A payment that is less than the scheduled monthly payment on a mortgage loan.
Payment Change Date:
The date on which a new monthly payment amount takes effect, for example, on an adjustable-rate mortgage (ARM) loan.
For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.
Any property that is not real property.
An acronym for the four primary components of a monthly mortgage payment: principle, interest, taxes, and insurance (PITI).
A cash amount that a borrower has available after making a down payment and paying 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 (PUD):
A real estate project in which individuals hold title to a residential lot and home while the common facilities are owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.
One percent 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.
A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This process typically includes a review of the applicant’s credit history and may involve the review and verification of in-come and assets to close.
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.
A preliminary assessment by a lender of the amount it will lend to a potential home buyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.
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.
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.
Any amount paid to reduce the principal balance of a loan before the scheduled due date.
A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or pre-paying a substantial amount to reduce the unpaid principle balance.
The amount of money borrowed 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 for conventional mortgage loans that protects the lender from loss in the event of default by the borrower. See Mortgage Insurance.
A written promise to repay a specified amount over a specified period of time.
Purchase and Sale Agreement:
A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.
Purchase Money Mortgage:
A mortgage loan that enables a borrower to acquire a property.
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