Real Estate Glossary

Partial payment:

A payment that is not sufficient to cover the scheduled monthly payment of principal and interest on a mortgage loan.



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 next month immediately after the adjustment date.



Periodic payment cap:

For an adjustable-rate mortgage (ARM), a limit on the maximum amount that payments can increase or decrease during any one adjustment period. See also rate cap.



Periodic rate cap:

For 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. See rate cap.



Personal property:

Property that is not classified as – or affixed to – real estate.



Petition for Foreclosure:

Filed with the local court clerk, this document is the lender's application to the court to initiate foreclosure proceedings. It names all parties having any interest of record in the property that were discovered in the title search.



PITI:

Acronym for principal, interest, taxes, and insurance (PITI).



PITI reserves:

The 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 predetermined number of months.



Planned unit development (PUD):

A thorough development plan for a large area of land. A PUD usually includes residences, roads, schools, recreational facilities, commercial, office and industrial areas. Also, a subdivision’s common areas are reserved for the use of some or all of the owners of the separately owned lots.



PMI:

Private mortgage insurance is insurance that protects a lender against certain defaults. See mortgage insurance.



Point:

A fee collected by a lender. One point equals one percent of the loan amount. That means if one borrows $150,000 and pays one point, one point or one percent (1%) equals $1,500. Points are imputed as pre-paid interest.



Post-foreclosure sale statutory right of redemption:

A variation of statutory right of redemption. Many states have what is known as a pre-sale right of redemption, which should not be confused with a post-sale right of redemption.



Power of attorney:

A legal document and authorization that authorizes another person to act on one's behalf regarding legal and other matters. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.



Power of sale clause:

A clause in a mortgage that permits the mortgagee to sell the property, that secures the mortgage loan in the event that mortgage payments are not made in a timely manner.



Power of sale language:

A clause in a mortgage that permits the mortgagee to sell the property that secures the mortgage loan in the event that mortgage payments are not made in a timely manner.



Power of sale:

A clause in a mortgage that permits the mortgagee to sell the property, that secures the mortgage loan in the event that mortgage payments are not made in a timely manner.



Pre-approval:

A process whereby the borrower is approved for a loan before the process of selecting a property.



Prearranged refinancing agreement:

A formal or informal agreement 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 to entice the borrower to enter into the original mortgage transaction.



Predatory lending:

Making unaffordable loans based on the assets of the borrower rather than the borrowers ability to repay, often with the intent to foreclose on the property. Inducing a borrower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced ("loan flipping"). Engaging in fraud or deception to conceal the true nature of the loan obligation from an unsuspecting or unsophisticated borrower.



Preforeclosure:

A time period usually during which a notice of default will have been filed as a first step to foreclosure. If the default is not cured, either a judicial or non-judicial proceeding is started and property is thereafter subject to foreclosure.



Prepaid escrow:

Amounts paid at closing for property taxes and hazard insurance. These funds are deposited into the escrow account and used to pay the tax and insurance bills when they become due. See escrow.



Prepaid interest:

Mortgage interest that is paid in advance of when it is due, typically, at closing to cover interest from the date of closing to the end of the month or the time the first payment is due.



Prepayment:

Any amount paid to reduce the principal balance of a loan before the maturity 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 an existing borrower who pays off a loan before its maturity date.



Pre-qualification:

The process of determining the amount a prospective homebuyer will be eligible to borrow before he or she applies for a loan.



Price:

The combination of the interest rate and points a borrower pays to obtain a loan. The rate determines the monthly payment; the points are included in the closing costs.



Prime rate:

The interest rate that banks charge to their preferred customers. The prime rate is tied to the fed funds rate that is set by the Federal Reserve. Changes in the prime rate influence changes in other rates, including mortgage interest rates.



Principal:

The amount borrowed or remaining unpaid as part of a loan, excluding interest. The part of the monthly payment that reduces the remaining balance of a mortgage.



Principal balance:

The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other costs or charges. See remaining balance.



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 often paid into an escrow account each month for property taxes and for mortgage and hazard insurance.



Private mortgage insurance (PMI):

Insurance that protects the lender from a default on some portion of the loan balance. See mortgage insurance.



Programs:

The type of loan programs offered by a lender such as ARM, conventional, and interest-only.



Promissory note:

A legal document that evidences the underlying debt secured by a mortgage or deed of trust, which sets forth the amount of the loan and the terms of repayment. Often referred to as the "note."



Property taxes:

Taxes imposed by local governments based on the assessed value of a parcel of real property. Sometimes referred to as "ad valorem" taxes, which are based on a property value.



Prothonotary:

In Pennsylvania, the equivalent of the court clerk’s office.



Public foreclosure auction sale (public auction):

A meeting in an announced public location to sell real property to repay a mortgage that is in default.



Public trustee:

A government agent that acts as a trustee for purposes of effectuating a foreclosure sale. In most states, the trustee is a private entity acting on behalf of the lender as an agent.



Public trustees office:

A government agency that acts as a trustee for purposes of effectuating a foreclosure sale. In most states, the trustee is a private entity acting on behalf of the lender as an agent.



PUD:

A Planned Unit Development is a detailed residential plot or tract usually with common elements.



Punch list:

A list of minor items to be corrected by the builder of a newly constructed building or home after the closing.



Purchase and sale agreement/purchase contract:

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



Purchase money mortgage:

A mortgage that is part of a loan used to purchase a particular parcel of property, which usually establishes a first priority lien. This is opposed to a refinance or home equity mortgage, which is not part of an acquisition transaction.



Purchase money transaction:

The acquisition of property through the payment of money or its equivalent such as a mortgage.


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