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Confused in the Home Loan jargon? Our glossary
will help you in understanding the basic loan related terms.
Browse through the glossary or serach for a term through the
menu to resolve any doubts.
Glossary of Home insurance
terms
P
Partial payment
A payment that is not sufficient to cover the scheduled monthly
payment on a mortgage loan.
Periodic rate cap
For an adjustable-rate mortgage (ARM), 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.
Personal property
Any property that is not real property.
PITI
See principal, interest, taxes, and insurance (PITI).
Planned unit development
See PUD.
Point
A one-time charge by the lender for originating a loan.
A point is 1 percent of the amount of the mortgage.
Policy
A policy is a written contract for insurance between an
insurance company and policyholder that states the details
of the coverage.
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.
Premium
The price for coverage as described in an insurance policy.
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.
Pre-qualification
The process of determining how much money a prospective
home buyer will be eligible to borrow before he or she applies
for a loan.
Prime rate
The interest rate that banks charge to their preferred 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 of principal on a mortgage. The
principal balance does not include interest or any other
charges. See remaining balance.
Principal, interest, taxes, and insurance (PITI)
The four 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 are paid into an escrow account each month for property
taxes and mortgage and hazard insurance.
Purchase and sale agreement
A written contract signed by the buyer and seller stating
the terms and conditions under which a property will be
sold.
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