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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Principal and Interest


Synonyms:principal and interest
Acronyms &
abbreviations:
P&I, PI
Filed Under: financial-banking, mortgages
Tags: banking, lending, loan, mortgage, rates
 

Definition of principal and interest (P&I, PI)

principal and interest (P&I, PI)
1. An acronym for principal and interest which are components of a monthly mortgage payment.

Related Terms and Acronyms:

  • annual percentage rate (APR)   A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
      ➥  A number used to compare costs associated with mortgage loans and other forms of financing.
  • annual percentage yield (APY)   The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.
  • balloon mortgage   A loan that has regular monthly payments which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years.
  • gross debt service (GDS)   The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
      ➥  Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
  • mortgage (mtg)   A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
  • principal, interest and taxes (PIT)   Principal, interest and taxes. The components of a monthly mortgage payment.
  • principal, interest, taxes, and insurance (PITI)   Acronym for the elements of a mortgage payment: principal, interest, taxes and insurance.
  • principal, interest, taxes, heat (PITH)
  • remaining balance   Unpaid principal on a loan.
  • step-rate mortgage   A fixed-rate home loan on which payments are lower at the beginning, typically for two years, and which then rise.

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