Real Estate Glossary - Meanings, Terms, & Acronyms
PARCEL IDENTIFICATION NUMBER (PIN) A taxing authority’s tracking number for a property.
PARTIAL PAYMENT A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.
PATENT An instrument used by the state or federal government to transfer title to property.
PAYMENT CHANGE DATE The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.
PAYOFF The amount that will pay off a loan in full. In general, a borrower can pay off a loan more quickly by making larger or more principal payments than required. Borrowers should check their contract terms to determine if there are any early payoff fees or penalties.
PAYOFF FIGURES The unpaid principal balance and escrow amounts to be used in calculating full payment of the mortgage or for the closing sale of the property.
PAYOFF LETTER A written document from a seller’s mortgage company stating the amount of money needed to pay the loan in full.
PENDING A real estate contract that has been accepted on a property but the transaction has not closed.
PERIODIC PAYMENT CAP For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period. PERIODIC RATE CAP For an adjustable-rate mortgage, 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.
PERSON WITH A DISABILITY Any person who has a physical or mental impairment that substantially limits on or more major life activities, including functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working; has a record of such an impairment; or is regarded as having such an impairment.
PERSONAL PROPERTY Any property that is not real property.
PERSONAL REPRESENTATIVE A court appointed individual who is authorized to deal with the matters of an estate, which was formerly referred to as an administrator or executor.
PLANS AND SPECIFICATIONS Architectural and engineering drawings and specifications for construction of a building or project. They include a description of materials to be used and the manner in which they are to be applied.
PLAT OR PLOT A map showing subdivisions of a certain area of land giving proportions of each lot as well as other features such as roads, easements, etc.
PRE-APPROVAL A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification.
PREDATORY LENDING Abusive practices in a segment of the mortgage lending market which may include inadequate or improper disclosure of interest rates and finance charges, prepayment penalties, credit life insurance, fraud, deception, etc.
PRE‐FORECLOSURE SALE A procedure in which the borrower is allowed to sell his or her property in which the investor and borrower agree to accept the proceeds of the sale to satisfy a defaulted mortgage, even though this may be less than the amount owed on the mortgage, in order to avoid foreclosing on the property. PRELIMINARY TITLE REPORT The results of a title search by a title company prior to issuing a title binder or commitment to insure clear title.
PREPAIDS
A portion of the total closing costs related to the mortgage loan that are collected at loan closing, including per diem pre-paid interest and initial deposits of monthly escrows for taxes and insurance.
PREPAID INTEREST Funds paid by the borrower at closing based on the number of days left in the month of closing.
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 fine imposed on the borrower by the lender when the loan is paid off before it comes due.
PREQUALIFICATION This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower. PRIMARY RESIDENCE The residence that the borrower intends to occupy as their principal residence.
PRIME RATE The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans. 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 of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
PRINCIPAL PAYMENT The portion of a monthly payment that goes toward reducing the principal balance. Borrowers should strive to make additional principal payments whenever possible to pay down a loan balance faster and possibly reduce the amount of interest paid over the term of the loan. PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI) This stands for principal, interest, taxes and insurance. If you have an "impounded" loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio. . 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. PRORATION OF TAXES Proportionate and equal division of property taxes relative to time and use. PLANNED UNIT DEVELOPMENT (PUD) A type of ownership where individuals actually own the building or unit they live in, but common areas are owned jointly with the other members of the development or association. Contrast with condominium, where an individual actually owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development or association.
POINT A point is 1 percent of the amount of the mortgage. 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. PRIVATE MORTGAGE INSURANCE (PMI) A special insurance paid by a borrower in monthly installments, typically of loans of more than 80 percent of the value of the property.
PROBATE A court proceeding in which descendant’s estate is administered.
PROCESSING The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer. PROFESSIONAL DESIGNATION Additional nonlicensed real estate education completed by a real estate professional.
PROMISSORY NOTE A promise-to-pay document used with a contract or an offer to purchase. PROPERTY USAGE Denotes whether a property is a first home, second home, vacation home or a rental property.
PUBLIC AUCTION A meeting in an announced public location to sell property to repay a mortgage that is in default.
PURCHASE CONTRACT (AGREEMENT/OFFER) An agreement between a buyer and seller of real property, setting forth the price and terms of the sale. Also known as a “sales contract.”
