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Realty and Mortgage Terms and Definitions



P&I - The monthly principal and interest payment required when repaying a mortgage in accordance with its terms.

Package Mortgage - A mortgage agreement in which the principal amount loaned is increased because personal property as well as real property serve as security.

Pad Site - A single freestanding retail site, often adjacent to a mall or larger shopping center.

Paper - Credit given, evidenced by a written obligation with property as collateral.

Partial Payment - A loan payment that is not great enough to cover the scheduled monthly payment on a mortgage.

Payment Change Date - The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). The payment change date usually occurs in the month immediately after the adjustment date.

Payoff - The final paymentthat closes a mortgage loan. Often, a lump sum repayment of an oustanding loan used to close the sale of a property.

Periodic Payment Cap - On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase during a single adjustment period.

Periodic Rate Cap - On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase during a single adjustment period.

Personal Income - Economic indicator that measures the total income of all Americans from all sources, and is reported both before and after taxes. Also reports personal spending and personal savings. The level of spending can be used as an indicator of consumer optimism. Frequency: monthly. Source: Commerce Department.

Personal Property - Any and all property that is not real property.

PITI - (P)rincipal, (I)nterest, (T)axes, and (I)nsurance is a reference to the total monthly payment required to repay a mortgage in accordance with its term as well as monthly escrow payments for taxes and insurance.

Planned Unit Development (PUD) - A housing project that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual unit owners.

Plat Drawing & Conservation Fee - A fee charged by title companies in some states for obtaining a map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.  This drawing is required to obtain title insurance.  For our comparison purposes, the plat drawing and conservation fee is considered to be a third party fee.  Some lenders may include this fee in the cost of the title insurance.

Plat Registration - A fee charged by title companies in some states to review the registration of a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels.  For our comparison purposes, the plat registration fee is considered to be a third party fee.  Some lenders may include this fee in the cost of the title insurance.

PMI -- Private Mortgage Insurance - Insurance premium on conventional loans of over 80 percent LTV (Loan to Value), charged to indemnify the lender against default.

Points - Fees that are collected by the lender in exchange for a lower interest rate.  Commonly called discount points, each point is equal to 1% of the loan amount.  For our comparison purposes, a discount point is considered to be a lender fee.  To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate.

Power of Attorney - A written legal instrument that authorizes another person to act on one's behalf. A power of attorney can grant either complete or limited authority.

Pre-foreclosure Sale - A process in which the lender allows a borrower to avoid foreclosure by selling the property for less than the amount that may be owed to the lender.

Pre-qualification - Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.

Prepaids - Expenses of property ownership or expenses incurred while obtaining a mortgage that must be paid in advance.  Prepaids typically include real estate taxes and hazard insurance.

Prepayment - Any amount that is paid to reduce the principal balance, not interest, of a loan before the due date.

Prepayment Penalty - A monetary penalty charged by a lender if all or part of a loan is paid off before it is due.

Prime Rate - The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.

Principal - The actual balance, excluding interest, of a mortgage loan.  Also refers to the amount of the monthly mortgage payment that will be applied to the actual balance.

Principal & Interest - The monthly payment required to repay a mortgage in accordance with its terms.  Sometimes referred to as "P&I".

Principal Balance - The outstanding balance of principal on a loan. Principal does not include interest or fees.

Private Mortgage Insurance - Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults.  The cost of the insurance is usually paid by the borrower and is most often required if the loan amount is more than 80% of the home's value.  Sometimes referred to as mortgage insurance.

Processing/Administration Fee - A fee charged by a lender to cover the administrative costs of processing a loan request.  For our comparison purposes, a processing or administration fee is considered to be a lender fee.

Producer Price Index (PPI) - Measures the average level of prices of a fixed basket of goods received in primary markets by producers. Monthly percent changes reflect the rate of change in such prices. Changes in the PPI are widely followed as an indicator of commodity inflation. Frequency: monthly. Source: Labor Department.

Productivity - An economic indicator that measures the output per hour of work for non-farm business production. Can be used in conjunction with the rate of change in GAP to determine whether economic growth is likely to be inflationary. A separate component measures unit labor costs, an important indicator of future inflation. Frequency: quarterly. Source: Labor Department.

Promissory Note - A written promise to pay a specified sum to specified person over a specified period of time.

Property Taxes - Taxes based on the assessed value of the home, paid by the homeowner for community services such as schools, public works, and other costs of local government. Sometimes paid as a part of the monthly mortgage payment.

Public Auction - A gathering at a pre-announced public location to sell property to satisfy a mortgage that is in default.

Public Record - A collection of legal documents that are filed with the local government registry so that the public will know what liens, encumbrances or judgements may affect any piece of real estate.

Purchase Agreement - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Purchasing Managers Association of Chicago (PMAC) Survey - The PMAC Survey is a composite diffusion index of manufacturing conditions in the Chicago area. Readings above 50% indicate an expanding factory sector.