Personal
Loan
An unsecured loan, which means a borrower
does not put up any collateral or security
to guarantee the repayment of the loan. For
this reason, personal loans carry high interest
rates. If a borrower owns a home, a lower-interest-rate
alternative is a home-equity loan. But this
option requires that the borrower put up his
or her home or other real estate property
as collateral. Your best loan option is the
loan that best meets your needs.
Piggyback Loan
An alternative to private mortgage insurance,
also known as a second trust loan. The most
common type is an 80/10/10 where a first mortgage
is taken out for 80% of the home’s value,
a down payment of 10% is made and another
10% is financed in a second trust at a higher
interest rate. In some cases, you may even
qualify for a piggyback loan with as little
as a 5% down payment
PITI Principal, interest, taxes, and insurance.
Also called monthly housing expense.
Plat
A map or chart of a lot, subdivision or community
drawn by a surveyor showing boundary lines,
buildings, improvements on the land, and easements.
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.
Points
Additional points you can pay a lender to
lower the interest rate on your loan at closing.
Each point is equal to 1 percent of the loan
amount (e.g. two points on a $100,000 mortgage
would cost $2,000). Also referred to as Discount
Points. Points may include discount points
and/or origination fee.
Power of Attorney
A legal document authorizing one person to
act on behalf of another.
Pre-paid Items
Pre-paid items are amounts that are required
by the Lender to be paid in advance of their
due date at settlement. You may be required
to prepay certain items at the time of settlement,
such as accrued interest, mortgage insurance
premiums and hazard insurance premiums. Pre-paid
items contribute to the total amount of the
loan's closing costs. See Closing Costs for
more information. Note: You will only see
per-diem interest under this category on our
site. For some lenders you will see insurance
premiums under this category also; we have
categorized our insurance premiums under the
Escrow Deposits.
Prepaids
Expenses necessary to create an escrow account
or to adjust the seller's existing escrow
account. Can include taxes, hazard insurance,
private mortgage insurance and special assessments.
Pre-approved Loan
A loan the lender issues to the borrower before
buying the auto. These loans are usually valid
for a limited time only, such as 30 days from
the loan approval date. To give yourself the
negotiating advantage, always get a pre-approved
loan. Have a pre-approved loan check draft
with you when you walk into a dealer, or go
to test drive a used car that's for sale by
an individual owner. Why? First, having a
pre-approved loan gives you the negotiating
power of a cash buyer who the seller views
as ready to buy the right auto at the right
price. Also, dealers make approximately half
of their money through financing for the autos
they sell. It usually always pays to shop
for a loan, and get pre-approved for loan.The
best loan option is the loan that best meets
your needs.
Preparation Charges
Charges imposed by a dealer for preparing
a newly purchased car for delivery to the
buyer. Includes filling the gas tank, verifying
appropriate fluid levels, last minute touchup
cleaning, etc.
Prepayment A privilege in a mortgage permitting
the borrower to make payments in advance of
their due date.
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.
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 amount of debt, not counting interest,
left on a loan.
Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent
down payments, lenders will allow a smaller
down payment-as low as 5 percent in some cases.
With the smaller down payments loans, however,
borrowers are usually required to carry private
mortgage insurance. Private mortgage insurance
will require an initial premium payment of
1.0 percent to 5.0 percent of your mortgage
amount and may require an additional monthly
fee depending on your loan's structure. On
a $75,000 house with a 10 percent down payments,
this would mean either an initial premium
payment of $2,025 to $3,375, or an initial
premium of $675 to $1,130 combined with a
monthly payment of $25 to $30.
Processing
Processing are the steps a lender takes with
your loan application to gather your information
for underwriting. Processing involves building
your file of information for your loan. Processing
includes getting the credit report, appraisal,
verification of employment, assets, etc.
Purchase Option
Typically, the option to buy a leased
auto usually during the life of a lease (lease
buy out) or when the lease ends.
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