P




Glossary



Passive management

The process or approach to operating or managing a fund in a passive or non-active manner, typically with the goal of mirroring an index. Passive management funds are often referred to as index funds and differ from investment funds that are actively managed.



Payment cap

A limit on how much a monthly payment can increase at any one time. Some adjustable-rate mortgages have payment caps in addition to annual (or semi-annual) interest rate caps and lifetime interest rate caps. Payment caps don’t limit the amount of interest charged and may cause negative amortization.



Payment change date

The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date. The borrower is notified 30 days before the new rate and payment take effect.



Payoff

Payment of the outstanding balance of a loan in full. Also, the amount required to pay the outstanding balance in full.



Periodic Payment Cap

A restriction on how much payments can increase or decrease over a single adjustment period.



Per diem interest

The amount of interest that accrues daily on a loan. This is calculated by multiplying the outstanding loan balance by the annual rate of interest, then dividing the result by 365.



Per participant charges

Charges are based on the total number of eligible employees or actual participants in the plan.



Period certain

A payment feature available in some annuity contracts that guarantees periodic payments for a set period of time. For example, in a life annuity, periodic payments would be made to you or beneficiary for the either the guaranteed period or the life of the individual. Whichever is longer.



Personal Property

Any movable or Intangible thing that is subject to ownership and not classified as real property.



Permanent Loan

A long-term Mortgage loan. In Real Estate projects, it is obtained after completion of construction, usually to repay the short term construction loan.



PITI

An acronym for principal, interest, taxes and insurance. Also referred to as the monthly housing expense.



Planned Unit Development (PUD)

A land area zoned for a single-community subdivision with flexible restrictions on residential, commercial and public uses.



Plan administrative expenses

Charges used to cover services provided for the day-to-day operations of the plan, such as recordkeeping, accounting, customer service support and daily valuation


Points

An amount paid to the lender, typically at closing, to lower (or buy down) the interest rate. One discount point equals one percentage point of the loan amount. For example, 2 points on a $100,000 mortgage would cost $2,000. Negative points indicate the amount to be credited at closing to reduce closing costs. Also called discount points or mortgage points.



Portfolio

A collection of investments, such as stocks and bonds owned by an individual, organization or investment fund.




Pooled guaranteed investment contract (GIC) fund charges

Charges for a common, fixed income investment option. Includes a number of contracts issued by an insurance company or bank that pays an interest rate. Charges include investment management and administrative fees.



Portfolio manager

The individual, team or firm making the investment decisions for an investment fund, including the selection of individual investments.



Portfolio turnover rate

A measure of how frequently investments are bought and sold within an investment fund during a year. The portfolio turnover rate is usually expressed as a percentage of the total value of an investment fund.



Power of Attorney

An instrument granting someone authority to act as agent or attorney-in-fact for the grantor. An ordinary Power of Attorney is revocable and automatically terminates upon the death or incapacity of the principal.



Preapproval

A lender’s conditional agreement to lend a specific amount of money to a homebuyer under a specified set of terms.



Prearranged refinancing agreement

A formal or informal arrangement between a lender and a borrower where the lender agrees to offer special terms (such as a reduction in the rate or closing costs) for a future refinancing as an inducement for the borrower to enter into the original mortgage transaction.



Preliminary Title Report

A report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, together with the liens and encumbrances thereon which will not be covered under a subsequent title insurance policy.



Prepaid expenses

The expenses that are usually paid in advance, such as escrows for taxes and insurance (which are paid at closing).



Prepaid interest

Interest collected at closing of a first mortgage, covering the period from the date of disbursement to the start of the next payment period.



Prepayment

An amount paid to reduce the principal balance of a loan before the principal is due.



Prepayment penalty

A penalty assessed by some lenders if a loan is paid off before the specified term. This is a lump-sum amount due and payable in addition to the loan balance, and is usually limited to the early years of a mortgage.



Prequalification

The process of providing financial and other information (such as employment history and proposed collateral) by a prospective borrower in order for the lender to preliminarily estimate how much the borrower may obtain for the purchase of a home. A prequalification is not a commitment to lend.



Predatory Lending

Unscrupulous actions carried out by a lender to entice, induce, and/or assist a borrower in taking a mortgage that carries high fees, a high interest rate, strips the borrower of equity, or places the borrower in a lower credit rated loan to the benefit of the lender.



Prime rate

The interest rate that banks charge their best customers when lending them money. The U.S. Prime Rate, as published daily by The Wall Street Journal, is based on a survey of the prime rates of the 10 largest banks in the United States. The U.S. Prime Rate is used by some financial institutions to calculate variable interest rates for credit cards. Changes in the U.S. Prime Rate influence changes in other rates, including mortgage interest rates.



Primary Mortgage Market

The national market in which mortgages are originated.



Principal

The amount of a debt, investment, or other fund, not including interest, earnings or profits.



Principal & interest

The principal is the amount of money borrowed on a loan. The interest is the charge paid for borrowing money. Principal and interest account for the majority of your mortgage payment, which may also include escrow payments for property taxes, homeowners insurance, mortgage insurance and any other costs that are paid monthly, or fees that may come due.



Principal, Interest, Taxes, and Insurance (PITI)

The components of a monthly mortgage payment.



Principal balance

The unpaid portion of the loan amount. The principal balance does not include interest or any other charges.




Principal payment

Portion of your monthly payment that reduces the principal balance of a home loan. This term also refers to prepayments you make to the principal balance.



Profit and Loss Statement

A financial statement that summarizes the revenues, costs, and expenses that a business incurred during a given period.



Processing fee

A fee charged to cover the administrative costs of processing a loan request.



Promissory note

A written promise to repay a specified amount over a specified period of time.



Property Tax

A tax levied on the owner of the property. The tax is based on the property's value. Local governments often impose property taxes to finance districts, municipal projects etc.



Prospectus

The official document that describes certain investments, such as mutual funds, to prospective investors. The prospectus contains information required by the SEC, such as investment objectives and policies, risks, services and fees.



Provider / Recordkeeping expenses

These expenses are a combination of various charges. Also known as an asset management charge (AMC) or wrap charge.



Purchase / Sales Agreement

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



Purchase Money Mortgage (PMM)

A Mortgage that a buyer gives the seller when the property is conveyed to secure the unpaid balance of the purchase price.



P/E ratio

The price of a stock divided by trailing 12-month earnings per share.












Acronyms




P and I
(principle and interest) they are the two elements that go towards repaying your loan



PCI
Purchased Credit-Impaired Asset



PD
Probability Default



PITI
Principal and Interest, plus Taxes and Insurance



PITY
(Principle interest taxes and insurance) these are the four main components of your monthly mortgage  payment. Principle is the loan amount. Interest is the rate at which the fina ce charged you pay for borrowing is calculated. Taxes are the real estate taxes for which you are responsible and insurance is the home  owners insurance that your lender requires you to have


PMI
(Private mortgage insurance) if you put down less than 20 percent most lenders or banks require you to have private mortgage insurance, This can be put into your monthly mortgage payment or calculated into your rate,



PMSR
Purchased Mortgage Servicing Rights



PPP
Prepayment pentalty a penalty charged to a borrower if they pay their loan in full before the end of its term


PUD
(planned urban development): A type of development is designed real estate, usually a combination of housing, recreation, commercial and industrial parks all within one development or subdivision.



POS
Point of Sale



PR
Primary Residence



PTD
Prior to Documents



PTF
Prior to funding