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Laguna Beach Mortgage 949-495-5885 |
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Mortgage Glossary |
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Use this glossary to look up definitions of mortgage terms. The definitions given here explain how the terms are used in the field of real estate finance.
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Payee In a promissory note, the party who is entitled to be paid; the creditor or lender |
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Payment Cap A limit on the amount an ARM's payment can be increased, either during a given year, or over the entire life of the loan. |
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Personal Property Any property that is not real property; movable property not affixed to land. Also called chattels or personalty. |
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Physical Life An estimate of the time a building will remain structurally sound and capable of being used. Compare: Economic Life. |
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PITI Principal, Interest, Taxes and Insurance. |
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Pledged Account
Mortgage (PAM) Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments. |
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PMI Private mortgage insurance, used to insure high LTV conventional loans; it's provided by a private insurance company instead of a government agency. |
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Point One point is one percent of the loan amount. |
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Portfolio The collection of mortgages and other loans that a lender holds on to until they are repaid, rather than selling them on the secondary market. |
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Power of Attorney A legal document authorizing one person to act on behalf of another. |
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Pre-Approval This means that we have determined that your credit report and application have been approved, and granted you the money for your loan. |
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Pre-Qualifying Determining the maximum mortgage payment and loan amount that prospective buyers are likely to qualify for, based on information provided by the buyer. |
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Prepaid Expenses Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments. |
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Prepayment Paying off part or all of a loan before payment is due. |
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Prepayment Penalty A penalty some lenders charge a borrower who prepays a loan, to compensate for the lost interest that the lender would have received if the borrower had continued paying off the loan over its entire term. |
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Primary Residence Primary residence is a property that you physically occupy and is your home. |
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Prime Rate The interest rate a bank charges its largest and most desirable customers. |
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Principal The amount of debt, not counting interest, left on a loan. |
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Proration The process of dividing or allocating something (especially a sum of money or an expense) proportionately, according to time, interest, or benefit. |
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Purchase and Sale
Agreement A contract in which a seller promises to convey title of real property to a buyer, in exchange for the purchase price. Also called an earnest money agreement, deposit receipt, sales contract, purchase contract, or contract of sale. |
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