Real Estate Glossary P

P

partial payment

A payment that is not sufficient to cover the scheduled monthly principal and interest payment on a mortgage loan.

payment change date

The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the adjustment date and the borrower is notified 30 days prior as to the new rate.

Payoff

To pay the outstanding balance of a loan in full.

periodic payment cap

A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. See cap.

periodic rate cap

A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. See cap.

personal property

Any property that is not real property or is not permanently fixed to land. Cash, furniture, and cars are all examples of personal property.

Pest Report (Wood Destroying)

As a protective measure, banks and lending institutions require that homes be inspected for damage from termites and other wood-destroying insects before closing the sale of the home. A Wood Destroying Pest Inspection Report (WPI) is a document prepared by a licensed pest control company that informs the lending institution and buyer of the results of the inspection.

Piggyback

A combination of two loans. Example: A loan is made for 90% of the home price. 80% of the purchase price is supplied by a 1st mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st.

PITI

See principal, interest, taxes, and insurance (PITI).

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 equal the amount that the borrower would have to pay for PITI for a predefined number of months.

planned unit development

See PUD.

point

A one-time charge by the lender for originating a loan. A point is 1% of the amount of the mortgage (e.g., 1,000 on a $100,000 loan).

power of attorney

A legal document authorizing one person to act on another'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 lender's conditional agreement to lend a specific amount on specific terms to a homebuyer. Countrywide calls this an Upfront Approval or Approved Homebuyer Certificate and makes it subject to satisfactory property review and no change in financial condition. If you want the comfort of knowing that a Countrywide underwriter has reviewed your file, we can go even further than a pre-qualification by issuing your pre-approval. We will ask for written documentation of your information, which you can provide via fax or by mail. With pre-approval, you know your file has been reviewed by an underwriter and that you're approved (subject to satisfactory appraisal and no change in financial condition). Either way, you can shop with assurance, because you'll know up-front how large a loan you could qualify for.

prearranged refinancing agreement

A formal or informal arrangement between a lender and a borrower where the lender agrees to offer special terms (such as a reduction in the rate or closing costs) for a future refinancing as an inducement for the borrower to enter into the original mortgage transaction.

preforeclosure sale

A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property, typically for less than the amount that is owed to the lender.

Pre-paid items

Items required by lender to be paid at closing prior to the period they cover such as prorated property taxes, homeowners insurance and pre-paid interest.

Pre-paid interest

Mortgage interest that is paid in advance of when it is due.

prepayment

Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

prepayment penalty

A fee that may be charged to a borrower who pays off a loan before it is due. Generally, a prepayment penalty is added to a loan in exchange for a discounted rate.

pre-qualification

The process of determining how much money a prospective home buyer might be eligible to borrow before he or she applies for a loan. When you pre-qualify, we ask you for information about your credit, assets and debts. Based on the information you provide and the loan type you want, the lender will calculate how large a loan you could qualify for. Countrywide pre-qualification is neither pre-approval nor a commitment to lend and requires you to submit additional information for review and approval.

Primary residence

The place someone lives most of the time.

prime rate

The interest rate that banks charge on short-term loans to its most creditworthy customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

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 on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.

principal, interest, taxes, and insurance (PITI)

Four potential 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 amounts that may be paid into an escrow account each month for property taxes and mortgage and hazard insurance.

Principal payment

Portion of your monthly payment that reduces the remaining balance of a home loan.

private mortgage insurance (PMI)

Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 %.

Property Management

Typical duties expected of a property manager include finding/evicting and generally dealing with tenants, home repair, home improvement, cleaning, garden maintenance, landscaping and snow removal, to be coordinated with the owner's wishes. Such arrangements may require the property manager to collect rents, and pay necessary expenses and taxes, making periodic reports to the owner, or the owner may simply delegate specific tasks and deal with others directly.

Property Taxes

When you own or purchase a home, the county tax assessor reassesses the property and sets a new property tax amount based on your purchase price. Your property taxes will be approximately 1% of your purchase price, plus any voter approved bonded indebtedness of the community.

promissory note

A promissory note, referred to as a note payable in accounting, is a contract where one party (the maker or issuer) makes an unconditional promise in writing to pay a sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.

public auction

A meeting in an announced public location to sell property to repay a mortgage that is in default.

PUD (Planned Unit Development)

A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

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 transaction

A loan used in part as payment for a purchase. A loan that is used to buy a home is called a purchase money mortgage.

Purchase price

The total amount paid for a home.