under the FHA reverse mortgage program.

 

Private Mortgage Insurance ( PMI )
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment (as low as five percent in some cases). With the smaller down payment loans, however, borrower's are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of one to five percent of your mortgage amount and may require an additional monthly fee depending on your loan's structure.

 

Processing
Compiling and maintaining the file of information about the transaction, including the credit report, appraisal, verification of employment and assets, and so on. The processing file is handed off to underwriting for the loan decision.

 

Purchase Contract (Agreement/Offer)
An agreement between a buyer and seller of real property, setting forth the price and terms of the sale. Also known as a sales contract.