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Mortgage Glossary

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There are 18 terms in this glossary beginning with the letter P.
Payment cap
for an adjustable rate mortgage, this is the maximum payment amount a buyer could ever be expected to pay per month.

Piggyback loan
a second mortgage "piggybacked" onto a first mortgage and used in lieu of mortgage insurance. Cost effectiveness of a piggyback loan depends on current market factors.

Portable mortgage
a type of mortgage that may be carried by the borrower from one home purchase to the next, portable.

Power of attorney
a legal document that grants an individual the rights to act on behalf of another. For example, if a borrower dies or becomes incapable of managing his or her home loan or mortgage, a power of attorney assigned by that individual could manage his or her mortgage and related decisions.

Pre-paid costs or fees
any of a number of fees associated with a mortgage and usually paid out of pocket at the time of closing; includes origination fees, underwriting fees, attorney fees, etc.

Pre-qualification
the process in which a homebuyer may find out how much of a home loan he or she would be approved for with a lender; gives many buyers more flexibility when shopping for a home.

Preferred lender
a lender that is closely affiliated with a brokerage based on reputation and other industry factors. A mortgage lender that is recommended by a broker.

Primary mortgage market
direct lenders.

Prime loan
a conforming loan, one whose loan limits fall within those set by Fannie Mae or Freddie Mac and often awarded to borrowers with good credit.

Principal
the amount borrowed on a home loan.

Principal balance
the amount currently owed on a home loan.

Private label mortgage outsourcing
a process in which a private bank or financial lender outsources mortgage products to another lender.

Private mortgage insurance, PMI
a type of insurance many homebuyers are required to purchase, particularly when they are unable to put down a certain dollar amount on the loan; protects the lender in the event of borrower default.

Processing fees
lender fees associated with creating the loan or mortgage, usually part of closing costs.

Property address
the physical street address of a home or property, required for mortgage application.

Property appraisal
a fair market value of property performed by a licensed appraiser; takes into account not only condition, but also the value of similar local properties or comparable sales.

Property taxes
annual local taxes charged against the value of a homeowner's property.

Property valuation
see Property appraisal.