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O
Origination Fee -
The fee imposed by a lender to cover
certain processing expenses in connection
with making a loan. Usually a percentage
of the amount loaned. top
of page
Owner Financing -
A property purchase that is partly
or wholly financed by the seller.
top
of page
Owner's Title Policy -
A policy protecting the buyer for
the amount of the purchase price in
the event of a future title dispute.
top
of page
P
Package Mortgage -
A mortgage that /includes equipment
and appliances located on the premises
in addition to the real property itself.
top
of page
Partial Entitlement -
Under VA loans, the amount of guarantee
still available to an eligible veteran
who has used his previous entitlement.
top
of page
partial payment -
A payment that is not sufficient enough
to cover the month payment. During
times of economic hardship, a borrower
can make this request of the loan
servicing collection department. top
of page
Participation Financing -
A loan in which more than one mortgagee
or more than one mortgagor harbors
an interest. It can also be a loan
in which the mortgagee receives partial
ownership of the property being financed.
top
of page
Payment Change Date -
The date when a new monthly payment
amount takes effect on an adjustable
rate mortgage (ARM) or a graduated
payment mortgage (GPM). The payment
change date occurs the month immediately
after the interest rate adjustment
date. top
of page
Periodic Payment Cap -
The limit on the amount that payments
can increase or decrease during any
one adjustment period for an adjustable-rate
mortgage (ARM) where the interest
rate and principal fluctuate independently
of one another. top
of page
Periodic Rate Cap -
The limit on the amount that payments
can increase or decrease during any
one adjustment period in an ARM (adjustable
rate mortgage), regardless of how
high or low the index fluctuates.
top
of page
Personal Property -
Movable property that does not fit
the definition of realty. top
of page
PITI -
PITI stands for principal, interest,
taxes, and insurance. An "impounded"
loan means that the monthly payment
covers all of these, and perhaps mortgage
insurance, if your loan so calls for
it. If one does not have an "impounded"
account, then the lender still calculates
these amounts separately and uses
it as part of determining one's debt-to-income
ratio. top
of page
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 PITI (principal,
interest, taxes, and insurance) must
equal the amount that the borrower
would have to pay for PITI for a determined
number of months. top
of page
Planned Unit Development (PUD)
-
A type of ownership where individuals
actually own the building or unit
they reside in, but shared areas are
owned jointly with the other members
of the development or established
association. top
of page
Pledge Account Mortgage (PAM)
-
Combines GPM (graduated payment mortgage)
with a subsidizing savings account
to provide the borrower with a low
payment plan, the lender with amortizing
payments and the seller with cash.
top
of page
Points -
The site allows lenders to post rates
via point ranges. Points are broken
out on the site for Discount and Origination.
The definitions for each are as follows:
Discount Points = Interest Charges
paid up-front when a borrower closes
a loan. A point is equal to 1 percent
of the loan amount (e.g. 1.5 points
on a $100,000 mortgage would cost
the borrower $1,500). Generally, by
paying more points at closing, the
borrower reduces the interest rate
of his loan and thus future monthly
payments.top
of page
Origination
Points = A fee imposed by a lender
to cover certain processing expenses
in connection with making a real estate
loan. Usually a percentage of the
amount loaned, such as one percent.
top
of page
Pre-Approval -
A term used to mean that a borrower
has completed a loan application and
provided debt, income, and savings
information that has been reviewed
and pre-approved by an underwriter.
top
of page
Pre-Foreclosure Sale -
A procedure in which the borrower
is allowed to sell his or her property
for an amount less that what is owed
on it to avoid foreclosure, fully
satisfying the borrower's debt. top
of page
Pre-Paids -
Expenses such as taxes, insurance,
and assessments, which are paid in
advance of their due date, and on
a prorated basis at closing. top
of page
Pre-Payment -
Any amount paid so as to reduce the
principal before the due date. top
of page
Prepayment Penalty -
Lenders who impose prepayment penalties
will charge borrowers a fee if they
wish to repay part or all of their
loan in advance of the regular schedule.
top
of page
Pre-Qualification -
After a loan officer has made inquiries
about a borrower's debt, income, and
savings, he or she can write a written
statement (pre-qualification) about
the borrower's chances for qualifying
for a home loan. top
of page
Prime Rate -
Interest charged by financial institutions
to top-rate borrowers. top
of page
Principal -
The amount of debt, not counting interest,
left on a loan. top
of page
Private Mortgage Insurance (PMI) -
Paid by a borrower to protect the
lender in case of default. PMI is
typically charged to the borrower
when the Loan-to-Value Ratio is greater
than 80%. top
of page
Prorations -
The allocation of charges and credits
to the appropriate parties at a real
estate sale and/or loan closing at
a real-estate sale and/or loan closing.
top
of page
Promissory Note -
A written promise to repay a specified
amount over a specified period of
time. top
of page
Purchase Agreement -
A written contract signed by the buyer
and seller stating the terms and conditions
under which a property will be sold.
top
of page
Purchase-Money Mortgage -
Mortgage given by a borrower to the
seller as part of the purchase price
of the property. top
of page
Purchase-Money Transaction
-
The acquisition of property through
the payment of money or its equivalent.
top
of page
Q
Qualifying Ratio -
The ratio of the borrower's fixed
monthly expenses to his gross monthly
income. Ratios are expressed as two
numbers like 28/36 where 28 would
be the Front-End Ratio and 36 would
be the Back-End Ratio.
The Front-End Ratio is the percentage
of a borrower's gross monthly income
(before income taxes) that would cover
the cost of PITI (Mortgage Principal
Payment + Mortgage Interest Payment
+ Property Taxes + Homeowners Insurance).
In the case of a 28% Front-End Ratio
a borrower could qualify if the proposed
monthly PITI payments were 28% or
less than the borrower's gross monthly
income.
The Back-End
Ratio is the percentage of a borrower's
gross monthly income that would cover
the cost of PITI plus any other monthly
debt payments like car or personal
loans and credit card debt.
Please
note that qualifying ratios are only
a rough guideline in determining a
potential borrower's credit-worthiness.
Many factors such as excellent or
poor credit history, amount of down
payment, and size of loan will influence
the decision to approve or disapprove
a particular loan. The concord board
of Realtors urges all borrowers to
discuss their particular situation
with a qualified lender regardless
of the outcome of any self-qualification
exercise. top
of page
Quitclaim Deed -
A deed that transfers, without warranty,
whatever interest or title a grantor
may have at the time the conveyance
is made. top
of page
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