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Mortgage glossary: Letter P |
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Par An interest rate that can be obtained without paying any discount points and that does not have any additional yield beyond its rate. For instance, you get a 30-year quote of 7.00 percent with one point, or 7.25 percent with zero points, or 7.50 percent with zero points plus an additional yield to you of $1,000 toward closing costs. Here the 7.25 percent at zero points is the par rate.
Payment Option ARM A type of negative amortization loan where you have a choice as to what you'd like to pay each month. The choice is between an initial contract rate, an interest-only, or a fully indexed, fully amortized loan.
Payment Shock A term used by lenders referring to the percentage difference between what you're paying now for housing and what your new payment would be. Most loan programs don't have a payment shock provision, but for those that do, a common percentage increase is 150 percent.
Permanent Buydown See Buydown.
Piggyback Mortgage See Second Mortgage.
PITI Principal, Interest, Taxes, and Insurance. These figures are used to help determine front debt ratios.
Pledged Asset An appraisable property or security that is collater-alized to make a mortgage loan. Sometimes a pledged asset can be a stock or mutual fund. A lender can make a mortgage loan and use the mutual fund as part of the collateral. If the borrower fails to make the payments, all or part of the pledged asset can go to the lender.
PMI See Private Mortgage Insurance.
Points See Discount Points.
Portfolio Loan A loan made by a direct lender, usually a bank, and kept in the lender's loan portfolio instead of being sold or underwritten to any external guidelines.
Predatory Loan A loan designed to take advantage of people by charging either too many fees or too high of an interest rate, or both, while also stripping that homeowner of his equity.
Prepaid Interest Daily interest collected from the day of loan closing to the first of the following month.
Prepayment Penalty An amount is paid to the lender if the loan is paid off before its maturity or if extra payments are made on the loan. A hard penalty is automatic if the loan is paid off early or if extra payments are made at any time or for any amount whatsoever. A soft penalty only lasts for a couple of years and may allow extra payments on the loan not to exceed a certain amount.
Principal The outstanding amount owed on a loan, not including any interest due.
Private Mortgage Insurance PMI is typically required on all mortgage loans with less than 20 percent down. It is an insurance policy, paid by the borrower with benefits paid to the lender. It covers the difference between the borrower's down payment and 20 percent of the sales price. If the borrower defaults on the mortgage, this difference is paid to the lender.
Pull-Through Rate A term, used by wholesale lenders, to track the percentage of loans that close that have been locked by a broker.
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