Glossary

PARTIAL PAYMENT: When a payment is less than the regular monthly amount. Usually, a lender will not accept partial payments.

PERIODIC PAYMENT CAP: The limit established on how much regular monthly payments will be on an Adjustable Rate Mortgage can change during one adjustment period.

PERIODIC RATE CAP: The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period.

PERSONAL PROPERTY: These are owned items which are not permanently affixed to the land, also known as Chattels.

PERSONAL RESIDENCE: The primary place of residence of a person or family.

PLANNED UNIT DEVELOPMENT (PUD): This consists of a coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.

PLAT: This is plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements and may be derived from a survey.

POINT: This is known as a percentage of a mortgage amount (one point = 1 percent).

PRE-APPROVAL: The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval usually accompanies an offer to purchase from the borrower when in negotiations with sellers.

PREFABRICATED: This is considered any building or portion thereof which is manufactured and assembled off site, then erected on a property.

PREPAYMENT: Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.

PREPAYMENT PENALTY: This is fee that may be charged to a borrower who pays off a loan before it is due and can be expensive.

PRE-QUALIFICATION: Pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage loan, contingent upon credit report, appraisal and other documentation. This is less formal than a pre-approval, which means most of the conditions of the loan have been met.

PRIME RATE: The interest rate which banks and other lending institutions charge other banks or preferred customers.

PRINCIPAL: This is the amount owed on a mortgage which does not include interest or other fees.

PRINCIPAL BALANCE: This is the outstanding balance of principal on a mortgage and does not included interest due.

PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI): The most common type of a monthly mortgage payment.

PRIVATE MORTGAGE INSURANCE (PMI): This is a required form of mortgage insurance provided by private, non-government entities. It is normally required when the LOAN TO VALUE RATIO is less that 20%.

PROPERTY: This is item which is owned or possessed.

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