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Real Estate Glossary

Real Estate Glossary
Use this real estate glossary to research terms you might run across in a real estate transaction.

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There are 58 entries in the glossary.
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Term	Definition
Package mortgage	A mortgage that includes personal property as part of the security.

Partial Payment	A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan.

Partially amortized	The payments do not repay the loan over its term and thus a lump sum mortgage loan (balloon) is required to repay the loan.

Participation mortgage	A loan in which two or more lenders participate.

Partnership	An association of two or more persons to carry on a business for profit as co-owners.

Party wall	A wall erected on the line between two adjacent properties for the use of both parties.

Payment cap	A provision of some ARMs limiting the amount by which a borrower's payments may increase regardless of any interest rate increase; may result in negative amortization. See Adjustable-rate mortgage.

Payment Change Date	The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.

Percentage lease	A lease in which the rent amount is based on a percentage of gross sales (monthly or annually) made by the tenant.

Percentage rent	The additional rent (over a base amount) paid by tenants to owners based on tenant sales over a specified dollar amount.

Periodic Payment Cap	For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease during any one adjustment period.

Periodic Rate Cap	For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

Permits	With most major home improvement projects, work permits may be required. Permits provide legal permission to undertake a project and are usually given by local governments agencies.Some of the most common permits are for general projects or permits that require you to meet specific local building codes.You may want to check with your local government to determine if there are building restrictions in historic areas or in environmentally-sensitive areas.

Personal Property	Any property that is not real property.

Pest Inspection Report	Termite InspectionHomes in many parts of the country must be inspected for termites before they can be sold. You should receive a certificate from a termite inspection firm stating that the property is free of both visible termite infestation and termite damage.The cost of the termite inspection is usually paid by the seller, and the seller's real estate sales professional orders the inspection. You need to make sure that the original certificate is delivered to your lender at least three days before closing.This allows the lender to review the certificate and address any potential problems.

Physical depreciation	Physical deterioration and concurrent loss in property value caused by wear, tear, and decay.

PITI	Principle, interests, taxes and insurance (PITI) are the four components of a monthly mortgage payment. The four components of a monthly mortgage payment: Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and hazard insurance.

PITI Reserves	A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD)	A Land Development project involving a mixture of land uses and densities not available for separately zoned units. Similar to condominiums, it is viewed as an integrated whole. Unlike condominiums, however, t he individual unit owners do own a portion of the land under and around their individual unit.

Plat	A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

Plot plan	A drawing showing the placement of a building on a site with precise locations, dimensions, and elevations.

Plottage	The increase in value of land by assembling smaller properties into one larger site.

Point	A charge of 1 percent of the loan amount made at origination of mortgage.

Point of beginning	The starting point in a metes and bounds legal description.

Point or points	A one-time charge the lender adds to a mortgage loan. A point is 1\% of the mortgage loan amount.

Points	A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.

Positive leverage	Borrowed funds are invested at a rate of return higher than the cost of the funds to the borrower.

Potential rental income	The total amount of rental income for a property if it were 100\% occupied and rented at competitive market rates.

Power of Attorney	A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-Approval	When you work with your lender to get pre-approved, you are getting an indication of how much money you will be eligible to borrow when you apply for a mortgage. This process occurs before you complete an application for a loan.Pre-approval includes a screening of a borrower's credit history, and all information you give to your lender will be verified when you apply for your mortgage.

Pre-Qualification	The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Prearranged Refinancing Agreement	A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.

Predatory Lending	Predatory lending refers to abusive mortgage practices, which threaten the financial security of homeowners and the stability of neighborhoods. Predatory mortgage lenders market their products to homeowners with home equity, people with large debts or those in need of home repairs. These lenders use high-pressure sales tactics, inflated fees or interest rates, and unaffordable repayment terms. Many homeowners become financially burdened by these loans and fall at risk of losing their homes.

Prefabricated home	Home built or partially assembled prior to delivery to the building site.

Preforeclosure Sale	A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.

Premium	Amount above the face value of a loan.

Prepayment	Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

Prepayment Penalty	A fee that may be charged to a borrower who pays off a loan before it is due. If you pay off your mortgage before it is due, you may be charged a fee -- this is referred to as a prepayment penalty. Any amount that is paid to reduce the principal balance of a loan before the due date -- such as the sale of the property, the owner's decision to pay the loan in full, the owner's decision to pay additional money every month to lower the principle or interest -- is considered prepayment.You may want to consider discussing the specifics of this fee as you negotiate the terms of your loan with your lender.

Prepayment priviledge	The right of a borrower to pay a mortgage ahead of the scheduled due date.

Prequalification	The process of determining how much money a prospective homebuyer will be eligible to borrow before a loan is applied for.

Present value	The sum of all future benefits accruing to the owner of an asset when such benefits are discounted to the present by an appropriate discount rate.

Price	The dollar amount that was offered, asked, or actually paid for a property.

Prime Rate	The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

Principal	The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage. One of the terms you're likely to hear when you talk about a mortgage with your lender is principal. The principal is the amount originally borrowed or the amount that remains to be paid once you have started making payments. It is also the part of the monthly mortgage payment that reduces the remaining balance of a mortgage.The principal balance is the outstanding amount of principal on a mortgage; it does not include interest or any other charges.

Principal Balance	The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. (see also "Remaining Balance")

Private Mortgage Insurance	Also known as Mortgage Insurance, PMI is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

Probate sale	A sale held to sell property, including houses, of a person who has died.

Promissory Note	A written promise to repay a specified amount over a specified period of time.

Property inspection	The examination of a house by a licensed inspector to see if its structure is sound and if its mechanical systems, such as plumbing and heating, are working.

Property Tax

Proration	Allocation of costs and income between the buyer and seller of real estate at the time of the transaction closing, based upon the time of ownership of each.

Public Auction	A meeting in an announced public location to sell property to repay a mortgage that is in default.

Public Housing Agency (PHA)	Organization created by local government which administers HUD's Low-Income Public Housing Program and other HUD programs.

Purchase Agreement	A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. The Purchase and Sale Agreement is a written contract that is signed by the buyer and seller. It states the terms and conditions under which a property will be sold. It includes: Description of property Price offered Down payment Earnest money deposit Financing Personal items to be included Closing date Occupancy date Length of time the offer is valid Special contingencies Inspection

Purchase and Sale Agreement	A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. The Purchase and Sale Agreement is a written contract that is signed by the buyer and seller. It states the terms and conditions under which a property will be sold. It includes: Description of property Price offered Down payment Earnest money deposit Financing Personal items to be included Closing date Occupancy date Length of time the offer is valid Special contingencies Inspection

Purchase money mortgage	A mortgage taken by the seller as pat of the purchase price.

Purchase Money Transaction	The acquisition of property through the payment of money or its equivalent.

Pyramiding	A process of acquiring additional properties by refinancing existing properties.

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