Glossary

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Payment Cap Principal Sales Agreement
Per Diem Interest Principal & Interest (P&I) Second Mortgage
Periodic Cap Private Mortgage Insurance Social Security
PITI Purchase Agreement Survey
Planned Unit Development (PUD) Purchase Price Title Insurance
Points Real Estate Agent Title Insurance Company
Prepaid Interest Recording Trade-In
Prepaid Items Refinance Transfer Tax
Prepayment RESPA Real Estate Settlement Procedures Act Truth-In-Lending
Prepayment Penalty Right of Rescission

Payment Cap
For an Adjustable Rate Mortgage (ARM) loan, a limit on the amount that payments can increase or decrease at the scheduled periodic interest rate adjustments.
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Per Diem Interest
Interest calculated per day and collected from the borrower at settlement to cover the period of time when mortgage funds are disbursed until when the first mortgage payment is made.
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Periodic Cap
For an adjustable-rate mortgage (ARM) loan, a limit on the amount that payments can increase or decrease during any one scheduled adjustment period.
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PITI
Abbreviation for Principal, Interest, Taxes and Insurance. These are the components of a monthly mortgage payment.
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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.
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Points
An up-front fee paid to a lender at the time of loan closing to reduce the initial interest rate. One "point" equals 1% of the loan amount.
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Prepaid Interest
Interest collected from the borrower at settlement to cover the period of time when mortgage funds are disbursed until when the first mortgage payment is made.
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Prepaid Items
Items such as property taxes, homeowners insurance and pre-paid interest that are required by the lender to be paid at closing rather than their normally scheduled due date.
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Prepayment
A payment made by the borrower above and beyond the scheduled mortgage payment. This includes prepayment in full, where the entire balance is paid, or a partial prepayment where only a portion is paid.
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Prepayment Penalty
A fee that may be charged to a borrower if the entire loan balance is paid-in-full earlier than the scheduled due date. The charge is usually expressed as a percentage of the loan balance at the time of prepayment.
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Principal
The remaining unpaid balance on a loan which excludes interest and penalties. Also, the portion of the monthly payment that reduces the remaining balance of a mortgage.
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Principal & Interest (P&I)
The base components of a monthly mortgage payment.
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Private Mortgage Insurance
See Mortgage Insurance.
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Purchase Agreement
A contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
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Purchase Price
The dollar amount, identified in the Purchase Agreement, for which the homebuyer will pay to acquire the property.
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Real Estate Agent
A professional licensed to negotiate and transact the sale of real estate on behalf of an owner.
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Recording
The act of documenting, in the registrar's office the details of an executed legal document, such as a deed of trust, mortgage, satisfaction of mortgage, or modification of mortgage, thereby making it a part of the public record.
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Refinance
The process of paying off an existing loan with the proceeds from a new loan using the same property as security. Refinancing is common to obtain a lower interest rate or to access available equity.
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RESPA Real Estate Settlement Procedures Act
A federal law administered by the U.S. Department of Housing and Urban Development (HUD), requiring lenders to provide specific information to consumers, including settlement costs and mortgage servicing transfer disclosures. RESPA also requires lenders to provide an Affiliated Business Arrangement Disclosure which documents with whom the referring party has an ownership or other beneficial interest. Additionally, RESPA provides borrowers with important consumer protections relating to the servicing of their loans.
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Right of Rescission
In the case of a refinance transaction, the borrower's act of cancellation or annulment of a transaction or contract by the operation of a law. Borrowers have the option to cancel a refinance transaction within three business days after settlement.
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Sales Agreement
See purchase agreement.
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Second Mortgage
A mortgage loan with a second-priority lien position in relation to the first mortgage.
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Social Security
Income received monthly from the federal government following retirement or disability.
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Survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
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Title Insurance
Insurance that protects the owner's and/or lender's (mortgagee's) ownership interest in the property against loss due to ownership claims of third parties. The lender only requires mortgagee's title insurance. Owner's title insurance is optional and may be purchased if desired.
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Title Insurance Company
A company that specializes in examining and insuring titles to real estate.
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Trade-In
The used vehicle you provide as partial payment for another vehicle.
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Transfer Tax
A state or local tax payable when title passes from one owner to another during a purchase transaction.
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Truth-In-Lending
A federal law requiring lenders to fully disclose in writing certain terms and conditions of a mortgage, including the annual percentage rate, total amount financed, finance charge and other essential loan information. Truth-In-Lending also enforces the requirements for Right of Rescission.
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