The Glossary Mortgage Terminology

Del Financial's Glossary consists of the more commonly used definitions, meanings, and descriptions used within the mortgage and real estate industry. As always, if you have any questions, please call us at (800) 469-5861.

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PITI
(Principal, Interest, Taxes, and Insurance) the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.
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 principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
PMI
Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.
Partial Payment
a payment that is less than the total amount owed on a monthly mortgage payment. Normally, lenders do not accept partial payments. The lender may make exceptions during times of difficulty. Contact your lender prior to the due date if a partial payment is needed.
Personal Property
ny property that is not real property or attached to real property. For example furniture is not attached however a new light fixture would be considered attached and part of the real property.
Planned Unit Development (PUD)
a development that is planned, and constructed as one entity. Generally, there are common features in the homes or lots governed by covenants attached to the deed. Most planned developments have common land and facilities owned and managed by the owner's or neighborhood association. Homeowners usually are required to participate in the association via a payment of annual dues.
Power of Attorney
a legal document that authorizes another person to act on your behalf. A power of attorney can grant complete authority or can be limited to certain acts or certain periods of time or both.
Pre-foreclosure Sale
Also known as a short-sale;a procedure in which the borrower is allowed to sell a property for an amount less than what is owed on it to avoid a foreclosure.
Prepayment
any amount paid to reduce the principal balance of a loan before the due date.
Prepayment Penalty
a provision in some loans that charge a fee to a borrower who pays off a loan before it is due.
Promissory Note
a written promise to repay a specified amount over a specified period of time.
Property Tax
a tax charged by local government and used to fund municipal services such as schools, police, or street maintenance. The amount of property tax is determined locally by a formula, usually based on a percent per $1,000 of assessed value of the property
Property Tax Deduction
the U.S. tax code allows homeowners to deduct the amount they have paid in property taxes.
Purchase Offer
A detailed, written document that makes an offer to purchase a property. When signed by all parties involved in the sale (i.e. becomes fully executed,) the purchase offer becomes a legally binding contract.
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