Mortgage Terms - Bad Credit Home Loans.com

Patent
An instrument of conveyance of land owned by the government to an individual.

Payment Cap - see Cap for typical cap types
A limit on the amount that the monthly payment can increase. A periodic cap limits the amount of the increase at each adjustment period. A lifetime cap limits the amount that the monthly payment can increase during the term of the loan. A potential peril of payment caps is negative amortization. In the case of an adjustable-rate mortgage with a payment cap, rising interest rates may cause the loan payment to be insufficient to cover even the interest portion of the scheduled payment. In this case, the unpaid interest may be added to the mortgage loan principal, if the loan agreement permits.

Payment Schedule
A schedule detailing the amount and due date of payments required to be paid over the life of the loan. The dollar figures represent principal, interest and private mortgage insurance (if applicable). This schedule does not reflect payment for taxes and insurance.

Periodic Cap - see Cap
The periodic interest rate cap is the maximum amount the loan rate can change on an adjustable-rate mortgage loan on the anniversary date. ARM loan rates are often reset once a year after an initial one, three, or five year period. A lifetime cap often exists that limits the maximum loan rate that can be charged.

Personal Property
Generally, all things which are not real property; things of a temporary or movable nature.

Piggyback Loan
A loan in which the buyer takes a first mortgage to finance part of the value of the property and a second mortgage to finance another part of the value. For example, a buyer could put 10% down, then take out a first mortgage for 80% of the home's value and second mortgage for the remaining 10% of its value. The two mortgages together are called a piggyback loan.

PITI - See Principal, Interest, Taxes and Insurance. Also called monthly housing expense.

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.

Pledged Account Mortgage (PAM) style='font-size:10.0pt; font-family:
Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.

PMI - See Private Mortgage Insurance

Points
Points are also called discount points, mortgage points, loan discount points, loan origination fees, or maximum loan charges. Points are prepaid interest assessed at closing by the lender and or the broker. A point is equal to 1 percent of the loan amount. Lenders consider mortgage points as interest that you pay in advance. As a result, the more points you pay when you close the loan, the lower your interest rate. The IRS considers points to be a form of prepaid interest. Discount fees are totally tax deductible for the year the loan is closed for tax purposes, while origination points are tax deductible over two years (half for the year the loan is closed, and half in the year following).

Power of Attorney
A legal instrument which authorizes another person to act, either a specific act or generally, in the stead of the person drawing the instrument.

Prepaid interest
Prepaid interest is the interest that you pay the lender in advance for the number of days from closing until the end of the month. This is the most common usage of prepaid interest. Analyzers that calculate prepaid interest assume the loan closing date is the midpoint of a 30-day month. As a result, prepaid interest is calculated for 15 days. The IRS recognizes points that you pay at loan closing as tax deductible prepaid interest.

Prepayment
A prepayment is an amount paid in advance of its due date. Money paid in addition to required monthly payment, is applied toward principle balance, which reduces total interest expense and shortens the loan term.

Prepayment Penalty
Money charged for an early repayment of debt.

Primary Borrower
An individual who is listed first on the mortgage loan application and is considered to be the primary borrower. Some lenders allow a non-occupying co-borrower or co-signor to be on the application. In this case, the borrower occupying the property will need to be the primary borrower.

Primary Home
A property that the owner intends to occupy and will be their primary residence.

Primary Residence
A home which the borrower intends to occupy as the principal residence.

Principal Balance
Principal is the outstanding balance due on a debt, excluding any accrued interest or other fees..

Principal and Interest (PI)
A portion of the monthly payment that is applied toward the loan balance and accrued interest.

Principal, Interest, Taxes and Insurance (PITI)
The monthly payment that is applied toward the loan balance (principle), accrued interest and escrow account (taxes).

Principal Note
The promissory note which is secured by the mortgage or trust deed.

Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With down payments below 20%, borrowers are usually required to carry private mortgage insurance depending on your loan's structure. Private Mortgage Insurance, is paid on all non-government-insured loans and whose equity is less than 20%. When you have accumulated 20% in equity, your lender may waive PMI at your request. FHA and VA loans have different insurance and guidelines; see Mortgage Insurance Premium for FHA loans.

Proceeds from Sale of Current Home
The total funds remaining from the sale and transfer of a current home. The proceeds are calculated by subtracting all settlement fees and lien payoffs from the sales price (purchase price). Many borrowers use the proceeds from the sale of the current home as down payment and/or payment of closing costs for the purchase of a new home.

Product Type
The loan type typically details the purpose of the loan (i.e., purchase new home, refinance existing home, home equity, debt consolidation and second mortgage). Many loan programs may contain specific criteria allowing only certain loan types.

Property
The rights of ownership; the right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is generally classified into two groups; personal property and real property.

Property Class
A description of the structure of the property determining whether it is uses as a Single (one) Family Home, Mulit Family Home (2-4), Condominium, Town Home, Manufactured or Mobile Home and Cooperative Housing.

Property Taxes
Property taxes are also called real-estate taxes are paid to the local taxing authority or municipality. The amount you pay can generally be deducted from your federal income taxes. Property taxes are often levied as a percentage of your home's assessed value.

Property Type
A description of the property that determines whether the property will be used as a Primary Residence Home, Investment Property or Second Home.

Property Use
A description of the property that determines whether the property will be used as a Primary Residence Home, Investment Property or Second Home.

Public Trustee
The public official in each country, whose office has been created by statute, to whom title to real property is conveyed by Trust Deed for the use and benefit of the beneficiary, who usually is the lender.

PUD - See Planned Unit Development

Purchase Money Mortgage
A mortgage given by the purchaser to secure a loan for part or all of the purchase price. Such a mortgage becomes a lien on the property simultaneously with the passing of title, and if immediately recorded becomes prior to any lien against the purchaser.

Purchase Price
The amount of money paid for a specific property and is based upon a written agreement (purchase agreement) between the seller and buyer. also known as sales price.

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