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Mortgage Terms - P

Package Mortgage
Mortgage covering both real and personal property.
Paper
A mortgage, deed of trust, or land contract, which is given instead of cash.
Partial Release
A release of a portion of property covered by a mortgage.
Permanent Mortgage
A mortgage on completed construction on the same property under one mortgage or trust deed.
PITI
Abbreviation for principal, interest, taxes and insurance, often lumped together in a monthly mortgage payment.
Plat
A map or chart of a lot, subdivision or community, showing boundary lines, buildings and easements.
PMI
Abbreviation for private mortgage insurance: insurance issued by a company, which insures the lender against loss in the event that the borrower defaults on the mortgage.
Points
A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $100,000, one point is means you pay $1000 to the lender. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages in order to increase the yield of the mortgage and to cover loan closing costs. These points are usually collected at closing and may be paid by the borrower or the home seller, or may be split between them. Points describe some of the cost of obtaining a loan. They are used to describe the origination fees charged by the originating lender or broker. They are also used to describe the discount fees charged by lenders to increase the overall yield. A point is equal to 1% of the loan amount.
Portfolio Loan
Loans made by a bank, savings and loan, or credit union that keeps the loans as an investment.
Prepaid interest
Prepaid interest is the interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month. For example, if a loan closed on the 15th of the month, and the 1st payment is due 45 days later, the lender will charge 15 days of prepaid interest.
Prepayment
Full payment of the principal before the due date; occurs when a property is sold or the borrower refinances the existing loan.
Prepayment Penalty
Charge levied by the lender for paying off a mortgage loan before its maturity date.
Primary Mortgage Market
The process of obtaining a real estate loan, including the consumer's completion of a loan application form, validation of the credit and property information, loan underwriting by the lender and closing of the mortgage loan.
Primary Residence
Considered the permanent location of residency.
Principal
An entity that hires and pays an agent to perform a service; the seller in a real estate transaction is the principal. Also, the outstanding amount on a loan is the principal.
Private Mortgage Insurance (PMI)
Insurance similar to FHA or VA insurance, insuring part of the first mortgage or deed of trust, enabling a lender to make a conventional loan of a higher percentage of the property value.

Insurance which insures the upper portion of a mortgage loan thereby reducing the lenders risk to principal loss in the event of a borrowers default. The insurance coverage allows lenders to make higher loan-to-value ratios (95% LTV).
Processing, Underwriting and Document Fees
Charges for the lender's services associated with making the loan.
Property and Hazard Insurance
Property Tax
A tax levied by the local municipality or county on real and personal property.
Property Tax Prorations
Expenses such as taxes that are divided to the date of settlements between buyer and seller at closing. Interest is sometimes prorated when a mortgage loan is closed.
Prorate
To divide in proportionate shares, such as taxes, insurance, rent, or other items.
Planned Unit Development (PUD)
A housing development where there is a homeowners association and common areas owned by the homeowners.
Purchase Money Mortgage
A mortgage given by the buyer to the seller as part of the purchase consideration, as opposed to a hard money mortgage.
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