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P
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. More
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.
Q
qualifying
ratios
Calculations that are used in determining whether a borrower can qualify
for a mortgage. They consist of two separate calculations: a housing expense
as a percent of income ratio and total debt obligations as a percent of
income ratio.
quitclaim
deed
A deed that transfers without warranty whatever interest or title a grantor
may have at the time the conveyance is made.
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