Mortgage
Terms
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A B C D E F G H I J K L M
N O P Q R S T U V W X Y Z
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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 adjustment date.
Periodic Payment Cap
A limit on the amount that payments can increase or decrease during any one adjustment
period.
Periodic Rate Cap
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.
Permanent Loan
A long term mortgage, usually ten years or more. Also called an "end loan."
PITI
Principal, Interest, Taxes and Insurance. Also called monthly housing expense.
Pledged account Mortgage (PAM):
Money is placed in a pledged savings account and this fund plus earned interest
is gradually used to reduce mortgage payments.
Points (loan discount points)
Prepaid interest assessed at closing by the lender. Each point is equal to 1
percent of the loan amount (e.g., two points on a $100,000 mortgage would cost
$2,000).
Power of Attorney
A legal document authorizing one person to act on behalf of another.
Pre-Approval
The process of determining how much money you will be eligible to borrow before
you apply for a loan.
Prepaid Expenses
Necessary to create an escrow account or to adjust the seller's existing escrow
account. Can include taxes, hazard insurance, private mortgage insurance and
special assessments.
Prepayment
A privilege in a mortgage permitting the borrower to make payments in advance
of their due date.
Prepayment Penalty
Money charged for an early repayment of debt. Prepayment penalties are allowed
in some form (but not necessarily imposed) in many states.
Primary Mortgage Market
Lenders, such as savings and loan associations, commercial banks, and mortgage
companies, who make mortgage loans directly to borrowers. These lenders sometimes
sell their mortgages to the secondary mortgage markets such as to FNMA or GNMA,
etc.
Principal
The amount borrowed or remaining unpaid. The part of the monthly payment that
reduces the remaining balance of a mortgage.
Principal Balance
The outstanding balance of principal on a mortgage not including interest or
any other charges.
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 monthly
cost of property taxes and homeowners insurance, whether these amounts that are
paid into an escrow account each month or not.
Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow
a smaller down payment - as low as 3 percent in some cases. With the smaller
down payment loans, however, borrowers are usually required to carry private
mortgage insurance. Private mortgage insurance will usually require an initial
premium payment and may require an additional monthly fee depending on your loan's
structure.
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