What does PSS stand for in the context of mortgage payments?

In the context of mortgage payments, PSS stands for Payment Shock Savings. This term refers to the funds set aside or strategies implemented to mitigate the impact of payment shock that homeowners may face when their mortgage payments increase significantly. Payment shock typically occurs when an adjustable-rate mortgage (ARM) or a hybrid loan resets, often leading to a substantial increase in monthly payments that can strain a borrower’s finances.

Understanding this concept is crucial for borrowers, especially those considering loans that may not have a fixed interest rate for the entirety of the loan term. By planning for payment shock and having savings specifically earmarked for this purpose, borrowers can better prepare for potential increases in their mortgage payments, thereby enhancing their financial stability and reducing the risk of default.

The other options do not accurately represent the established term related to mortgage payments that addresses this specific concern.