Page 1
P&L - Principle of Progression

Page 2
Principle of Regression - Purchase Money

P&L
Package Mortgage
Partnership
Passive Activity
Passive Income
Passive Loss
Penalty
Per-Diem Interest
Periodic Rate
Personal Loan
Personal Property
Piggyback Loan
PITI
PITI Reserves
Planned Unit Development (PUD)
Plat
PMI
Point
Portfolio Lender
Possession
Power of Attorney
Preapproval Letter
Preapprove
Prepaid Expenses / Items
Prepaid Interest
Prepayment Penalty
Prequalification
Pre-Sold Home
Prime Rate
Principal
Principal, Interest, Taxes & Insurance
Principle of Conformity
Principle of Progression

P&L
An abbreviation for profit & loss statement.

Package Mortgage
A mortgage that covers both real and personal property.

Partnership
An agreement between two (2) or more individuals to go into business or invest together.

Passive Activity
An activity where you do not actually participate.

Passive Income
Income derived from real estate and other business investments in which the individual is not actively involved. The individual does not actually participate directly with activities producing income.

Passive Loss
Loss from a passive activity.

Penalty
A fine charged for violating previously agreed upon terms.

Per-Diem Interest
Interest charged on a daily rate.

Periodic Rate
An interest rate in comparison or in relation to a specific amount of time. For example: A monthly periodic rate would be the cost of the credit borrowed each month.

Personal Loan
A loan from a lender not secured by real property. These types of loans tend to be riskier in nature for the lender and therefore have higher interest rates in comparison to real estate loans.

Personal Property
Movable property that is not attached to real property or a house.

Piggyback Loan
The second loan of combination financing where there is more than one (1) loan on a property in order to finance more than 80% of the purchase price.

PITI
An abbreviation for principal, interest, taxes, and insurance.

PITI Reserves
A lender requirement for the borrower having a certain liquid amount of funds remaining after making a down payment and closing costs. The reserves are calculated by a certain amount of months of PITI payments.

Planned Unit Development (PUD)
A zoning category that allows for flexibility in a subdivision's ownership and design guidelines.

Plat
A map showing a specific parcel of land subdivided into individual lots.

PMI
An abbreviation for private mortgage insurance.

Point
One point equals 1% of the loan. Lenders, loan agents, and mortgage brokers usually charge their fees calculated on a point system for their services.

Portfolio Lender
A company that underwrites mortgages and keeps them instead of selling originated loans to a secondary market, as most lenders do.

Possession
(aka closing or close of escrow) A step of condition where all papers have been signed and the buyer has received keys to the house or property.

Power of Attorney
A legal document where the signer authorizes another to conduct business on his or her behalf. The document must be notarized and signed in order to be put into effect.

Preapproval Letter
A document written by a lender or loan agent estimating how much a potential borrower can borrow.

Preapprove
In real estate, this refers to the step where the borrower's loan possibility has been approved with a lender based on his or her credit history and preliminary financial information. This type of approval is not a final approval and is not yet attached to any specific property.

Prepaid Expenses / Items
Recurring costs such as: taxes, insurance, interest that are paid at closing and are part of the closing costs.

Prepaid Interest
Interest that a borrower pays before it is due.

Prepayment Penalty
A lender's charge to the borrower for paying down or paying off a loan before the end of the agreed term. An owner-occupied property cannot legally have a prepayment penalty for longer than five years.

Prequalification
A non-binding evaluation by a loan agent of a borrower's finances to determine the strength of the individual's ability to borrow and repay a mortgage debt.

Pre-Sold Home
A house that has been sold before it was built.

Prime Rate
A type of index for consumer and business loans set by banks. This rate is controlled by the Fed Funds rate and is calculated to be 3% higher than the Fed Funds rate.

Principal
The amount of money borrowed and owed.

Principal, Interest, Taxes & Insurance (PITI)
Principal, Interest, Taxes, and Insurance. Reserves for PITI is usually required by lenders in order to approva borrower's loan. PITI is generally calculated using monthly figures. For example: A borrower's monthly mortgage paymen of principal and interest is: $2,000. The tax owed on the property on a monthly basis: $500. The homeowner's insurance owed on the property on a monthly basis: $100. This makes the monthly PITI $2,600.

Principle of Conformity
The concept that a house or property will be sold for a fair market price if the property is among houses of similar size, condition, and style.

Principle of Progression
The concept that a smaller house will be worth more due to being located near larger, more expensive homes.