Mortgage Definitions and Terms (P, Q)
Paper: Term used for a mortgage, deed of trust, or land contract, instead of a cash payment as part of the purchase price.
Par: An interest rate given at face value that can be obtained without the payment of discount points.
Participation Loan: A loan that requires lender involvement in which the lender receives a portion of the profits from the income that is generated from the property. A participation loan is usually given when the risks are very high.
Payoff: The remaining balance of a loan that includes the principal and any prepayment penalty costs.
Piggyback Mortgage: A mortgage that assumes a subordinate positron behind a first mortgage or trust deed. Sometimes called a second trust deed or second mortgage, this loan is satisfied only after the primary mortgage is paid if the property goes into foreclosure.
P&I (Principal And Interest): Payments made that includes the principal amount due and the interest charges that are applied. Does not include taxes and insurance.
PITI: Refers to the monthly payment on a mortgage that includes the principal, interest, tax, and insurance combined into one payment.
PMI (Private Mortgage Insurance): An insurance on conventional loans designed to protect a lender against default.
Pre-approval: The act of approving a buyer for a specific maximum loan amount before the buyer actually starts the search for a home to purchase. This is normally done through a lender who issues a pre-approval letter.
Predatory Lending Practices: The act of taking advantage of borrowers for monetary gain. Predatory lending practices includes charging extremely high interest rates and fees, overcharging for services, giving loans to borrowers who can't possibly make the monthly mortgage payments.
Pre-payment Penalty: A certain percentage of a mortgage that is charged to a borrower if it is paid off earlier than it's due date.
Pre-qualification: The act of screening a buyer and determining in advance, prior to formal loan approval, the approximate dollar amount a buyer can afford to borrow. A pre-qualification is not a pre-approval.
Prime Lending Rate: The most favorable interest rate that is charged by commercial banks on short term loans.
Principal: The outstanding balance owed on a loan that does not include interest amounts.
Qualifying Ratio: This ratio is used to gauge a lender's risk by limiting the amount of debt service burden that a borrower is allowed to take on. The ratio is normally higher for first time buyers.
Quitclaim Deed: A document that releases any interest in a property that a person may have even, at times, if the person does not have an interest in the property.
Quiet Enjoyment: The rights to the use of real property for one's own benefit and enjoyment.
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