Dictionary of Mortgage Terms P-R

:: A Dictionary of Mortgage Terms -- P-R

MortgPermanent Loan

This long-term mortgage loan usually lasts at least ten years. Also known as an “end loan.”

PITI

An acronym for the major monthly housing expenses – principal, interest, taxes, and insurance.

Pledged Account Mortgage

An amount of money is placed into what is called a pledged savings account, which gathers interest and is used to reduce a borrower’s monthly mortgage payments.

Points

Each loan discount point is equal to one percent of the loan’s principal. It is essentially prepaid interest that is assessed at the loan’s closing.

Power of Attorney

This legal document allows one person to act in place of another.

Prepaid Expenses

These expenses are used to create an escrow account, and can include taxes and insurance.

Prepayment

This allows the borrower to make his/her monthly payments before the due date.

Prepayment Penalty

In some states, a lender can charge a fee if the borrower wishes to repay the debt before the scheduled due date.

Primary Mortgage Market

When lenders make loans directly to the borrower, bypassing the secondary mortgage markets such as Fannie Mae.

A loan’s remaining balance, not including interest.

Private Mortgage Insurance

Private mortgage insurance, or PMI, is issued if the borrower can’t make the twenty percent down payment. In this case, the borrower will purchase private mortgage insurance so that they can make a lower down payment, sometimes as low as three percent.

Realtor

A real estate broker or a member of the local real estate board associated with the NAR.

Recission

This occurs when the contract is cancelled. In the event of mortgage refinancing, this allows the homeowner three days to cancel the contract.

Recording Fees

This money goes to the lender to make the sale of the home part of public records.

Refinance

This is when the borrower gets a new mortgage loan to replace the existing loan on their property.

Renegotiable Rate Mortgage

This type of mortgage loan features an interest rate that is periodically adjusted (see adjustable rate mortgage).

RESPA

The acronym for the Real Estate Settlement Procedures Act, which is a law allowing borrowers to review all applicable information regarding settlement cost on two occasions.

Reverse Annuity Mortgage

Reverse Annuity Mortgage, or RAM, is a type of mortgage where the lender makes payments to the borrower using the borrower’s home equity as collateral.