Mortgage Glossaryp
What is Payment cap?
Limit on the amount by which a borrower's ARM payments may increase, regardless of rise in interest rates. This may result in negative…
What is Payment cap (ARM)?
A pre-determined amount that establishes the maximum by which the payment can increase, irrespective of increases to the interest…
What is 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…
What is Periodic interest cap?
An interest cap that restricts how much adjustable-rate mortgage rates may increase or decrease on pre-determined change…
What is Periodic Payment Cap?
A limit on the amount that payments can increase or decrease during any one adjustment…
What is 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…
What is Permanent loan?
A long-term mortgage of 10 years or…
What is PITI?
See Principal, Interest, Taxes, and…
What is 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…
What is PMI?
See Private Mortgage…
What is Points (or Discount points)?
Interest prepaid to the lender at closing. Each point is equal to 1 percent of the loan amount. Paying more points at closing generally reduces a loan's interest rate and monthly…
What is Power of attorney?
Legal document authorizing one person to act on behalf of…
What is Pre-Approval?
The process of determining how much money you will be eligible to borrow before you apply for a…
What is Pre-payment penalty?
Some ARM loans contain a provision against pre-payment without penalty. Terms of pre-payment penalty clauses vary from product to product, investor to investor, and state to state. Many states and…
What is Prepaid expenses?
Taxes, insurance and assessments paid in advance of their due dates, including at…
What is Prepaid interest?
Charged to a borrower at closing to cover interest on the loan between the closing date and the end of that…
What is Prepayment?
A full or partial payment of the principal before the due date. This might occur if the borrower makes extra payments, sells the property or refinances the existing…
What is Prequalification?
The process of determining how much money a prospective homebuyer may borrow, prior to application for a…
What is Primary mortgage market?
Includes banks, savings and loans, credit unions, and mortgage bankers who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to lenders such as FNMA in the…
What is Principal?
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a…
What is Principal Balance?
The outstanding balance of principal on a mortgage not including interest or any other…
What is 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…
What is Private Mortgage Insurance (PMI)?
Insurance purchased by a buyer on a conventional loan when a down payment is less than 20 percent of the purchase price to protect the lender against…
What is Profit and loss statement?
A financial statement showing revenue, expenses and profits over a period of…
What is Property tax?
A government tax based on the market value of a…
What is Purchase agreement?
A contract signed by buyer and seller stating the terms and conditions of a home…
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