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Principal reduction is the process of lowering the outstanding balance of a loan. On a standard amortizing mortgage it happens automatically, as a portion of every scheduled payment retires debt. It can also happen

In real estate financing, the principal is the amount of money borrowed to purchase a property. It is the core of the loan: the sum on which interest is calculated, the balance that must

The price-to-rent ratio compares the cost of buying a home to the cost of renting a comparable one. It is calculated by dividing a property’s price by its annual rent. A $360,000 house that

Pre-qualification is a lender’s initial, informal estimate of how much a borrower might be able to borrow, based on financial information the borrower reports about income, assets, and debts. It usually involves no document

Pre-approval is a lender’s conditional commitment to lend a specific amount to a borrower, issued after verifying the borrower’s income, assets, credit, and debts. It is the serious version of the mortgage conversation: documentation

Private Mortgage Insurance, or PMI, is insurance that conventional lenders require when a borrower’s down payment is less than 20% of the purchase price. It protects the lender, not the borrower, against loss if

PITI stands for principal, interest, taxes, and insurance: the four components that make up a complete monthly mortgage payment. Principal pays down the loan balance. Interest pays the lender for the use of the

Pass-through taxation is a tax structure in which a business entity pays no income tax itself. Instead, profits and losses flow through to the owners, who report them on their personal returns. Partnerships, LLCs,

An Opportunity Zone is an economically distressed community designated under the 2017 Tax Cuts and Jobs Act where qualifying investments can receive preferential federal tax treatment. The program was designed to pull long-term private