- Partial Payment
A payment that is not sufficient to cover the
scheduled monthly principal and interest payment on a mortgage loan.
- Payment Change Date
The date when a new monthly payment amount takes
effect on an adjustable rate mortgage (ARM). Generally, the payment change date
occurs in the month immediately after the adjustment date and the borrower is
notified 30 days prior as to the new rate
- Payoff
To pay the outstanding balance of a loan in full.
- Payoff Statement (or Demand)
A document
detailing the remaining balance of a loan to be paid off. This is provided by the current lender or
note holder.
- Periodic Payment cap
A provision of an adjustable-rate mortgage (ARM) that
limits how much the interest rate or loan payments may increase or decrease. In
upward rate markets, it protects the borrower from large increases in the
interest rate or monthly payment at each adjustment period. See cap.
- Periodic Rate Cap
A provision of an adjustable-rate mortgage (ARM) that
limits how much the interest rate or loan payments may increase or decrease. In
upward rate markets, it protects the borrower from large increases in the
interest rate or monthly payment at each adjustment period. See cap.
- Personal Property
Any property that is not real property or is not
permanently fixed to land. Cash, furniture, and cars are all examples of
personal property.
- Piggyback
A combination of two loans. Example: A loan is made
for 90% of the home price. 80% of the purchase price is supplied by a 1st
mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st.
- 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.
- Point
A one-time charge by the lender for originating a
loan. A point is 1% of the amount of the mortgage (e.g., 1,000 on a $100,000
loan).
- Points
- A fee charged by the lender as additional compensation for making the
loan. One "point" is equal to 1% of the principal amount of the loan.
- Power of Attorney
A legal document authorizing one person to act on
another's behalf. A power of attorney can grant complete authority or can be
limited to certain acts and/or certain periods of time.
- Pre-approval
A lender's conditional agreement to
lend a specific amount on specific terms to a homebuyer. The commitment remains
as long as the borrower still meets the qualification requirements at the time
of purchase.
- Pre-paid interest
Mortgage interest that is paid in
advance of when it is due.
- Pre-paid Items
Items required by lender to be paid at closing prior
to the period they cover such as prorated property taxes, homeowners insurance
and pre-paid interest.
- Pre-qualification
The process of determining how much
money a prospective home buyer might be eligible to borrow before he or she
applies for a loan. When you pre-qualify, we ask you for information about your
credit, assets and debts. Based on the information you provide and the loan
type you want, the lender will calculate how large a loan you could qualify
for.
- Prearranged refinancing agreement
A formal or informal arrangement between a lender and
a borrower where the lender agrees to offer special terms (such as a reduction
in the rate or closing costs) for a future refinancing 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, typically for less than the
amount that is owed to the lender.
- 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. Generally, a prepayment penalty is added to a loan in
exchange for a discounted rate. The
terms of a prepayment penalty can be found on the note or addendum to the deed
of trust.
- Primary residence
The place someone lives most of the time.
- Prime Loan
- A loan offered to borrowers with better credit history (sometimes
called "A" loans). Prime loans generally are priced lower and cost the
borrower less.
- Prime Rate
The interest rate that banks charge on short-term
loans to its most creditworthy 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.
Loan Glossary 
