| Term | Definition |
|---|
| prepayment | Paying off all or part of the mortgage before the scheduled date. |
| prepayment clause in a mortgage | Statement of the terms upon which the mortgagor (borrower) may pay the entire or stated amount on the mortgage principal at some time prior to the due date. |
| prepayment penalty | A fee paid to the lending institution for paying a loan prior to the scheduled maturity date. |
| primary mortgage market | Lenders who originate loans and makes funds available directly to the borrowers. Contrast with secondary mortgage market. |
| prime rate | The interest, or discount rate charged by a commercial bank to its largest and strongest customers. |
| principal | The amount of money owed to the lender not including interest. |
| principle of conformity | An appraisal principle which holds that the maximum value is realized when a reasonable degree of homogeneity (sameness) exists in a neighborhood. |
| private mortgage insurance (PMI) | Default insurance on conventional loans, normally insuring the top 20%-25% of the loan and not the whole loan. |
| pro-rate | To divide or distribute proportionally. At closing, various expenses such as taxes, insurance, interest, rents, etc. are prorated between the seller and buyer. |
| property taxes | Taxes that are paid yearly on real property. Property taxes are ad valorem, based on the assessed value of the real property. Each taxing authority multiplies this appraised value by its annual tax rate. Taxing authorities include local school districts, counties, cities, water districts, and other special tax districts. |
