Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
Periodic rate cap
In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease during any one adjustment period. See caps.
Stands for principal, interest, taxes, and insurance, which are the usual components of a monthly mortgage payment.
A cash amount that a home buyer must have on hand after making a down payment and paying all closing costs. The reserves required by the lender must equal the amount a home buyer would pay for PITI for a specified number of months.
Planned Unit Development (PUD)
A type of real estate project that gives each unit owner title to a residential lot and building and a nonexclusive easement allowing access to the project's common areas. See common area assessment.
A map that shows a parcel of land and how it is subdivided into individual lots. Plat maps also show the locations of streets and easements.
See private mortgage insurance.
A point equals 1 percent of a mortgage loan. Lenders charge points as a way to make a profit. Borrowers may pay discount points to reduce the loan interest rate. Buyers are prohibited from paying points on HUD or VA guaranteed loans. On a conventional mortgage, points may be paid by either buyer or seller or split between them. Within limits, points are usually tax deductible. Also see interest tax deduction.
This process goes a step further than pre-qualification. It means the lender has contacted the borrower's employer, bank and other places to verify all claims of earnings and assets. In return, the borrower receives a letter stating the lender is willing to grant a mortgage for a specified amount, within a limited period of time.
An early evaluation by a lender of a potential home buyer's credit report plus earnings, savings and debt information. The home buyer gets a nonbinding estimate of the mortgage amount the borrower would qualify for, or how much house the borrower can afford. Buyers who pre-qualify can go a step further and seek pre-approval.
A fee imposed by certain lenders if the first mortgage is paid off early.