Loan Glossary
P
- Principal Balance
The outstanding balance on a mortgage. The principal
balance does not include interest or any other charges. See remaining balance.
- Principal Payment
Portion of your monthly payment that reduces the
remaining balance of a home loan.
- Principal, interest, taxes, and insurance (PITI)
Four potential 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 may be paid into an escrow
account each month for property taxes and mortgage and hazard insurance.
- Private Mortgage Insurance (PMI)
Mortgage insurance that is provided by a private
mortgage insurance company to protect lenders against loss if a borrower
defaults. Most lenders generally require PMI for a loan with a loan-to-value
(LTV) percentage in excess of 80 %.
- 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 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
A loan used in part as payment for a purchase. A loan
that is used to buy a home is called a purchase money mortgage.
- Purchase Price
The total amount paid for a home.
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Loan Glossary 
