Arbor Financial Group Marketing Engines, Inc.

Glossary of Terms

Mortgage. Real Estate & Insurance

P

P&L 
An abbreviation for profit and loss statement. See PROFIT AND LOSS STATEMENT.
PAR
The principal amount of a mortgage with no premium or discount.
PARTNERSHIP
An agreement between 2 or more individuals or entities to go into business or invest together. Either partner may bind the other, within the scope of the partnership. Each partner is liable for all the partnership's debts.
Party Wall
Wall built on a line between two adjoining properties and used by both owners.
Payment Shock
Happens at the first adjustment of an ARM when the monthly mortgage payments rise so high that the borrower may not be able to afford the payments the loan will require in the future.
PAY STUB 
The portion of the paycheck the employee retains for his/her records. The pay stub verifies pay-period and year-to-date gross and net earnings.
PAYMENT CHANGE DATE
On an adjustable rate mortgage, this is the date the new mortgage payment is effective after an interest rate change. It is usually the 1st of the month following the interest rate change date.
PAYMENT SCHEDULE
This schedule outlines the number of payments due, the amount of each payment and the date payments are due.
PENSION AWARD LETTER
Documentation specifying the frequency and amount of pension payments an individual is eligible to receive.
PERIODIC ADJUSTMENT CAP 
This cap limits how much the interest rate can change in the future on an adjustable-rate mortgage.
Permanent Loan Commencement Date 
The start date of the permanent phase of an OTC loan. This date is defined in the construction loan documents executed at the initial closing. It is the date of the Note and the Deed Of Trust/Mortgage.
Permits
Ordered by the borrower(s) and/or the builder/contractor, these represent permission and agreement from local authorities and municipalities that the proposed project can be constructed on the assigned lot and will meet all required specifications and rules that apply to the area.
Personal Liability
Borrower's assets are pledged or subject to claim in addition to a primary security.
Physical Depreciation (Deterioration) 
Loss of value by real property resulting from wear and tear, disintegration, or action of the elements that can be either curable or incurable.
PIGGYBACK LOAN 
See SECONDARY FINANCING.
PITI
Principal, interest, taxes, and insurance.
PITI Ratio
The principal, interest, tax, and insurance payment to income ratio, used in mortgage lending decisions.
PLAINTIFF
An individual or entity who files a legal action against another.
Planned Unit Development (PUD) 
(1) Comprehensive development plan for a large land area. It usually includes residences, roads, schools, recreational facilities, commercial, office, and industrial area.
(2) Subdivision having lots or area owned in common and reserved for the use of some or all of the owners of the separately owned lots.
Plans and Specifications
Architectural and engineering drawings and specifications for construction of a building or project. They include a description of materials to be used and the manner in which they are to be applied.
Plat Map
Map representing a piece of land subdivided into lots with streets, boundaries, easements, and dimensions shown thereon.
A map dividing a parcel of land into lots, as in a subdivision. For example, a Title/Commitment report and an appraisal report will provide a plat map of the subject property, which shows the location of the property within the subdivision.
Point
Amount equal to one (1) percent of the principal amount of an investment or Note. Loan discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan to a competitive position with other types of investments.
Points
Points are a payment made to a bank as consideration for issuing a mortgage. These are usually based upon a percentage of the loan amount.
POINT OF REFERENCE
A starting point used to put a customer's canceled checks or mortgage statements in chronological order by establishing either the date and amount of the last mortgage payment made or the date and amount of the next mortgage payment due.
Pool Insurance
Second layer of mortgage insurance coverage required when the Lender is selling a pool (group) of jumbo mortgage loans to an investor. Pool insurance is required on Jumbo, and non-GSE, mortgage loans and is paid for by the Lender.
Postwar Buildings
Built after World War II, postwar buildings offer spacious, well-planned apartments with L-shaped living areas, wide picture windows, good closets, and air-conditioning. They rarely exceed 20 stories in height.
Power of Attorney 
Power of Attorney is a written instrument duly signed and executed by a person who authorizes an agent to act on his/her behalf to the extent indicated in the instrument. It's a Legal document authorizing one person to act on behalf of another.
