Glossary 1

N

part of the financing for the buyer's pur-

chase of the property.

Negative Amortization: An increase in

Owner-Occupied Property: A property

the balance of a loan caused by adding

that serves as the borrower's primary

unpaid interest to the loan balance; this

residence.

occurs when the payment does not cover

the interest due.

P

Net Monthly Income: Your take-home

pay after taxes. It is the amount of

Partial Payment: A payment that is less

money that you actually receive in your

than the scheduled monthly payment on

paycheck.

a mortgage loan.

Net Worth: The value of a company or

Payment Change Date: The date on

individual's assets, including cash, less

which a new monthly payment amount

total liabilities.

takes effect, for example, on an adjust-

able-rate mortgage (ARM) loan.

Non-Liquid Asset: An asset that cannot

easily be converted into cash.

Payment Cap: For an adjustable-rate

mortgage (ARM) or other variable rate

Note: A written promise to pay a speci-

loan, a limit on the amount that pay-

fied amount under the agreed upon

ments can increase or decrease during

conditions.

any one adjustment period.

Note Rate: The interest rate stated on a

Personal Property: Any property that is

mortgage note, or other loan agreement.

not real property.

O

PITI: An acronym for the four primary

components of a monthly mortgage

payment: principle, interest, taxes, and

Offer: A formal bid from the home buyer

insurance (PITI).

to the home seller to purchase a home.

PITI Reserves: A cash amount that a

Open House: When the seller's real

borrower has available after making a

estate agent opens the seller's house to

down payment and paying closing costs

the public. You don't need a real estate

for the purchase of a home. The princi-

agent to attend an open house.

pal, interest, taxes, and insurance (PITI)

reserves must equal the amount that the

Original Principal Balance: The total

borrower would have to pay for PITI for a

amount of principal owed on a mortgage

predefined number of months.

before any payments are made.

Planned Unit Development (PUD): A

Origination Fee: A fee paid to a lender

real estate project in which individuals

or broker to cover the administrative

hold title to a residential lot and home

costs of processing a loan application.

while the common facilities are owned

The origination fee typically is stated in

and maintained by a homeowners' as-

the form of points. One point is one per-

sociation for the benefit and use of the

cent of the mortgage amount.

individual PUD unit owners.

Owner Financing: A transaction in

Point: One percent of the amount of the

which the property seller provides all or

mortgage loan. For example, if a loan