Payment Schedule

A schedule detailing the amount and due date of payments required to be paid over the life of the loan. The dollar figures represent principal, interest and private mortgage insurance (if applicable). This schedule does not reflect payment for taxes and insurance.

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.

Points

Sometimes called "discount points." A point is one percent of the amount of the mortgage loan. For example, if a loan is for $25,000, one point is $250. Points are charged by a lender to raise the yield on his loan at a time when money is tight, interest rates are high, and there is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or Veterans' Administration guaranteed loans (sellers can pay, however). On a conventional mortgage, points may be paid by either buyer or seller or split between them.

Pre-qualification

A request by a prospective loan applicant for a preliminary determination of whether the prospective applicant would likely qualify for credit under a lender's standards, or of the amount of credit for which the prospective applicant likely would qualify. Some lenders evaluate pre-qualification requests through a procedure that is separate from the lender's normal loan application process; others use the same process. Pre-qualification is generally not a commitment to lend.

Prepayment

Payment of mortgage loan, or part of it, before due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. The Federal Housing Administration does not permit such restrictions in FHA insured mortgages.

Principal

The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.

Principal and Interest (PI)

A portion of the monthly payment that is applied toward the loan balance and accrued interest. Payment for property taxes and insurance is considered PITI (principal, interest, taxes and insurance).

Principal, Interest, Taxes and Insurance (PITI)

The monthly payment that is applied toward the loan balance, accrued interest and escrow account. Principal, interest, taxes and insurance are the four major components of a regular monthly mortgage payment. Payment for principal and interest is considered PI (principal and interest).

Private Mortgage Insurance (PMI)

Insurance required by investors to protect the lender in case the borrower defaults on the loan. Mortgage Insurance is typically required for conventional loans that have a down payment less than 20% of the purchase price. FHA and VA loans have different insurance and guidelines. Also known as Mortgage Insurance.

Property Taxes

A tax collected on real estate property by local, state and/or federal government. The amount of tax is determined by the value of the property.

Purchase Agreement

See agreement of sale.

Purchase Price

The amount of money paid for a specific property and is based upon a written agreement (purchase agreement) between the seller and buyer. Also known as sales price.