Partial Payment - A payment that is not sufficient to cover the scheduled monthly principal and interest payment on a mortgage loan.
Payment (P&I) - Your monthly mortgage payment, including principal and interest, but excluding Tax and insurance payments.
Payment Change Date - The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the adjustment date and the borrower is notified 30 days prior as to the new rate.
Payoff - To pay the outstanding balance of a loan in full.
Periodic Payment Cap - A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. See cap.
Periodic Rate Cap - A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period. See cap.
Personal Property - Any property that is not real property or is not permanently fixed to land. Cash, furniture, and cars are all examples of personal property.
Piggyback - A combination of two loans. Example: A loan is made for 90% of the home price. 80% of the purchase price is supplied by a 1st mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st.
PITI - An abbreviation for the parts of a typical monthly mortgage payment. PITI stands for principal-Interest-Taxes-Insurance. See principal, interest, taxes, and insurance.
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.
Planned Unit Development - See PUD.
PMI - Stands for Private Mortgage Insurance. PMI is an insurance policy the borrower buys to protect the lender from non-payment of the loan. PMI policies are usually required if you make a down payment that is below 20% of the sales price of the home.
Points (Loan Discount Points) - Points are prepaid interest on your mortgage. A one-time fee charged by the lender at the time of closing for originating a loan. Each point is 1% of the loan amount - that is, 2 points on a $100,000 mortgage would be $2,000.
Power Of Attorney - A legal document authorizing one person to act on another's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Pre-Approval - A lender's conditional agreement to lend a specific amount on specific terms to a homebuyer. (subject to satisfactory appraisal and no change in financial condition). You can shop with assurance, because you'll know up-front how large a loan you could qualify for.
Preforeclosure Sale -A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property, typically for less than the amount that is owed to the lender.
Pre-Paid Items (Prepaids) - Items required by lender to be paid at closing prior to the period they cover such as prorated property taxes, homeowners insurance and pre-paid interest.
Pre-Paid Interest - Mortgage interest that is paid in advance of when it is due.
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 fee that may be charged to a borrower who pays off a loan before it is due. Generally, a prepayment penalty is added to a loan in exchange for a discounted rate.
Pre-Qualification - A preliminary analysis of a borrower's ability to afford the purchase of a home. An affordability analysis takes into consideration factors such as income, liabilities, and available funds, along with the type of home loan, the likely taxes and insurance for the home, and the estimated closing costs.
Primary Residence - The place someone lives most of the time.
Prime Rate - The interest rate that banks charge on short-term loans to its most creditworthy customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.
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 on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
Principal, Interest, Taxes, and Insurance (PITI) - Four potential components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that may be paid into an escrow account each month for property taxes and mortgage and hazard insurance.
Principal Payment - Portion of your monthly payment that reduces the remaining balance of a home loan.
Private Mortgage Insurance (PMI) - Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 %.
Processing - The preparation and documentation of a mortgage loan application for underwriting.
Promissory Note - A written promise to repay a specified amount over a specified period of time.
Property Value - LTV or Loan to Value Ratio refers to the relationship between the unpaid principal balance of the mortgage and the property's appraised value (or sales price if it is lower).
Public Auction - A meeting in an announced public location to sell property to repay a mortgage that is in default.
PUD (Planned Unit Development) - 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.
Purchase Agreement - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Purchase Money Transaction - A loan used in part as payment for a purchase. A loan that is used to buy a home is called a purchase money mortgage.
Purchase Price - The total amount paid for a home.
Qualifying Ratios - Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
Quit Claim Deed - A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made.
Rate - This is the annual interest rate applied to the outstanding balance of the loans.
Rate Reduction Option - A fixed-rate mortgage that includes a provision that gives the borrower an option to reduce the interest rate (without refinancing) at a later date. It is similar to a prearranged refinancing agreement, except that it does not require re-qualifying.
Rate Lock - A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time. See lock-in.
Real Estate Agent - A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction.
Real Estate Settlement Procedures Act (RESPA) - A consumer protection law that, among other things, requires advance disclosure of settlement costs to home buyers and sellers, prohibits certain types of referral and other fees, sets rules for escrow accounts, and requires notice to borrowers when servicing of a home loan is transferred.
Real Property - Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
REALTOR® - A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS®.
Recording - Filing a document in the public records, thereby giving constructive notice to the world of the existence of the document and its contents.
Reduced Documentation - A method used to determine income when qualifying a borrower(s) for a loan. Borrower(s) provide their income, however no verification documentation is typically required.
Rescission - The act of cancellation or annulment of a transaction or contract by the operation of a law. Borrowers usually have the option to cancel certain credit transactions, including a refinance or home equity transaction, within three business days after consummation (when the consumer becomes contractually obligated by, for example, signing the loan documents).
Recorder - The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."
Recording - The noting in a book of public record of the terms of a legal document affecting title to real property, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage.
Refinance Transaction - The process of paying off one loan with the proceeds from a new loan, typically using the same property as security for the new loan.
Rehabilitation Mortgage - A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.
Remaining Balance - The amount of principal that has not yet been repaid. See principal balance.
Remaining Term - The original amortization term minus the number of payments that have been applied.
Rent With Option To Buy - See lease-purchase mortgage loan.
Repayment Plan - An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are often called "relief provisions."
Revolving Liability - A credit arrangement, such as a credit card or HELOC, that allows a customer to borrow against a predetermined line of credit when purchasing goods and services. The borrower makes payments on the amount that is actually borrowed plus any interest due.
