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Partial Payment |
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage
loan.
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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. |
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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. |
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Prepayment Penalty |
A fee that may be charged to a borrower who pays off a loan before it is due. |
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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.
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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. |
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Periodic Rate Cap |
AFor 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.
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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. |
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Personal Property |
Any property that is not real property. |
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Principal |
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces
the remaining balance of a mortgage. |
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PITI |
See principal, interest, taxes and insurance (PITI) below. |
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Principal Balance |
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance. |
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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.
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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. |
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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. |
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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. |
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Point |
A one-time charge by the lender for originating a loan. A point is 1 percent of
the amount of the mortgage.
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Promissory Note |
A written promise to repay a specified amount over a specified period of time. |
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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. |
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Public Auction |
A meeting in an announced public location to sell property to repay a mortgage that
is in default. |
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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. |
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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. |
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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. |
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Purchase Money Transaction |
The acquisition of property through the payment of money or its equivalent. |
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