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Glossary of
FinanciaI & Real Estate Terms

Index of Terms | Complete List of Terms

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Package Mortgage : A mortgage that includes appliances and equipment located on the premises in addition to the real property itself.

Partial Entitlement : The amount of guarantee on a VA loan that is still available to an eligible veteran who has used his or hers previous entitlement.

Partial Payment : A payment that is not sufficient enough to cover the payment due. A borrower may make a request to make partial payments on the loan, especailly during times of economic hardship.

Participation Financing : A loan in which more than one mortgagee or mortgagor harbors an interest. It can also be a loan in which the mortgagee receives partial ownership of the property being financed.

Passive Income : income from business or investments that you do not have to work in on a day to day basis.

Payday Loan : A loan where a borrower gets cash advanced based on his paycheck. These loans generally up are up $500 and must be repaid on the next payday.

Payment : The amount that you are required to put toward what you owe, which is considered your monthly payment, or other time period as specified in the terms of agreement.

Payment Schedule : The method for disclosing your payment schedule varies by loan type. For fixed-rate loans, the payment schedule indicates what your required monthly payment will be throughout the life of your loan. The payment schedule for VA, FHA, one-time MIP and uninsured conventional loans should also indicate a fixed monthly payment. The payment schedule for fixed-rate insured loans may gradually decrease over time due to a declining insurance premium. For adjustable rate loans, the payment schedules will vary by loan type and are based on conservative assumptions of future interest rates.

Payment Change Date : The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM) or a graduated payment mortgage (GPM). The payment change date occurs the month immediately after the interest rate adjustment date.

Per Capita Debt : The total bonded debt of a municipality divided by the population of the municipality.

Periodic Payment Cap : The limit on the amount that payments can increase or decrease during any one adjustment period for an adjustable-rate mortgage (ARM) where the interest rate and principal fluctuate independently of one another.

Periodic Rate Cap : The limit on the amount that payments can increase or decrease during any one adjustment period in an ARM (adjustable rate mortgage), regardless of how high or low the index fluctuates.

Personal Cards : A personal credit card is used for your own use to make purchases that are needed for various reasons. This is different from a business card, which makes purchases that support or benefit a business operation.

Personal Loan : A loan that establishes the cause of consumer credit and is granted for personal use. Categorized under unsecured loans and is based on the borrower's integrity, ability to pay and an individual's credit worthiness. A borrower does not put up any collateral or security to guarantee the repayment of a personal loan thus personal loan bears high interest rates.

Personal Property : Essentially, any property that does not fit the definition of realty, or real property.

Petition : A formal application made to a court.

PITI : Stands for principal, interest, taxes, and insurance. An "impounded" loan means that the monthly payment covers all of these, and perhaps mortgage insurance, if the loan calls for it. If one does not have an "impounded" account, then the lender still calculates these amounts separately and uses it as part of determining one's debt-to-income ratio.

PITI Reserves : A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The PITI (principal, interest, taxes, and insurance) must equal the amount that the borrower would have to pay for PITI for a determined number of months.

Plan : A debtor s detailed report on how he plans to pay the creditors over a period of time.

Planned Unit Development (PUD) : A type of ownership where individuals actually own the building or unit they reside in, but shared areas are owned jointly with the other members of the development or established association.

Plastic : A slang term for a credit card.

Pledge Account Mortgage (PAM) : Combines GPM (graduated payment mortgage) with a subsidizing savings account to provide the borrower with a low payment plan, the lender with amortizing payments and the seller with cash.

Points : Fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing. In some cases, the money needed to pay points can by borrowed, but doing so will increase the loan amount and the total costs. An origination fee covers the lender's work in preparing your mortgage loan.

Point-of-Sale (POS) : A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks.

Power of Attorney : A legal document authorizing one person to act on behalf of another.

