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Mortgage
Glossary - Mortgage and Real Estate Terms Sorted Alphabetically:
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P – par, partial payment, partnership, party wall, payment shock…more
PAR - a price of 100 percent of face value
PARTIAL PAYMENT - in loan collection, receipt of less than the full payment
due.
PARTNERSHIP - a business association of two or more owners who share in the
profits and losses of the business. Partners are jointly and severally liable
for the debts of the business enterprise.
PARTY WALL - a wall built on a line between two adjoining properties and common
to both owners.
PAYMENT SHOCK - a scenario in which monthly mortgage payments on an
adjustable rate mortgage (ARM) rise so high that the borrower may not
be able to afford the payments. Many consumer protection guidelines regarding
extremely low initial "teaser" rates, lifetime ceilings, and annual caps are
designed to prevent payment shock.
PAYOFF FIGURES - the unpaid principal balance, plus any negative escrow
amounts, plus accrued and unpaid interest, late charges, prepayment penalties,
and other possible fees, to be used for payment in full of a mortgage or other
lien.
PERMANENT FINANCING - a mortgage loan usually covering development costs,
interim loans, construction loans,
home financing expenses, that is put in place when the property is
completed.
PERSONAL PROPERTY - any property that is not real property (dirt).
PHYSICAL DEPRECIATION - decline in the value of a physical asset or real
property, resulting from normal usage, age, wear and tear, disintegration or
action of the elements. Depreciation can be curable or incurable sometimes.
PIGGY-BACK LOAN - the combination of both a first and
second mortgage being recorded concurrently on a single piece of
property. A single mortgage lender may originate both loans, or the loans may
be originated by two different lenders. In either event, the two loans are
recorded by priority.
PITI (PRINCIPAL, INTEREST, TAXES AND INSURANCE) - the four components that (for
most homeowners) are included in the monthly mortgage payment. Principal and
interest are the portions of the payment assigned to repay the mortgage itself;
taxes and insurance are paid by your lender into a special escrow account to
pay for homeowners insurance and property taxes.
POINTS (LOAN DISCOUNT POINTS) - prepaid interest on a mortgage that is usually
paid at the time of closing. Each "point" is equal to one percent of the total
amount of a mortgage (one point on an $80,000 mortgage is $800, or 1 percent of
80,000). Most lenders offer mortgages with several combinations of points and
interest rates. Generally, the lower the interest rate, the more points you
will pay at settlement, and the shorter the loans term will be. Don't mix-up
"points" and "closing costs" in your mind (** SEE GOOD FAITH ESTIMATE **).
POINTS (typically charged) - the residential FIRST MORTGAGE market today for
'conforming' applicants is in the zero to two, two and a half point range.
'Non-conforming' customers (about 60% of everybody else) are charged generally
one to three points, while SECOND MORTGAGES are often in the two to five point
range at most home equity specialty companies, especially when the typical
customer today is looking for higher Combined LTV's (CLTV).
PORTFOLIO LENDER - a funding source who holds loans in their own portfolio and
does not sell them to investors in the secondary market. These lender/funding
sources usually hold the loans until their maturity, or until the loan is paid
off.
PRE-APPROVAL OR PRE-QUALIFICATION (pre-qual) - an early assurance by a
lender/loan broker that you appear to meet the requirements for a specific type
of loan. Unless subsequent supporting documentation doesn't adequately confirm
the initial supplied information, "pre-quals" rarely change.
PRELIMINARY TITLE SEARCH - a real property title search a title insurance
company conducts prior to issuance of a title binder or commitment to insure.
PREPAID ITEMS - costs paid at closing for taxes, interest, and insurance.
Because prepaid items are recurring costs that do not relate to the acquisition
of the real property itself, they cannot be financed.
PREPAID INTEREST - mortgage loan interest that is paid in advance of when it is
due to obtain tax advantages, or as required by a lender at closing for the odd
days between he loan closing date and 30 days prior to the first scheduled
payment due date.
PREPAYMENT - the payment of all or part of a mortgage debt before it is due.
PRE-PAYMENT PENALTY - a charge the mortgagor pays the mortgagee, for the
privilege to prepay the loan.
PRE-QUALIFICATION - evaluation of a potential borrower's financial status, and
other characteristics, to determine the size and type of mortgage which is
likely available to him or her.
PRIME RATE - the interest rate commercial banks typically charge their most
creditworthy commercial customers for short-term loans. "Prime" is a yardstick
for trends in interest rates, and it is often a baseline for establishing
interest rates on higher-risk loans. Each bank sets its own separate "prime
rate." It does NOT directly affect mortgage rates like you think it might!
PRIMARY RESIDENCE - the residence which the owner physically occupies and uses
as his or her home.
PRINCIPAL - the original balance of money lent, excluding interest. Also, the
remaining balance of a loan, excluding interest.
PRIVATE MORTGAGE INSURANCE (pmi) - a policy of insurance issued by an insurance
company protecting the mortgage lender against financial loss, in the event of
a borrower default on a mortgage loan. Borrower pays the premium, the lender is
the beneficiary of the insurance policy (it's like the insurance company is the
co-signer/guarantor on the loan).
PRORATE - the allocation of proportionate shares of income, ownership or of an
obligation which a buyer and seller share at the time of closing of a purchase
transaction.
PROMISSORY NOTE - a written promise to pay a specific amount at a specified
time.
PUD (Planned Unit Development) - a comprehensive development plan for a large
land area. A PUD usually includes residences, roads, schools, recreational
facilities, commercial office and industrial areas. Also, a subdivision having
lots of areas owned in common and reserved for the use of some or all of the
owners of the separately owned lots.
PURCHASE AGREEMENT - a written agreement/contract as between a buyer and a
seller of real property setting forth the price and the other terms of the
sale.
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A
- adjustable rate mortgage, adjustment interval, amortization, annual
percentage rate (APR)…more
B – balloon mortgage, bankruptcy, basis point, beneficiary…more
C - caps, cash flow, cash out (second mortgage), cash out refinance…more
D - debt consolidation, debt service, debt reduction plan, debt-to-income
ratio…more
E - earned and unearned income, earnest money, easement, economic life…more
F - Fair Credit Reporting Act, fair market value, Fannie Mae…more
G - good faith estimate, grace period, gradual payment mortgage (GPM),
grantee…more
H - home equity, home improvement loan, Home Mortgage Disclosure Act
(HMDA)…more
I - index, in file credit report, inflation, initial interest rate, ingress and
egress…more
L - lender buy-down mortgage, liability insurance, LIBOR, loan application…more
M - manufactured home, market value, maximum loan amount, mechanic’s lien…more
N - negative amortized (Neg/AM), Neg AM Loans, negative cash flow, net
worth…more
O - obsolescence, off-site improvements, on-site improvements, ordinary
income…more
Q – quality control, quit claim deed, quote…more
R – rate shopper, real property, real estate loans, reconciliation…more
S – sales contract, satisfaction or mortgage, seasoned mortgage, second
mortgage…more
T – tax lien, tenancy in common, tenant, term, title, title insurance…more
U – underwriting, unencumbered property, uniform commercial code (UCC)…more
V – VA (Department of Veterans Affairs) Mortgage, vacancy rate, VA funding
fee…more
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