Spectrus – Glossary – P
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- Point
- Means 1%. In mortgage arrangements, a point is one percent of the amount of the mortgage amount
- Prime rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates. - Principal
This term can be applied in the following ways:
- the one who owns or will use the property. Example: The principals to the lease are the landlord and tenant; principals to a sale are the buyer and seller.
- one who contracts for the services of an agent or broker; the broker's or agent's client. Example: Grey wishes to purchase a shopping center. Grey engages Jamison, a mortgage broker, to arrange financing. Jamison arranges a loan in the name of the principal, Grey. The loan is payable as interest only for 5 years, with the principal payable as a balloon payment at the end of year 5.
- the amount of money raised by a mortgage or other loan, as distinct from the interest paid on it. Example: Abel arranged a loan with $100,000 principal on his home. The first monthly payment is $1,200 including a $1,000 interest and $200 that amortizes the principal.
- Pro-rata
- Proportionately; according to measure, interest, or liability. In the case of a tenant, the proportionate share of expenses for the maintenance and operation of the property.
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