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Glossary

Mortgage Note

A document that holds you legally responsible to repay your loan. It indicates the terms and conditions of the loan and how it will be repaid, the monthly payment amount, the date payment is due, the interest rate and the length of the mortgage.

Mortgagee

Your mortgage lender, who holds the mortgage note as legal evidence of your promise to repay the loan.

Mortgagor

The borrower in a mortgage loan transaction.

Multi-Family Dwelling

A property with more than four residential units.

Multiple Listing Service (MLS)

A continually updated database that features information on homes for sale in your area. Participating real estate agents maintain the information and agree to share commissions with each other.

Negative Amortization

When your monthly mortgage payments aren't large enough to cover the principal and interest due, unpaid interest is added to the loan balance, increasing the amount of money you owe.

Nonconforming Mortgage Loan

See Jumbo Loan.

Origination Fee

A fee charged by a lender to cover the costs of evaluating and processing a mortgage loan. Usually, the fee is a percentage of the loan amount.

P&I

See Principal and Interest.

Payment Cap

A limit on the amount your monthly payments on an adjustable rate mortgage can increase during each adjustment period. Unlike an interest rate cap, a payment cap does not limit the amount of interest you pay, and could lead to negative amortization.

Piggyback Mortgage

See Second Mortgage.

PITI

An abbreviation for "Principal, Interest, Taxes and Insurance" — the four charges that make up your monthly mortgage payment.

Plan Unit Development (PUD)

A comprehensive development plan for a land area that features common areas owned and shared by the homeowners.

Power of Attorney (POA)

A legal and notarized document authorizing someone else to act on your behalf if you are not able to attend closing. The document must specify the type of loan it is to be used for and include the property address. The closing agent will obtain and coordinate the POA document, which is to be recorded at closing.

Pre-Approval

The process by which you get a preliminary decision on a mortgage loan before making an offer on a home. Having pre-approval can give you an advantage over other homebuyers who may be interested in the same home, because it may give the seller more confidence in your ability to purchase the home.