Glossary

Par Rate Defined
Par rate is a rate that does not cost money or create money. Rates are quoted on a scale. On the low side, a rate costs money and you would pay that in the form of a discount point. Then as a rate moves higher up the scale, there is [...]

PITI Defined
PITI refers to a mortgage payment that includes Principal, Interest, Taxes, and Insurance. The lender collecting your PITI mortgage payment takes the principal and interest part (P&I) to repay your mortgage and puts the taxes and insurance part (T&I) into an escrow account. That escrow account will have accumulated enough in it [...]

Prepayment Penalty Defined
A prepayment penalty is penalty or charge to the borrower if the loan is paid off early. A prepayment penalty can be anywhere from 1 to 5 years but normally it is 2 years. That means if you pay off your loan before 2 years are up, you owe the lender.
The [...]

Principal Defined
Principal is the amount of money borrowed. Principal is another word for mortgage balance. It also refers to the part of your payment that goes to pay down the mortgage balance.
A fully amortized mortgage payment has 2 parts. One pays the interest due to the lender who loaned you the money [...]