PITI
An acronym for the four primary components of a monthly mortgage payment: principle, interest, taxes, and insurance (PITI).
PITI Reserves
A cash amount that a borrower has available after making a down payment and paying 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.
Partial Payment
A payment that is less than the scheduled monthly payment on a mortgage loan.
Payment Cap
For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.
Payment Change Date
The date on which a new monthly payment amount takes effect, for example, on an adjustable-rate mortgage (ARM) loan.
Personal Property
Any property that is not real property.
Planned Unit Development (PUD)
A real estate project in which individuals hold title to a residential lot and home while the common facilities are owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.
Point
An amount equal to 1 percent of the loan amount.
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 process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This process typically includes a review of the applicants credit history and may involve the review and verification of income and assets to close.
Pre-Qualification
A preliminary assessment by a lender of the amount it will lend to a potential homebuyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.
Prepayment
Any amount paid to reduce the principal balance of a loan before the scheduled due date.
Prepayment Penalty
A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principal balance.
Principal
The amount of money owed on a loan, excluding interest. Also, the part of the monthly payment that reduces the remaining balance of a mortgage.
Private Mortgage Insurance (PMI)
Insurance for conventional mortgage loans that protects the lender from loss in the event of default by the borrower.
Promissory Note
A written promise to repay a specified amount over a specified period of time.
Purchase Money Mortgage
A mortgage loan that enables a borrower to acquire a property.
Purchase and Sale Agreement
A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.