Glossary of Terms

Following are mortgage and real estate related terms and definitions you may find helpful.

If you have questions and would like to speak with a VA mortgage specialist, please call us toll free at 1-866-704-2826.

Currently Viewing 'P'

Payment Adjustment Period: The length of time (typically a year) between changes to the borrower's P&I (Principal & Interest) payment.

Payment Buy down: Payment buy downs occur when a third party, typically a builder, pays part of the initial P&I payments for a year or two, so that the borrower has smaller payments and can qualify for the loan.

Payment Cap: A limit on the amount the payment can be changed at the end of each Payment Adjustment Period.

Payment Discount: In a payment discount, the lender reduces the first year's interest rate to make the mortgagor more attractive to borrowers.

Periodic payment cap: A limit on the amount that payments can increase or decrease during any one-adjustment period.

Periodic rate cap: A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

Personal property: Any property that is not real property.

PITI: Principal, Interest, Taxes and Insurance are components of a mortgage payment.

Planned Unit Development (PUD): 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.

Plat: A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

Points: A one-time charge by the lender to increase the yield of the loan;1% of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.

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.

Prepayment: Payment of mortgage loan, or part of it, before due date.

Pre-Approval Letter: A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you're a serious buyer.

Pre-qualification: The process of determining how much money a prospective homebuyer will be eligible to borrow before application.

Pre-Qualification Letter: A letter from a mortgage lender that states that you're pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.

Predatory Lending: Abusive lending practices that include making mortgage loans to people who do not have the income to repay them or repeatedly refinancing loans, charging high points and fees each time and "packing" credit insurance onto a loan.

Principal: The amount of money borrowed to buy your house or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you've repaid.

Private Mortgage Insurance: Insurance provided by nongovernmental insurers that protect lenders against loss if a borrower defaults. (See Mortgage Insurance).

Promissory note: A written promise to repay a specified amount over a specified period of time.

Property Appreciation: See Appreciation

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

Purchase Agreement: See Agreement of Sale.

Purchase money transaction: The acquisition of property through the payment of money or its equivalent.

Back to Top