REALTOR® Serving the San Francisco Bay Area Communities
Terms You Want to Know O - Z
- Origination Fee: A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent for FHA and VA loans.
- PITI: Principal, interest, taxes and insurance.
- Planned Unit Development (PUD): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Uses may be residential, commercial or industrial. In a PUD individuals actually own the building or unit they live in, and common areas are owned jointly with the other members of the development or association. This is in contrast with condominium, where an individual actually owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development or association.
- Point: An amount equal to 1 percent of the principal amount of the investment or note. The lender assesses loan discount points at closing to increase the yield on the mortgage and position itself competitive with other types of investments.
- Pre-Approval: A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender.
- Prepayment Penalty: A fee charged to a mortgagor who pays a loan before it is due. Not allowed for FHA or VA loans.
- Pre-Qualification: This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
- Prime Rate: The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.
- Private Mortgage Insurance (PMI): Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage.
- Promissory Note: A written promise to repay a specified amount over a specified period of time.
- Purchase Agreement: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. Also called a sales contract, earnest money contract, or agreement for sale.
- Realtor: A real estate broker or associate active in a local real estate board affiliated with the National Association of Realtors.
- Recording: The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
- Regulation Z: The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection Act.
- Second Mortgage: A mortgage that has a lien position subordinate to the first mortgage.
- Secured Loan: A loan that is backed by collateral.
- Security: The property that will be pledged as collateral for a loan.
- Subdivision: A housing development that is created by dividing a tract of land into individual lots for sale or lease.
- Survey: A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
- Tenancy in Common: A type of joint ownership of property by two or more persons with no right of survivorship.
- Title: A legal document evidencing a person's right to or ownership of a property.
- Title Insurance Policy: A policy that protects the purchaser, mortgagee or other party against losses.
- Transfer tax: State and/or local tax payable when title passes from one owner to another.
- Treasury Index: An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities, or is derived from the U.S. Treasury's daily yield curve. This curve is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
- Trustee: A fiduciary who holds or controls property for the benefit of another.
- VA Loan: A loan that is partially guaranteed by the Veterans Administration and made by a private lender.
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