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OPELIKA, AL | Monday, September 06, 2010 |
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Real Estate Terms Glossary
: P
partial payment
A payment that is not sufficient to cover the
scheduled monthly payment on a mortgage loan. Normally, a lender
will not accept a partial payment, but in times of hardship you
can make this request of the loan servicing collection department.
payment change date
The date when a new monthly payment amount takes
effect on an adjustable-rate mortgage (ARM) or a graduated-payment
mortgage (GPM). Generally, the payment change date occurs in the
month immediately after the interest rate adjustment date.
periodic payment cap
For an
adjustable-rate mortgage where the interest rate and the minimum
payment amount fluctuate independently of one another, this is a
limit on the amount that payments can increase or decrease during
any one adjustment period.
periodic rate cap
For an
adjustable-rate mortgage, 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.
personal property
Any property that is not real property.
PITI
This stands for principal, interest, taxes and
insurance. If you have an "impounded" loan, then your
monthly payment to the lender includes all of these and probably
includes mortgage insurance as well. If you do not have an
impounded account, then the lender still calculates this amount
and uses it as part of determining your debt-to-income ratio.
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.
planned unit development (PUD)
A type of
ownership where individuals actually own the building or unit they
live in, but common areas are owned jointly with the other members
of the development or association. Contrast with condominium,
where an individual actually owns the airspace of his unit, but
the buildings and common areas are owned jointly with the others
in the development or association.
Planned Unit Development (PUD)
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.
point
A point is 1
percent of the amount of the mortgage.
power of attorney
A legal document that authorizes another person to
act on one’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 loosely used
term which is generally taken to mean that a borrower has
completed a loan application and provided debt, income, and
savings documentation which an underwriter has reviewed and
approved. A pre-approval is usually done at a certain loan amount
and making assumptions about what the interest rate will actually
be at the time the loan is actually made, as well as estimates for
the amount that will be paid for property taxes, insurance and
others. A pre-approval applies only to the borrower. Once a
property is chosen, it must also meet the underwriting guidelines
of the lender. Contrast with pre-qualification.
pre-qualification
This usually refers to the loan officer’s written
opinion of the ability of a borrower to qualify for a home loan,
after the loan officer has made inquiries about debt, income, and
savings. The information provided to the loan officer may have
been presented verbally or in the form of documentation, and the
loan officer may or may not have reviewed a credit report on the
borrower.
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.
prime rate
The interest rate that banks charge to their
preferred customers. Changes in the prime rate are widely
publicized in the news media and are used as the indexes in some
adjustable rate mortgages, especially home equity lines of credit.
Changes in the prime rate do not directly affect other types of
mortgages, but the same factors that influence the prime rate also
affect the interest rates of mortgage loans.
principal
The amount borrowed or
remaining unpaid. The part of the monthly payment that reduces the
remaining balance of a mortgage.
principal ; interest ; taxes and insurance (PITI)
The four
components of a monthly mortgage payment on impounded loans.
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 paid into an escrow account each month for property taxes and
mortgage and hazard insurance.
principal balance
The outstanding
balance of principal on a mortgage. The principal balance does not
include interest or any other charges. See remaining balance.
private mortgage insurance (MI)
mortgage insurance
that is provided by a private mortgage insurance company to
protect lenders against loss if a borrower defaults. Most lenders
generally require MI for a loan with a loan-to-value (LTV)
percentage in excess of 80 percent.
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.
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
The acquisition of
property through the payment of money or its equivalent.
Equal Housing Opportunity
REALTOR® -- A registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. Inquiries regarding the Code of Ethics should be directed to the board in which a REALTOR® holds membership.
John Rice, LLC Realtors
334-364-0480
fax: 334-364-0481
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