| Participation |
| A mortgage where the lender receives a percentage of the gross proceeds along with the mortgage payments. |
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| Participation Certificates |
| A mortgage security rather than a mortgage. The certificate is more readily marketable. |
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| Payment Adjustment Period |
| The length of time, typically six months to a year, between changes to the AML borrower's P&I 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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| Payoff |
| The full payment of an existing loan or any other type of lien. |
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| Perfecting Title |
| The process of eliminating any adverse claims against a title. |
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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 Property |
| Any property that is not attached to real property.
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| Physical Assessment |
| Report Engineering and physical assessment of the property. Completed in addition to the appraisal.
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| PITI |
| Principal, Interest, Taxes and Insurance are components of a mortgage payment.
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| PITI Ratio |
| The ratio used in mortgage lending decisions that consists of the principal, interest, tax, and insurance payment to the total gross income. |
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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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| Pledged Account Mortgage (PAM) |
| Money that is placed in a pledged savings account. This fund, and earned interest, is used to reduce monthly mortgage payments. |
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| Points |
| Charges levied by the mortgage lender to obtain a better interest rate and usually payable at closing. One point represents 1% of the mortgage loan amount.
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| Possibility of Reverter |
| The term refers to the chance that an estate will exist as some future time. An example would be a property sold on the condition that it would be a park, but if not used for that, it would revert back to the seller who would then have a “possibility of reverter.” |
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| 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.
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| Pre-approval |
| A process whereby a potential home buyer secures a conditional credit approval before making an offer on a home.
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| Pre-paids |
| Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, and interest.
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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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| Premium |
| The amount paid for a property above the expected price, or the value of a mortgage or bond in addition to its face amount. |
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| Prepayment |
| Payment of mortgage loan, or part of it, before due date.
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| Prepayment Penalty (PPP) |
| A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.
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| Prescriptive Easement |
| An easement granted by a court based on the assumption that a written easement was given after a period of continuous use of the land, although none existed. |
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| Prime Rate |
| The interest rates that banks charge to their preferred customers.
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| Principal |
| The amount borrowed or remaining unpaid. Also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
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| Principal Balance |
| The outstanding balance of principal on a mortgage, which does not include interest or any other charges. |
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| Private Mortgage Insurance (PMI) |
| Insurance provided by nongovernmental insurers that protect lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.
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| Pro rate |
| The allocation of proportionate shares of certain expenses, such as interest, to be paid by the buyer and seller at closing. |
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| Promissory Note |
| A written promise to repay a specified amount over a specified period of time.
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| Property Classification |
| A classification that a lender gives to a property according to its age and needed repairs. |
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| Property Tax |
| Local tax assessed on the market value of a property |
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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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