| Terms P-Z |
| Payment
Adjustment Period |
| This is the time frame between payment adjustments
made on Adjustable Rate Mortgages and a usual time
frame is one, three, or five years. |
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| Payment Cap |
| A cap placed on the borrower's payment rather
than his interest rate. The level to which the monthly
payment may rise is limited to a certain dollar
figure. A typical payment cap used today would be
7.5% of the payment (Roughly equivalent to one percent
in interest). |
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| Payment Rate |
| The effective rate of interest the buyer is paying
at a certain time, regardless of the overall interest
rate of the note. |
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| Permanent Buydown |
| An amount of money a lender is paid to permanently
reduce a borrower's interest rate and payments. |
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| Permanent Loan |
| A long-term mortgage of ten years or more, often
registered after construction is complete. Often
referred to as an "end loan". |
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| P.I.T.I. |
| This stands for principal, interest, taxes and
insurance. It is representative of the borrower's
actual monthly mortgage-related expenses. Most residential
mortgage payments are referred to as P.I.T.I . |
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| Pledged
Account Buydown |
| This refers to a principle amount paid plus interest
earned on the principal to reduce a borrower's interest
rate and payment. |
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| Points |
| A one - time fee you pay the bank for originating
a loan. A charge equal to 1% of the loan amount
which increases or equalizes the lender's yield
or rate of return. Lenders offer various rate/point
combinations. |
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| Prepayment
Penalty |
| A penalty that a lender may impose on a borrower
who pays off a loan before it is due. |
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| Prepayment
Privilege |
| The right of a borrower to pay off all or part
of the outstanding principal before the maturity
date, without incurring a penalty. |
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| Principal |
| It is the amount of the mortgage debt that is
presently owed and remains unpaid. The principal
is the part of the monthly payment that reduces
the remaining balance of a mortgage. |
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| Private
Mortgage Insurance |
| Private mortgage insurance is to protect lenders
against foreclosure losses provides mortgage insurance.
Similar to the FHA's mortgage insurance premium,
it is provided to lenders making conventional loans
with less than 20% down. It protects lenders against
foreclosure losses. |
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| Prorate |
| The seller and buyer allocate their proportionate
share of an obligation paid or due. For example,
real property taxes, fire insurance or condominium
fees may be prorated. |
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| Quit Claim Deed |
| A document that releases the deeding or giving
up of one's interest in a property to another party. |
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| Rapid Payoff Mortgage (RPM) |
| Another name for a short term mortgage. |
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| Realtor |
| A professional real estate broke or associate
who is an active member in a local real estate board
that is affiliated with the National Association
of Realtors. Not every broker is a Realtor |
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| Real Estate Mortgage Investment
Conduits (REMICs) |
| Mortgage securities may be pooled to create collateral
for a more complex type of mortgage security known
as a Real Estate Mortgage Investment Conduit. They
are a complex type of mortgage securities that may
be pooled to allow cash flows to be split so that
different classes of securities may be created.
|
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| Real
Estate Professional |
| Any real estate broker, sales person, or attorney
who holds a real estate license. |
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| Refinance |
| To obtain or replace an existing mortgage with
a new mortgage loan on property already owned. New
mortgage may have different terms than the old one.
|
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| Release of
Liability |
| A release from financial obligations from a mortgage
due to another individual becoming responsible for
the obligation. Both the VA and FHA allow releases
of liability on their mortgages. |
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| Renegotiable Rate Mortgage
(RRM) |
| Similar to an Adjustable Rate Mortgage, this type
of mortgage allows the interest rates and payments
to be adjusted periodically according to an index.
|
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| REO (Real Estate Owned) |
| Defined as a term for properties taken back by
lenders in foreclosures. |
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| Residual Income |
| Residual income is determined by subtracting all
known obligations from the borrower's gross monthly
income to see how much is left to support the family.
This amount replaces the Income Ratio on VA loans. |
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| Restriction |
| A provision in a deed which limits in some way
the right to use land or convey it's title. Examples
are building setback lines and limitations to residential
uses. |
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| Reverse Annuity Mortgage
(RAM) |
| A type of mortgage where the property's equity
serves as security for periodic payments made by
the lender to the borrower. Mortgage is generally
paid out upon the sale of the property. |
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| Rollover Mortgage (ROM) |
| A mortgage where the payments are only guaranteed
for three, four, or five years. The borrower is
allowed to refinance at the end of the term at the
interest rate then applicable. |
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| Savings and Loans |
| The traditional lenders for conventional home
loans. |
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| Second Mortgage |
| A mortgage loan that is registered on title after
a first mortgage is already recorded. It is behind
the first mortgage in priority. In the event of
default and sale of the property, the second mortgagee
will only be paid if there are funds left after
the payment of the first mortgagee. |
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| Secondary
Mortgage Market |
| A market where the primary lenders can sell packaged
home loans to obtain more funds to make additional
loans. |
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| Shared Appreciation Mortgage
(SAM) |
| It is a loan arrangement where two or more parties
participate in the purchase of real estate and share
the appreciation and tax deduction. Similar to shared
equity mortgages. |
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| Shopping Center
|
| A group of stores catering to a trade area, which
offer a variety of goods and/or service and on-site
parking. |
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| Strip Commercial
|
| It refers to a string of stores in a commercial
area with no central leasing, management or theme. |
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| Sweat Equity |
| When a purchaser contributes to the construction
or rehabilitation of a property in the form of labor
or services rather than cash. |
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| Swing Loan |
| See Bridge Loan |
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| Telecommuting |
| Working at a remote location instead of traveling
to the primary workplace. |
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| Title |
| A legal document evidencing proof of ownership. |
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| Title Company |
| A corporation which is in the business of selling
policies of insurance guaranteeing the ownership,
quality of title to land and also to perform escrow
functions. |
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| Title Insurance |
| Protection for the lender (lender's policy) against
the consequences of a pre-existing lien or the buyer
(owner’s policy) against encumbrance on a property
that is discovered after change of ownership. |
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| Usury |
| Extremely high interest charged, in excess of
the legal rate established by law. |
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| Vesting |
| Conveying ownership or control of through legal
action. |
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| Veterans'
Administration Loans |
| Mortgage loans to veterans by banks, savings and
loans, or other lenders that are guaranteed by the
Veterans' Administration, enabling veterans to buy
a residence with little or no money down. |
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| Walk-Up Apartments
|
| Three to five story buildings, without an elevator.
They may be mixed single and multi-family; usually
only two or three different types of units. |
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| Warehouse/Distribution
|
| Typically warehouse and distribution facilities
are often located in the lowest-priced land in older
parts of town or as well as suburban fringes. Frequently,
like light industrial/assembly property, office
use is limited to management tasks for distribution
or warehouse facility, or about 15 percent of total
space. |
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| Warehouse Fee |
| Charged as an offset to cover a loss, many mortgage
firms borrow funds on a short-term basis in order
to originate loans that will later be sold in the
secondary mortgage market. When the rate of interest
is higher on short-term loans than on long term
mortgage loans, the lender has an economic loss.
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| Wraparound
Mortgage |
| A secondary financing option in which a new larger
mortgage is created to encompass the first mortgage.
This large second mortgage is used to preserve the
low interest rate on the first mortgage for a potential
buyer. |
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| Yield |
| A profit obtained on an investment, which includes
the interest rate charged, discount points paid
and any other charges collected. |
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