Pre-Approval : A term used to mean that a borrower has completed a loan application and provided debt, income, and savings information that has been reviewed and pre-approved by an underwriter. Also, credit card companies often send out pre-approval notices to solicite new members, but in reality, issuance of the credit card may not be guaranteed.

Pre-Foreclosure Sale : A procedure in which a borrower is allowed to sell his or her property for an amount less than what is owed on it to avoid foreclosure, fully satisfying the borrower's debt.

Pre-Paids : Expenses such as taxes, insurance, and assessments, which are paid in advance of their due date, and on a prorated basis at closing.

Pre-QualificationTERM : After a loan officer has made inquiries about a borrower's debt, income, and savings, he or she can write a written statement (pre-qualification) about the borrower's chances for qualifying for a home loan.

Preferential Creditor : A creditor who is entitled to receive certain payments in priority to floating charge holders and other unsecured creditors. These creditors include occupational pension schemes and employees.

Preferred Debt : Debt that takes precedence over other debts.

Premium Credit Cards : This is a group of cards for people or businesses with outstanding credit. They are offered special privilege cards that have higher limits, lower interest, or no limit at all.

Prepaid Credit Card : Some credit card companies have cards with the option of paying first and using later. This is generally for people who have had some sort of credit difficulty. You would put money onto the card and then have that amount to spend.

Prepaid Interest : Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

Prepayment : Full or partial repayment of the principal before the contractual due date.

Prepayment Penalty : A prepayment penalty is a fee that is charged if the loan is paid off earlier than the specified term of the loan. Depending on your loan program and applicable state law, you may or may not incur a prepayment penalty. Contact your loan officer for specific information.

Prepayment Premium: : Money charged for an early repayment of debt. Prepayment premiums are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.

Prepaid Expenses : Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

Prime Rate : The interest rate charged by lenders to their best, most creditworthy customers. A less credit worthy customer may be offered a loan at the prime rate plus anywhere from 2 to 10 percent. Borrowing at below-prime also occurs, but is less common and usually applies to businesses, not individual consumers. The Federal Reserve determines whether to lower or raise the prime rate based on a variety of economic factors. Many consumer loans, such as auto, home equity, mortgage and credit card loans are based upon the prime rate. Building and maintaining a good credit history are two of the most important qualifications for prime-rate borrowing.

Principal : The total amount of a loan, not including any capitalized fees or interest.

Private Debt : Money owed by individuals and business within a country.

Private Mortgage Insurance (PMI) : PMI is typically charged to the borrower when the Loan-to-Value Ratio is greater than 80%. It is paid by a borrower to protect the lender in case of default.

Pro-Rata : This means "in proportion to."

Promissory Note : A written promise to repay a loan or specified amount of money over a specified period of time.

Promotions : This refers to the various deals that companies offer to lure you to their business. Some deals include low interest, balance transfer rewards, points or air miles, or even money towards vehicles. If you're in the market for a card, you can look around to see who has the best promotion.

Prorations : The allocation of charges and credits to the appropriate parties at a real estate sale and/or loan closing at a real-estate sale and/or loan closing.

Protection : This refers to the insurance you can have on your card to protect you in times that you may not be able to make payments, such as the loss of a job. In addition, there is insurance to protect you if your card is lost or stolen.

Provider : The company or lender from which you are obtaining a credit card.

Proxy : Instead of attending a meeting, a person can appoint someone to go and vote in their place - a 'proxy'.

Proxy Form : Form that must be completed if a creditor wishes someone else to represent him or her at a creditors' meeting and vote on his or her behalf.

Public Debt : Money (or credit) owed by any level of government; either central government, federal government, municipal government or local government.

Purchase Agreement : A written contract signed by the buyer and seller stating the terms and conditions under which a particular property will be sold.

Purchase-Money Mortgage : Mortgage given by a borrower to the seller as part of the purchase price of the property.

Purchase-Money Transaction : The acquisition of property through the payment of money or its equivalent.

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Index of Terms | Complete List of Terms

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