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| • | Payment Adjustment Period - The length of time (typically a year) between changes to the borrower's P&I (Principal & Interest) payment. |
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| • | 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. |
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| • | Payment Cap - A limit on the amount the payment can be changed at the end of each Payment Adjustment Period. |
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| • | Payment Discount - In a payment discount, the lender reduces the first year's interest rate to make the mortgagor more attractive to borrowers. |
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| • | Periodic Payment Cap - A limit on the amount that payments can increase or decrease during any one-adjustment period. |
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| • | 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. |
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| • | Personal Loan - An unsecured loan, which means a borrower does not put up any collateral or security to guarantee the repayment of the loan. For this reason, personal loans carry high interest rates. If a borrower owns a home, a lower-interest-rate alternative is a home-equity loan. But this option requires that the borrower put up his or her home or other real estate property as collateral. Your best loan option is the loan that best meets your needs. |
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| • | Personal property - Any property that is not real property. |
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| • | Piggyback Loan - An alternative to private mortgage insurance, also known as a second trust loan. The most common type is an 80/10/10 where a first mortgage is taken out for 80% of the home's value, a down payment of 10% is made and another 10% is financed in a second trust at a higher interest rate. In some cases, you may even qualify for a piggyback loan with as little as a 5% down payment |
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| • | PITI - Principal, interest, taxes, and insurance. Also called monthly housing expense. |
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| • | 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. |
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| • | 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. |
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| • | Point-of-Sale (POS) - A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks. |
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| • | Points - Additional points you can pay a lender to lower the interest rate on your loan at closing. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000). Also referred to as Discount Points. Points may include discount points and/or origination fee. |
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| • | Power of Attorney - A legal document authorizing one person to act on behalf of another. |
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| • | Pre-paid Items - Pre-paid items are amounts that are required by the Lender to be paid in advance of their due date at settlement. You may be required to prepay certain items at the time of settlement, such as accrued interest, mortgage insurance premiums and hazard insurance premiums. Pre-paid items contribute to the total amount of the loan's closing costs. See Closing Costs for more information. Note: You will only see per-diem interest under this category on our site. For some lenders you will see insurance premiums under this category also; we have categorized our insurance premiums under the Escrow Deposits. |
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| • | Prepaids - Expenses necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments. |
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| • | Prepayment - A privilege in a mortgage permitting the borrower to make payments in advance of their due date. |
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| • | Prepayment Premium - Money charged for an early repayment of debt. Prepayment premiums are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia. |
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| • | Pre-qualification - The process of determining how much money a prospective homebuyer will be eligible to borrow before application. |
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| • | Prime Rate - The interest rate charged by lenders to their best, most creditworthy customers. A less credit worthy customer may be offered a loan at the prime rate plus anywhere from 2 to 10 percent. Borrowing at below-prime also occurs, but is less common and usually applies to businesses, not individual consumers. The Federal Reserve determines whether to lower or raise the prime rate based on a variety of economic factors. Many consumer loans, such as auto, home equity, mortgage and credit card loans are based upon the prime rate. Building and maintaining a good credit history are two of the most important qualifications for prime-rate borrowing. |
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| • | Principal - The amount of debt, not counting interest, left on a loan. |
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| • | Private Mortgage Insurance (PMI) - In the event that you do not have a 20 percent down payments, lenders will allow a smaller down payment-as low as 5 percent in some cases. With the smaller down payments loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of 1.0 percent to 5.0 percent of your mortgage amount and may require an additional monthly fee depending on your loan's structure. On a $75,000 house with a 10 percent down payments, this would mean either an initial premium payment of $2,025 to $3,375, or an initial premium of $675 to $1,130 combined with a monthly payment of $25 to $30. |
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| • | Processing - Processing are the steps a lender takes with your loan application to gather your information for underwriting. Processing involves building your file of information for your loan. Processing includes getting the credit report, appraisal, verification of employment, assets, etc. |
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| • | Promissory note - A written promise to repay a specified amount over a specified period of time. |
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| • | Public auction - A meeting in an announced public location to sell property to repay a mortgage that is in default. |
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| • | Purchase Agreement - See Agreement of Sale. |
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| • | Purchase Money Transaction - The acquisition of property through the payment of money or its equivalent. |
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| • | Purchase option - Typically, the option to buy a leased auto usually during the life of a lease (lease buy out) or when the lease ends. |
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