The Ultimate Real Estate Glossary: Letter P

Learn this Real Estate Glosarry
2021-10-11

The Ultimate Real Estate Glossary: Letter P

 

Learn this Real Estate GlosarryProperty management, principal, payoff letters—please slow down! Real estate talk confuses newcomers with all its jargon and industry-specific vocabulary. So if it feels like you’re drowning, don’t worry—we’ve got your back. Welcome to the latest installment of our Ultimate Real Estate Glossary!

This article is part of our exhaustive list of most relevant words to the real estate industry. Whether you’re a landlord or a tenant, this real estate glossary series will help you keep up in the world of property investments.

For this edition, we’ll go through the real estate terms that start with the letter P.

Real estate terms: The letter P

Parcel identification number (PIN): A number assigned by a local tax assessment office, used to identify your property for government paperwork. You may also refer to it as ‘property tax number,’ ‘property identification number,’ ‘tax parcel number,’ and so on.

Payoff letter: Or payoff statement. A document from a lender detailing how to pay off your entire loan in a single transaction. If you wish to pay off your loan in your next installment, request a payoff letter to know how much you need.

See also: Loan

Pending: This is a status indicator on a listing. A pending property indicates that an offer is accepted and the sale is in process, but the transaction has yet to be closed.

Personal assistant: The term refers to an administrative assistant who works for a real estate agent. They may be licensed or unlicensed. Both will handle tasks like arranging a schedule, managing social media and databases, taking calls from prospective buyers, assembling data and presentations, and so on. Licensed assistants may also assist with real estate procedures like showing properties, discussing listings/offers with clients, or drafting and submitting offers/counter-offers.

Planned unit development (PUD): This type of real estate development incorporates multiple-land uses in a single area. Residential, recreational, commercial, and industrial regions are mixed instead of sectioned into monolithic zones. Such developments are typically oriented towards a given audience (e.g., young professionals, new families, or the elderly), allowing developers to tailor their designs for the intended demographic.

Preapproval: A possible step before getting a mortgage that involves filling out a mortgage application and credit check. A lender then looks at important factors like credit history and credit score, income, assets, liabilities, and a few other things to gauge creditworthiness. A mortgage preapproval makes it easier to get a mortgage.

Preapproval letter: Following the completion of a preapproval, this official document indicates that the borrower can make good on a loan. Sellers will typically ask for a preapproval letter, as it shows the commitment and financial ability of the buyer to proceed with a purchase.

Prepaid interest: This refers to the interest paid by a borrower before the due date. A common form is in closing costs for a mortgage, applied against the date the first payment is due to keep interest from accruing against the loan for that period.

Prepayment penalty: A penalty assessed against borrowers if they pay off or make a large paydown on the mortgage before term. Prepayment penalty protects the lender against the loss of interest income that would typically have come over time.

Prequalification: The process where a lender assesses a borrower’s capacity to repay a mortgage. To prequalify for a loan, borrowers will provide documents that show their ability to pay, such as income tax returns and pay stubs, but not credit reports. Once a borrower is prequalified, they will get a prequalification letter to show their real estate agent. The agent then has a picture of the borrower’s price range.

Preview appointment: A visit by a buyer’s agent without the buyer to see if the house fits what their buyer wants.

Principal: Also known as principal balance, this term refers to the amount borrowed from the bank (the amount still owed) without the interest. Payments on a loan are applied to the interest before they are applied to the principal. Paying off the principal also reduces the amount of interest due.

Principal, interest, taxes, and insurance (PITI): These are the four components of paying off a mortgage. Every monthly payment consists of amounts against these four.

Private mortgage insurance (PMI): PMI is a type of insurance that protects a lender. Mortgages typically require a down payment of 20% of the purchase price. If a borrower cannot afford this, they must pay for private mortgage insurance. Such a premium is added to their monthly payment until they build up 20% equity.

Professional designation: Additional credentials for a real estate agent that do not require a license. A designation demonstrates that they have specialist knowledge in a particular niche of real estate.

Promissory note: A note signed by the borrower which promises to repay a loan. The promissory note should include the specific terms of the agreement about the loan. They’re not quite as informal as IOUs, but not as rigid as proper loan contracts.

Property management company: A third-party company that oversees residential, commercial, or industrial real estate. A property management company handles the daily real estate matters of a property and allows an owner to focus on other things.

Property manager: An individual or company hired by a property owner to oversee the daily operations of a rental property. Property managers act on behalf of the owner to handle the day-to-day operations of the property. These include rent collection, property maintenance, defaulting tenants, property marketing, and the record-keeping necessary for property management.

Property valuation: Also known as land valuation, this is the process of determining how much economic value there is in a piece of real estate.

Conclusion

That leaves us with sixteen letters down before we wrap up our real estate glossary series. Just ten more to go!

These may be a lot to take in, so don’t worry if you forget them the first time. You can always come back to the Glossary to check whatever definition slips your mind. Remember, we have more installments coming your way, so check in soon to catch the next part of our series.

Did we miss a word? Let us know in the comments below.

Image courtesy of Pixabay

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