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REAL ESTATE GLOSSARY
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PACKAGE MORTGAGE
A mortgage that /includes equipment and appliances located on the premises in addition to the real property itself.
PARGING
The cement coat applied to block foundations.
PARTIAL ENTITLEMENT
Under VA loans, the amount of guarantee still available to an eligible veteran who has used his previous entitlement.
PARTIAL INTEREST
A shared ownership in a piece of property. May be divided among two or more parties.
PARTIAL PAYMENT
A payment of less than the regular monthly amount. Usually, a lender will not accept partial payments.
PARTIAL RELEASE
A provision in a mortgage that allows some of the property secured to be freed from serving as collateral.
PARTICIPATION FINANCING
A loan in which more than one mortgagee or more than one mortgagor harbors an interest. It can also be a loan in which the mortgagee receives partial ownership of the property being financed.
PARTICIPATION MORTGAGE
A mortgage that allows the lender to share in part of the income or resale proceeds.
PASS THROUGH CERTIFICATES
Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates..
PAYMENY CHANGE DATE
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.
PERIODIC PAYMENT CAP
The limit on how much regular monthly payments on an Adjustable Rate Mortgage can change during one adjustment period.
PERIODIC RATE CAP
The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period.
PERMANENT LOAN OR MORTGAGE
A mortgage for a long period of time. Often referred to as the mortgage that pays off a construction loan on a completed property.
PERMIT
A document issued by a government regulatory authority that allows the bearer to take some specific action.
An occupancy permit allows the owner of a building to occupy or rent the building.
PERSONAL PROPERTY
Owned items which are not permanently affixed to the land.
PERSONAL RESIDENCE
The primary domicile of a person or family.
PITI
Abbreviation for principal, interest, taxes and insurance, which may be combined in a single monthly mortgage payment.
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 PITI (principal, interest, taxes, and insurance) must equal the amount that the borrower would have to pay for PITI for a determined number of months.
PLANNED UNIT DEVELOPMENT (PUD)
A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.
PLAT
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.
PLAT BOOK
A public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.
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.
POINT
A percentage of a mortgage amount (one point = 1 percent).
PORTFOLIO LOAN
A loan that is held as an investment by a bank or savings and loan, and NOT sold on the secondary market to investors.
POWER OF ATTORNEY
A written document authorizing another to act on his or her behalf as an Attorney in Fact. One does not need to be a licensed attorney to act as an attorney in fact but, power of attorney forms are powerful legal documents that should be used only under advice of a licensed attorney at law.
PREARRANGED REFINANCING AGREEMENT
A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.
PREFABRICATED
Any building or portion thereof which is manufactured and assembled off site, then erected on a property.
PREFORECLOSURE SALE
A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.
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.
PREPAID INTEREST
Prepaid interest is the interest charged to borrowers at closing to pay for the cost of borrowing for a balance of the month. For example, if a loan closes on the 19th of the month and the first payment is due on the 1st of the following month, the lender will charge 12 days of prepaid interest.
PREPAYMENT
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.
PREPAYMENT PENALTY
A fee that may be charged to a borrower who pays off a loan before it is due.
PRE-FORECLOSURE SALE
A procedure in which the borrower is allowed to sell his or her property for an amount less that what is owed on it to avoid foreclosure, fully satisfying the borrower's debt.
PRE-APPROVAL
The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers.
PRE-PAIDS
Expenses such as taxes, insurance, and assessments, which are paid in advance of their due date, and on a prorated basis at closing.
PRE-QUALIFICATION
Less formal that pre-approval, pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage loan.
PRIMARY MORTGAGE MARKET
Lenders making mortgage loans directly to borrower's such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets.
PRIME RATE
The interest rate that banks and other lending institutions charge other banks or preferred customers.
PRINCIPAL
The amount owed on a mortgage which does not include interest or other fees.
PRINCIPAL BALANCE
The outstanding balance of principal on a mortgage. Does not included interest due.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI)
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI)
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.
PROBATE
Court process to establish the validity of the will of a deceased person.
PROMISSORY NOTE
A written promise to repay a specified amount over a specified period of time.
PROPERTY
Any item which is owned or possessed.
PROPERTY TAX
A government levy based on the market value (as assessed by the county assessor's office) of the property.
PRORATIONS
The allocation of charges and credits to the appropriate parties at a real estate sale and/or loan closing at a real-estate sale and/or loan closing.
PUBLIC AUCTION
A meeting in an announced public location to sell property to repay a mortgage that is in default.
PUBLIC SALE
An auction of property with notice to the general public.
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 MORTGAGE
A mortgage used to finance the purchase of a property.
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