PRELIMINARY TITLE REPORT (PRELIM) 
A report showing all current claims against a property before a sale or loan transaction and identifying those items that must be removed to obtain a 1st lien position. After completion of the transaction, a title insurance policy is issued. Same as TITLE COMMITMENT.
Preliminary Title Search
Title search by a title company prior to issuance of a title binder or commitment to insure.
Premises
Defined portion of land and the improvements thereon as usually described in a deed, deed of trust, or mortgage.
PREPAID FINANCE CHARGE 
The finance charges charged at closing exclusive of interest. Examples include points, processing and application fees, tax certification, etc.
Prepaid Interest
Mortgage interest that is paid in advance of when it is due in order to obtain tax advantages.
PREPAID INTEREST CHARGE
The portion of interest, added on at loan closing, which covers the time period between funding and the beginning of the first 30-day period covered by the first payment. For example, if the loan closed on 2/15, the first payment due on 4/1 retroactively pays interest from 3/1 to 4/1. The prepaid interest would cover the period from 2/15 to 2/28.
Pre-payment Clause
A Pre-payment Clause is a clause in the mortgage which gives a mortgagor the privilege of playing the mortgage indebtedness before it becomes due.
Prepayment Penalty
Charge a mortgagor may be required to pay during the early years of a mortgage if he/she pays it in full or pays large sums to reduce the unpaid balance.
Present Value
Today's worth of moneys to be received in future.
Prewar Buildings
Built prior to World War II, prewar buildings often have larger and wider rooms and commonly feature fireplaces, hardwood floors, high ceilings, and moldings.
PRIMARY CUSTOMER
The primary borrower on the loan.
PRIMARY RESIDENCE
The property in which the customer resides the majority of the time.
PRIME RATE INDEX 
A rate index which is the prevailing rate that banks charge to lend money to corporations.
PRINCIPAL
The amount of debt on a mortgage, not including interest. The face value of a note, mortgage, etc.
PRINCIPAL AND INTEREST (P&I)
This refers to the principal and interest portions of a monthly mortgage payment.
PRINCIPAL, INTEREST, TAXES & INSURANCE (PITI)
The total of the monthly mortgage payment due, which includes all principal, interest, taxes and insurance.
Private Mortgage Insurance (PMI) 
Insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default.
Pro Forma Statement 
Latin meaning "according to form." A projection of anticipated income, expenses, and cash flow from an investment enterprise.
Promissory Note
A written promise by the borrower to pay a debt owed, within a specified time, to the holder of the note under conditions mutually agreed upon.
Proof of Loss
Affidavit or claim form signed by the insured and submitted to the insurer as a claim for an insured loss sustained.
Proposed Construction
Property to be constructed. The construction is subject to compliance inspections during construction or is warranted as so constructed.
Proprietary Lease
A Proprietary Lease is the lease issued by a co-operative corporation to each tenant/shareholder prescribing the right to occupy a specific apartment pursuant to guidelines mandated by the building.
Pro Rate
To allocate proportionate shares of income (such as rents) or an obligation (such as taxes and insurance premiums), paid or due, between seller and buyer at closing.
PROFIT AND LOSS STATEMENT (P&L)
A statement documenting business revenues and expenses for a specified time period to establish whether a business gained a profit or suffered a loss.
PROPERTY TAXES
Generally, a tax levied on both real and personal property. The amount of the tax is dependent on the value of the property.
PUD
Planned Unit Development. A real estate project in which each unit owner has title to a residential lot and building and a non-exclusive easement on the common areas of the project. The owner may have an exclusive easement over some parts of the common areas (for example, a parking space).
Punch List
List of discrepancies in building plans or other construction flaws written by the original architect during his final inspection of the structure.
Purchase Agreement 
Written proposal by a buyer to purchase real estate that becomes binding upon the acceptance of the seller.
Purchase-Money Mortgage
Mortgage given to the seller as all or part of the purchase consideration in exchange for property, most commonly used in land purchases, with prior rights over any subsequent lien, unless made subject to subordination.
Purchase Money Transaction
Acquisition of property through the payment of money or its equivalent.