Mortgage Insurance (MI)
Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent. The PMI payment is usually added to the monthly mortgage payment. However, there are ways to finance up to 100% of your home's value and avoid PMI. These strategies include "Piggyback Mortgages" and Lender Paid Mortgage Insurance. In today's market, Lender Paid Mortgage Insurance can often be the best strategy.
See your CMPS professional for details.
Note
This document signed at closing is the promise by the signers to repay the loan.
Origination Points
One point equals one percent of the loan amount. Points are used to lower the interest rate. One point does not equate into lowering the interest rate one percent. Typically is tax deductible.
Prepaid Interests
Collected at closing, it is money collected/refunded to borrower to synchronize the closing to the monthly payments
Piggy Back
A second mortgage closed at the same time as a first mortgage. Usually purpose is to avoid mortgage insurance, jumbo pricing, or for future needs.
PITI
Monthly payment including Principal, Interest, property Taxes, and Insurance (both hazard and mortgage)
Pre-Approval
Based on documented income, assets, and credit.
Pre-Qualification
Based on stated income, assets and debt. Information not verified, not as useful or informative as a Pre-Approval.
Pre Payment Penalty
A penalty that has to be paid by the borrower if he/she decides to payoff the loan before the prepayment penalty period is over. Loans may have or may not have prepayment penalty. A soft prepayment penalty allows the borrower not to pay the penalty in case of a home sale. A hard prepayment penalty makes the borrower pay the penalty, whereas the payoff of the current loan happens because of a refinance or a sale.
Private Mortgage Insurance (PMI)
Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent. The PMI payment is usually added to the monthly mortgage payment. However, there are ways to finance up to 100% of your home's value and avoid PMI. These strategies include "Piggyback Mortgages" and Lender Paid Mortgage Insurance. In today's market, Lender Paid Mortgage Insurance can often be the best strategy.
See your CMPS professional for details.
Property Taxes
Amount of tax due on a property. Usually is collected as part of the escrow portion of the monthly payment, with the lender being responsible to forward the escrowed money as the bills come due on May 15 and Oct 15.
Purchase Agreement
Contract between buyer and seller outlining the terms of the agreement.