P Glossary Terms

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PREPAYMENT
Defines whether a fee will be charged to the borrower for paying off the loan early. 

PITI
An acronym for Principal, Interest, Taxes, Insurance – all the components of a monthly mortgage payment. 

PREFORECLOSURE SALE
A procedure in which the borrower is allowed to sell his or her property for an amount less than what is owed in order to avoid foreclosure of a defaulted mortgage. Also known as Short Sale. 

PREQUALIFICATION
Determining the amount a buyer is eligible to borrow before a loan application is made. 

PRINCIPAL AND INTEREST
Principal is the total amount borrowed from the mortgage lender. Interest is a percentage charged over the life of the loan for the use of the money. Both principal and interest is paid in monthly installments throughout the life of the loan. 

POINTS
A dollar amount paid to a lender as a fee for making a loan. A point is equal to one percent of the loan amount, paid one time and usually at closing. Points may also be referred to as an origination fee, discount points, or a combination of the two.