P

Partial Payment
In loan collection, a loan payment that is less than the amount due under the terms of the mortgage note. Usually, it will not be credited to the account until the balance of the amount due is paid.

Payment Adjustment Period
The length of time (typically a year) between changes to the borrower's P&I (Principal & Interest) payment.

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.

Payment Cap
A limit on the amount the payment can be changed at the end of each Payment Adjustment Period.

Payment Discount
In a payment discount, the lender reduces the first year's interest rate to make the mortgagor more attractive to borrowers.

Penalty Rate
Several percentage points higher than a credit card’s current annual percentage rate, which goes into effect after a predetermined number of late payments.

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.

Periodic Rate
The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month. The daily periodic rate is the cost of credit per day.

Permanent Financing
A mortgage loan, usually covering development costs, interim loans, construction loans, financing expenses, and marketing, administrative, legal and other costs. This loan differs from a construction loan in that the financing goes into place after the project is constructed and open for occupancy. It is a long-term obligation, generally for a period of 10 years or more.

Personal Loan
A loan secured by property other than real estate, or unsecured.

Personal property
Any property that is not real 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
Shorthand for principal, interest, taxes, and insurance, which are the components of a monthly mortgage payment.

PITI Ratio
Compares the amount of the monthly income to the amount the borrower will owe each month in principal, interest, real estate tax and insurance on a mortgage. It is used by lenders in deciding whether to give the borrower a loan.

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.

Plaintiff
The person who institutes a suit in a court.

Planned Unit Development (PUD)
A project that may consist of any combination of one- to four-family homes, condominiums and other styles of residential housing. The individual unit and often the real estate under it are owned by the individual owner. The common facilities are owned and maintained by a homeowner's association.

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.

Points
Points are finance charges paid at the beginning of a mortgage in addition to monthly interest. One point equals one percent of the loan amount.

Policyholder
A policyholder is a person who pays a premium to an insurance company in exchange for the protection detailed in an insurance policy.

Portfolio
The securities or investments owned by an individual.

Power of Attorney
A legal document that allows someone to appoint an attorney in fact to conduct personal and financial business, even in the event of legal incompetence. It expires upon the giver's death.

Pre-Approval
A process used to assess a prospective borrower’s ability to pay back a loan. It determines how much money a prospective homebuyer can borrow before an actual application is made.

Prearranged Refinancing Agreement
A formal or informal arrangement between a lender and a borrower where the lender agrees to offer special terms (such as a reduction in the rate or closing costs) for a future refinancing as an inducement for the borrower to enter into the original mortgage transaction.

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.

Premium
The fee you pay for insurance, usually a recurring expense paid at fixed intervals.

Prepaid Interest
Interest that the borrower pays the lender before it becomes due.

Prepayment
A loan repayment made in advance of its contractual due date.

Prepayment Penalty
A charge imposed by the lender if a borrower pays off a loan early. The charge is usually expressed as a percent of the loan balance at the time of the prepayment.

Prequalification
A process used to assess a prospective borrower’s ability to pay back a loan. It determines how much money a prospective homebuyer can borrow before an actual application is made.

Previous Balance
An interest calculation method used by some credit card issuers where finance charges are based on the amount owed at the end of the previous billing cycle.

Primary Residence
The place someone lives most of the time.

Prime Rate
The interest rate banks use to price loans to their best or "prime" customers. Many institutions quote prime rates established by large money center commercial banks.

Principal
The original or remaining amount of money invested or lent, not including profits or interest earned or due on that money.

Principal Payment
Portion of your monthly payment that reduces the remaining balance of a home loan.

Principle Balance
Amount borrowed, which may increase as a result of interest capitalization, and the amount on which interest is calculated.

Private Mortgage Insurance (PMI)
An insurance policy paid by borrowers designed to protect lenders against default for loans over 80 percent Loan-to-value ratios.

Processing
Gathering the loan application and all of the required supporting documents (including the property appraisal, credit report, credit history, and income and expenses) so that a lender can consider the borrower for a loan.

Probate
The process of distributing a deceased person's estate.

Promissory Note
A document in which the borrower promises to pay a stated amount on a specific date. The note normally states the name of the lender, the terms for payment and any interest rate.

Property Appraisal
A supportable estimate of a property’s market value determined by a trained and certified appraiser who measures the likelihood that a property will maintain its value over the duration of the loan.

Prorate
To divide expenses and income between a buyer and a seller in proportionate shares.

Public Auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.

Purchase Money
Refers to a loan for the purpose of purchasing a home, rather than a loan refinance or home improvement loan