Glossary of Terms
Click on a letter below to see the definitions for terms begining with that letter.
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P
Partial Release - A request by the borrower to the lender to release a portion of the mortgaged property from the mortgage after part of the loan has been repaid.
Pest/Termite Inspection - An examination of a structure, by qualified personnel, to determine the existence of infestation by termites. This is often required by the terms of a sales contract.
PITI - Principal, Interest, Taxes (property) and Insurance (hazard), or PITI, are the four elements that make up your total monthly mortgage payment for most homeowners. Every month a portion of your mortgage payment is held in an escrow account that is managed by your mortgage company. Your mortgage company uses this escrow account to pay hazard insurance premiums and property taxes on your property.
Points - Points are charged by a lender at closing, and are a one-time cost of obtaining the mortgage funds. One point is equal to one percent (1%) of the amount of a mortgage loan. Points are sometimes paid at a closing as a way to lower the monthly payment interest rate. The number of points and who pays the points are negotiable terms of a property sale.
Power of Sale - Sometimes referred to as "Foreclosure of Mortgage by Advertisement." This gives the right to the lender to force the sale of a defaulted property without judicial proceeding. It is the most frequently used method by which a lender will remedy a default by the borrower. The power of sale indicates a sale under the power contained in the mortgage document or in the Mortgages Act. This process is considered to be the fairest, most inexpensive method to deal with a negative financial situation. It allows the lending institution to retrieve only what it is entitled to and no more. If there is a surplus, the owner will benefit. The power of sale does represent certain complexities, especially in gaining possession and the obligation of the lender to obtain the best price for the property.
Pre-Approved - The process of applying for a loan, and obtaining approval for a maximum loan amount, before making a purchase.
Pre-Foreclosure Sale (PFS) - The term used when a borrower is allowed to sell the property for less than the amount owed in order to avoid foreclosure. This may also be referred to as a short sale. In cases involving a VA mortgage, it is referred to as a compromise offer. See Compromise Offer.
Pre-Payment Penalties - A fee that is charged to a homeowner who pays one or all of the monthly payments before the due date and that can apply to additional principal reduction payments.
Pre-qualified - The pre-qualification process of estimating how much money a prospective homebuyer would be eligible to borrow if approved for a loan. It does not mean the loan is approved.
Private Mortgage Insurance(PMI) - Insurance purchased from a commercial company by the buyer to protect the lender in the event of default. The cost of mortgage insurance is usually added to the monthly payment. Mortgage insurance is usually maintained until the outstanding amount of the loan is less than 80 percent of the value of the house, or for a set period of time (7 years is common). PMI is usually used for conventional loan packages. Mortgage insurance packages for FHA and VA loans last for the life of the loan.
Professional Credit Counselor - Help you manage your money and work with you to form a debt management plan.
Purchase Agreement - See Offer.
Purchase Contract - See Offer.
Purchase and Sales Agreement - See Offer.
Purchase and Sales Contract - See Offer.