Glossary - P

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

Personal property: Any property that is not real property.

Planning commission: An official agency usually organized on the city/county level, to direct and control the use, design, and development of land and real property.

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

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.

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.

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.

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 main parties to a transaction.

Principal balance: The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges.

Principal, interest, taxes, and insurance (PITI): 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 mortgage and hazard insurance.

Private mortgage insurance (MI): Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan-to-value (LTV) percentage in excess of 80 percent.

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

Property Management: That aspect of the real estate profession devoted to the leasing, management, marketing, and overall maintenance of the property of others.

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

Planned unit development (PUD): A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.