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Glossary of Mortgage and Home Equity Terms

To navigate through our glossary, click on the first letter of the word you’re looking for.
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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.
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.
Percentage Point
One percent of the loan or a measure of the interest rate.
Personal Property
Usually considered to be property that is moveable, as opposed to real property such as vacant or improved land.
PITI (Principal, Interest, Taxes, and Insurance)
Principal, interest, taxes and insurance are the most common components of a monthly mortgage payment.
Planned Unit Development (PUD)
A comprehensive development plan for a large land area. A PUD usually includes residences, roads, schools, recreational facilities, and commercial, office and industrial areas. A PUD may also be a subdivision with lots of areas owned in common and reserved for the use of some or all of the owners of the separately owned lots. See also De minimis PUD.
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.
Power of Attorney
A legal document authorizing one person to act on behalf of another.
A preapproval letter indicates that you have been preapproved for a specified mortgage amount based on a preliminary review of your credit information.
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.
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.
Prepayment Fee or Penalty
A provision in the lending contract that states the borrower will pay a fee in the event the borrower pays off the loan earlier than was originally agreed.
The process of estimating how much money a prospective homebuyer may be eligible to borrow prior to applying for the loan. Prequalification does not include a credit check and should not be confused with Preapproval.
Primary Residence
The residence that the borrower intends to occupy as their principal residence.
The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
Principal Balance
The remaining balance due on a debt, exclusive of accrued interest.
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
Private Mortgage Insurance (PMI)
Insurance written by a private company protecting the mortgage lender against loss resulting from a mortgage default.
The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer.
Property Usage
Denotes whether a property is a first home, second home, vacation home or a rental property.
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.”
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