Mortgage Marvel Glossary: Terms that Begin with P

P & I

The monthly principal and interest payment required when repaying a mortgage in accordance with its terms.

A reference generally found on a Good Faith Estimate or a HUD-1 statement that indicates a fee that will be paid for outside of the closing.

Paper

Credit given, evidenced by a written obligation with property as collateral.

Partial Payment

A loan payment that is not great enough to cover the scheduled monthly payment on a mortgage.

Payment Change Date

The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). The payment change date usually occurs in the month immediately after the adjustment date.

Per-Diem Interest

The interest due at closing to cover interest due that will not be collected with the first payment. Typically, interim interest is collected from the closing date through the last day of the month in which the loan is closed.

Periodic Payment Cap

On an adjustable rate mortgage (ARM), a limit on the amount that payments can increase during a single adjustment period.

Periodic Rate Cap

On an adjustable rate mortgage (ARM), a limit on the amount that the interest rate can increase during a single adjustment period.

Personal Property

Any and all property that is not real property.

Piggyback Loan

A type of financing that combines a first mortgage with a second mortgage home equity loan. Generally this type of financing allows the borrower to avoid paying mortgage insurance by keeping the balance of the first mortgage at no more than 80% of the home's value and financing the amount above that with a second mortgage. Also known as a combination loan.

PITI

(P)Principal, (I)Interest, (T)axes, and (I)nsurance is a reference to the total monthly payment required to repay a mortgage in accordance with its term as well as monthly escrow payments for taxes and insurance.

Planned Unit Development (PUD)

A housing project that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual unit owners.

Plat Drawing and Conservation Fee

A fee charged by title companies in some states for obtaining a map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements. This drawing is required to obtain title insurance.

Plat Registration

A fee charged by title companies in some states to review the registration of a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.

POC

See "Paid Outside of Closing"

Points

Fees that are collected by the lender in exchange for a lower interest rate. Commonly called discount points. Each point is equal to 1% of the loan amount.

Power Of Attorney

A written legal instrument that authorizes another person to act on one's behalf. A power of attorney can grant either complete or limited authority.

Pre-Approval

Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.

Pre-Approval Letter

Written verification from a lender that confirms a borrower has been pre-approved for a mortgage. Often used by realtors and sellers to demonstrate the strength of an offer to purchase.

Pre-Foreclosure Sale

A process in which the lender allows a borrower to avoid foreclosure by selling the property for less than the amount that may be owed to the lender.

Predatory Lending

Although there is no legal definition of the term, the act is when lenders use unjust practices during the mortgage origination process.

Prepaids

Expenses of property ownership or expenses incurred while obtaining a mortgage that must be paid in advance. Prepaids typically include interim interest, real estate taxes and hazard insurance.

Prepayment

Any amount that is paid to reduce the principal balance, not interest, of a loan before the due date.

Prepayment Penalty

A monetary penalty charged by a lender if all or part of a loan is paid off before it is due.

Pre-Qualification

Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.

Primary Residence

The house that will be lived in most of the time, as opposed to second home that will only be used sometimes or an investor property that will be rented.

Prime Mortgages

The vast majority of the mortgage market that is designed to provide market interest rate mortgages to borrowers with good credit histories and verifiable income and assets.

Prime Rate

The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.

Principal

The actual balance, excluding interest, of a mortgage loan. Also refers to the amount of the monthly mortgage payment that will be applied to the actual balance.

Principal & Interest

The monthly payment required to repay a mortgage in accordance with its terms. Sometimes referred to as "P&I".

Principal Balance

The outstanding balance of principal on a loan. Principal does not include interest or fees.

Private Mortgage Insurance

Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The cost of the insurance is usually paid by the borrower and is most often required if the loan amount is more than 80% of the home's value. Sometimes referred to as mortgage insurance.

Processing

The process of compiling the information necessary to complete a mortgage transaction prior to closing. The "processor" gathers and tracks the necessary documents to expedite the loan closing.

Processing/Administration Fee

A fee charged by some lenders to cover the administrative costs of processing a loan request.

Productivity

An economic indicator that measures the output per hour of work for non-farm business production. Can be used in conjunction with the rate of change in GAP to determine whether economic growth is likely to be inflationary. A separate component measures unit labor costs, an important indicator of future inflation.

Promissory Note

A written promise to pay a specified sum to specified person over a specified period of time.

Property Taxes

Taxes based on the assessed value of the home, paid by the homeowner for community services such as schools, public works, and other costs of local government. Sometimes paid as a part of the monthly mortgage payment.

Public Auction

A gathering at a pre-announced public location to sell property to satisfy a mortgage that is in default.

Public Record

A collection of legal documents that are filed with the local government registry so that the public will know what liens, encumbrances or judgments may affect any piece of real estate.

Purchase Agreement

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Purchase Money Mortgage

The mortgage a borrower obtains to purchase the property.

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Mortgage Glossary - P

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