Request For Notice of Default - A recorded document that obligates the holder of the first mortgage lien to notify subordinate lien holders in the event of default by the borrower.
Right Of First Refusal - A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
Right Of Ingress or Egress - The right to enter or leave designated premises.
Right Of Survivorship - In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
Rural Housing Service (RHS) - An agency within the Department of Agriculture. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.
Sale-Lease Back - A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
Second Home - A property occupied part-time by a person in addition to his or her primary residence.
Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage.
Secondary Mortgage Market - An informal market where lenders and investors buy and sell existing mortgages. Government-sponsored entities and private investors buy mortgages from lenders who use the proceeds to make additional loans.
Secured Loan - A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
Security - The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
Security Interest - An interest a lender takes in the borrower's property to assure repayment of a debt. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
Seller Take-Back - An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.
Servicer - An organization that collects principal and interest payments from borrowers and manages borrowers' tax and insurance escrow accounts. A mortgage banker is often paid a fee to service mortgages that have been purchased by an investor in the secondary mortgage market.
Servicing - The collection of principal and interest payments from borrowers and management of borrowers' tax and insurance escrow accounts.
Settlement - See closing.
Settlement Sheet - See HUD-1 settlement statement.
Single Family Residence - A residential structure designed to include one dwelling.
Special Deposit Account - An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.
Stand Alone - A Home Equity loan originated without obtaining a Countrywide first mortgage at the same time.
Start Date - The date you want to use as the start date for the amortization, usually the date you closed on your loan or today's date.
Start Month - The date you will begin adding an extra dollar amount to your regular monthly payments. Enter the payment number from 1 to 360 (e.g., if you will start paying extra principal at the start of year 5 of a 30 year loan, enter "49".
Start Rate - See initial interest rate.
Subdivision - A housing development that is created by dividing a tract of land into individual lots for sale or lease.
Sub-Escrow - Are fees charged by the escrow company for allowing the borrower to be able to sign all the loan documents in the Escrow office instead of having to go to the lenders office.
Subordinate Financing - Any mortgage or other lien that has a priority that is lower than that of the first mortgage. The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid.
Subprime - Subprime Lending is also called B&C lending. It refers to a category of loan programs that offer more lenient underwriting provisions and expanded credit guidelines. These provisions allow more flexibility in approving loans for borrowers who have less-than-perfect credit. Subprime loans are available at various interest rates and terms. They also offer capabilities for debt consolidation allowing borrowers to get a mortgage with enough extra cash to consolidate loans.
Subsidized Second Mortgage - An alternative financing option known as the Community Seconds� mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part or all of the second mortgage debt may be forgiven depending on how long the buyer remains in the home.
Survey - A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Sweat Equity - Contribution to the construction or rehabilitation of a property in the form of labor or services performed personally by the owner.
Tax Bracket - Please select the tax bracket you fall under. If you are unsure what tax bracket you are in, you may want to speak with an accountant find out.
Tax Savings - This is the amount of money you save in income taxes. You save this money because in most cases the interest you pay on your home loan is tax deductible!
Tax Service - A fee collected to set up a third-party to monitor the borrower's property tax payments to ensure that the payments are made on time, and to prevent tax liens from occurring.
Tenancy By The Entirety - A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. One spouse dies the property goes to the other spouse. Contrast with tenancy in common and joint tenancy.
Tenancy In Common - A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenancy.
Term - The term of a home loan is the number of years the home loan is amortized for. Home loans are generally amortized over 15, 20 or 30 years.
Termite Report - A report that results from an inspection by a professional to determine if the property has termites.
Third Party Fees - Fees collected by lender for services provided by other companies, such as an appraiser.
Third Party Origination - A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the home loan. See mortgage broker.
Title - A legal document evidencing a person's right to or ownership of a property.
Title Company - A company that specializes in examining and insuring titles to real estate.
Title Insurance - Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
Title Insurance Endorsements - This is an endorsement of insurance against losses that may result from claims of previously unknown ownership in insured property.
Title Search - A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Total Expense Ratio - Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts. Used to help qualify a potential borrower for a home loan.
Total Monthly Payment - See Monthly PITI payment.
Transaction Fee - A fee charged each time the borrower draws on the credit line.
Transfer of Ownership - Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.
Transfer Tax - State or local tax payable when title to a property passes from one owner to another.
Treasury Index - An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. See adjustable-rate mortgage (ARM).
Truth-in-Lending - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of credit, such as a mortgage, including the annual percentage rate (APR) and other charges.
Two To Four-Family Property - A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed. See multi-unit housing.
Trustee - A fiduciary who holds or controls property for the benefit of another.
Underwriting - The analysis of risk, the determination of the appropriate loan amount, and the setting of loan terms and conditions, based on the borrower's creditworthiness and the value of the real property that will secure the loan.
Unsecured Loan - A loan that is not backed by collateral.
VA Mortgage - A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
Variable Rate - An interest rate that changes periodically in relation to an index. Payments may increase or decrease per the terms of the loan agreement or note.
Vested - Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
Veterans Affairs, Department of (VA) - An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
Warehouse - A closing-cost fee representing the lender's cost of holding a borrower's loan temporarily prior to being sold on the secondary mortgage market.
Year Acquired - The date you acquired your existing mortgage, used to determine your remaining balance.
Year-End Statement - A report sent to the borrower each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.