Mortgage Glossary: P - Z

 



  • PITI: Principal, interest, taxes and insurance. With a single mortgage the PITI generally refers to the full monthly payment.
  • Points: The fees that are charged by the lenders at the time that the loan is originated. A point is equal to one percent of the total loan amount, and is paid at the point the loan is made and is independent of the interest on the loan.
  • Pre-qualify: Many lenders will pre-qualify a buyer who is searching for a loan with an assessment of the buyer's credit and ability to follow through on the loan.
  • Prime Rate: The prime rate runs about 3 percent over the federal funds rate which is typically the rate banks charge to one another. It is often used as a method of calculating rate changes to adjustable rate mortgages and other short term loans.
  • Principal: Is the amount of money that is owed, and does not include interest on the original loan amount.
  • Rate Lock: Occurs when a lender guarantees that the quoted mortgage rate will not increase during a specified period of time.
  • Reverse Mortgage: Available to equity-rich, 62 year olds and older. They may convert equity into tax-free income without having to sell, or give up title.
  • Savings And Loan: Originally served as community-based institutions for savings and mortgages, and have been around since the 19th century. Deposit insurance function shifted to the FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls. With the money lost from the S&L scandals, the government could have purchased 5 million average homes The goverment bail out will cost the taxpayers around $1.4 trillion dollars when it is over
  • Seller: The property owner in the sales of homes and property.
  • Standard Rate Index: Computed monthly and is the basis for most adjustable loan payment calculations. Index rates are a measurement of financial markets and are based upon averages of financial instruments such as treasury bills, LIBOR, etc.
  • Title: A legal document that is signed sealed and delivered and shows ownership of property and the legal right to possess it.
  • Title Fees: Charged by the firms that perform title and deed searches to guarantee that the title is free and clear, as well as providing title insurance which is a policy issued to both lenders and buyers to protect losses because of any dispute. There are also transfer and recording fees.
  • Title Insurance: For buyers and lenders to protect any losses that might occur over disputes.
  • Title Risk: Possible impediments to the transfer of a title from one owner to another.
  • VA Loan: Operated by the US Department of Veteran's Affairs, a program to help veterans to purchase a home without a down payment. Loans are made by private lenders.
  • Variable Rate Mortgage: The interest rate charged by the lender may be adjusted in accordance of fluctuations such as the rate paid on treasury bills and cost of funds index. The payment is fixed, but if rates go down, more of the payment is applied to principal, and if the rate increases, more of the payment is applied to interest.
  • Zero-Down Mortgage: A phrase used to describe a mortgage wherein the buyer is not required to supply a down payment in order to secure the loan.
 
 
 

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