FHA Loan and Mortgage Glossary - Terms Beginning with 'P'

  • Partial Claim: This is when a borrower may have been late with mortgage payments so they take out a loan from HUD in order to get caught up on their mortgage payments and keep their home.
  • Periodic Cap: This is associated with adjustable rate mortgages. It is the highest amount an interest rate or mortgage payment can increase in a specified period of time.
  • Permanent Loan: Also called an end loan. This is a loan that is for a term of more than 10 years.
  • Piti: This is an abbreviation for the principal, interest, taxes and insurance that are all part of the monthly mortgage payment.
  • Pledged Account Mortgage: This is a savings account that the borrower opens, and the money in the account plus the interest from that money is used to pay off principal of the mortgage loan.
  • Points: One point is usually worth 1% of the mortgage loan. Points are paid up front when a mortgage loan agreement is made, and are used to get a lower interest rate or more favorable terms. If a borrower does not want to pay any points then the interest rate will be higher.
  • Power of Attorney: This is a legal document that gives someone legal rights of law to speak and sign documents for someone else. Usually parents will award their children power of attorney when they are too old to make sound decisions for themselves.
  • Pre-approval: This is the process of getting approved by a mortgage lender for a specified amount of money based on verifying personal information so that the borrower can look for a home within the amount they have been approved for. After the borrower makes an offer on a property the final approval is made.
  • Pre-foreclosure Sale: This is when a property owner will sell their home while they are in default to satisfy their mortgage lender and avoid foreclosure.
  • Pre-paids: These are the costs that are associated with a home that have been paid in advance by the current owner and are paid back upon the sale of the home by the new owner.
  • Pre-qualify: A mortgage lender will consider the income of a potential borrower and let them know the amount they may qualify for based on the verification of their information.
  • Premium: A specific amount of money that is paid by the insured and insures an interest in something in the case of loss or damage.
  • Prepayment: The pay off of a mortgage in advance of its schedule.
  • Prepayment Penalty: This is a fee that is charged to the borrower by the lender if they try to pay off their mortgage ahead of time. Lenders like to impose these terms for a specified amount of time on a mortgage to guarantee that they get a certain return on their investment.
  • Primary Mortgage Market: This is the initial mortgage lender that borrowers get their mortgage loans from. This includes credit unions, banks, and mortgage companies.
  • Principal: The amount of money that is owed to a lender by a borrower at a specific point in time. This does not include the interest that is owed on the mortgage.
  • Private Mortgage Insurance: Also called pmi, this is insurance protection by a private company that insures a mortgage lender that they will get back a certain amount of money in the case the insured borrower defaults on the loan.