Mortgage Glossary

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.

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.

Pre-approve:

Lender commits to lend to a potential borrower.  The commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-foreclosure Sale:

Allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-qualify:

A lender informally determines the maximum amount an individual is eligible to borrow.

Premium:

The amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment:

Payment of the mortgage loan before the scheduled due date.  This may be subject to a prepayment penalty.

Principal:

The amount borrowed from a lender; doesn’t include interest or additional fees.