APPLY
NOW / LOGIN
GLOSSARY
Principal amount
Principal amount is the loan amount at funding, and the amount that has to be repaid when the loan matures, excluding interest and debt charges.
Principal balance
Principal balance is the amount owed on a debt. At funding, the principal balance is the loan amount. If payments have been made on the debt, the principal balance is the remaining, unpaid amount.
Principal residence
Principal residence is the place where one lives most of the time. The distinction between a principal residence and secondary property is important when determining tax liability on any gains earned by selling the property.
Principal risk
Principal risk is the danger of losing invested funds due to bankruptcy or default. Before an investor buys an equity share in a company, for example, she must assess the probability that the company will become insolvent and be unable to return her investment.
Principal, interest, taxes, insurance - PITI
Principal, interest, taxes, insurance, or PITI, are the different parts of a complete mortgage payment. Principal is the amount applied to the debt balance, interest is the monthly accrued financing charges, taxes are pro-rated amounts applied to the annual tax bill, and insurance is the mortgage insurance premium.
Principle of conformity
The idea that a house will garner a fair price if it is located near houses of similar size and condition.
Principle of progression
When a piece of real estate which is of lower value can command a higher price due to its location and proximity to higher end properties.
Principle of regression
The opposite of progression. When a high end property's value is brought down by its location and proximity to lower end properties.
Prior redemption privilege
Prior redemption privilege is synonymous with prepayment privilege; it's a borrower's contractual right to pay off debt early without penalty. A borrower would choose to do so if interest rates drop such that refinancing the debt would result in lower interest charges.
Prioritization of debt
Prioritization of debt is the placement of amounts owed in primary, secondary, and tertiary positions. Primary debt is the first to be repaid if the borrower becomes insolvent and must liquidate assets to pay off creditors.
Private annuity
Private annuity is an annuity contract made between two parties, neither of which is an insurance company in the business of selling annuities. An annuity is an arrangement whereby one party pays a fee, or transfers assets to another party in exchange for a guaranteed stream of income payments. There may be certain tax benefits associated with setting up a private annuity as a means of transferring assets to a family member.
Private banking
Private banking refers to the expanded set of services financial institutions offer to their wealthy customers. These services might include financial and estate planning, investment management, etc. Customers must meet minimum deposit requirements to have access to private banking services.
Private college/university
A private college/university is an institution of higher learning that doesn't receive public funds. These colleges and universities are usually characterized by higher tuition rates, smaller classes and, sometimes, more specialized programs.
Private debt
Private debt is an economic term referring to the total money owed by individuals and businesses within a country.
Private investment fund
A private investment fund is a company that issues securities to an exclusive group of investors, and is exempt from certain SEC regulations. To be considered an exempt, private investment fund, the entity must have fewer than 100 investors, or its investors must have large amounts of money invested in other places. The exemption from SEC regulation provides private investment funds with an added level of flexibility in pursuing specialized investments.