Money one will pay for breaking a law or violating part or all of the terms of a contract.

The shorthand way of stating the most usual elements of a residential mortgage payment which may consist not only of the Principal and Interest (PI) but the property taxes (T) and hazard insurance (I) as well. In the case where all four elements are part of the payment, the lender escrows the T and I and pays them on behalf of the borrower when they come due. Some loans are written such that the payment to the lender consists only of the P and I in which case the borrower pays the taxes and insurance directly.

Planned Unit Development (PUD)
A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.

Loan fees paid by the borrower. One point equals one percent of the loan amount.

Portfolio Loan
A non-conforming loan that is held by the original lender rather than being sold on the secondary market.

Prepayment Penalty
Fee charged for paying off a loan within a relatively short period of time after the loan has closed.

Principal Balance
Outstanding dollar amount owed on a loan exclusive of accrued interest

Principal, Interest, Taxes, Insurance (PITI)
Monthly payments required by an amortizing loan that includes escrow deposits for taxes and insurance in addition to the principal and interest

Private Mortgage Insurance (PMI)
Insurance premium paid by a borrower to protect lenders against losses from loans with loan-to-value ratios higher than 80%, default insurance for lenders

Pro Forma
Refers to the presentation of data, such as a balance of income statement, where certain amounts are hypothetical. For example, a pro forma balance sheet might show a debt issue that has been proposed but has not been consummated. Remember to analyze deals based on actuals, not Pro-forma numbers.

The process of establishing the validity of a will before a duly authorized court or person. Once validity is confirmed, the probate court then administers the sale of property as directed by the will or as authorized by the court to settle any financial obligations

Promissory Note
Promise to pay a specified sum to a specified person under specified terms

Purchase Money Mortgage
A mortgage which secures a note written on a loan used in the purchase of real estate

Purchase Subject to Mortgage
A purchase in which a buyer agrees to make the monthly mortgage payments on an existing mortgage and the original borrower remains liable if the purchaser fails to make the payments as agreed.

Purchase-Money Mortgage (PMM)
A mortgage obtained by a borrower as partial payment for a property.