Mortgage Glossary
• A • B • C • D • E • F • G • H • I • J • K • L • M • N • O • P • Q • R • S • T • U • V • W • X • Y • Z •
Impound Account
The account in which a mortgage servicer holds the
borrower's escrow payments prior to paying property expenses. See Escrow Income Property
Any property developed or improved to produce income. Index
A published rate, such as the average interest rate or yield on
Treasury bills. A margin is added to the index to determine the interest rate
that will be charged on an adjustable-rate mortgage (ARM).
Index of Leading Economic Indicators (LEI):
Indicators reflecting future
changes in economic conditions. The index indicates the direction of the economy
in the next six or nine months. It helps to forecast business trends; hence, the
reference "leading indicators." It includes as one element Residential building
permits for private housing. Note that gains in building permits signal business
upturns. Inflation
An increase in the amount of money or credit available in
relation to the amount of goods or services available, which causes an increase
in the general price level of goods and services. Over time, inflation reduces
the purchasing power of a dollar, making it worth less. Initial Interest Rate
The original interest rate of the mortgage at the
time of closing. This rate changes for an adjustable-rate mortgage (ARM).
Sometimes known as "start rate" or "teaser." Inspection Fees
Fees paid by a homebuyer for professional inspections of
the property being purchased. The most common inspections are
structural/mechanical inspection, termite inspection, and radon test. Others may
be necessary depending on the property. Installment
The regular periodic payment that a borrower agrees to make
to a lender. Installment Loan
Borrowed money that is repaid in equal payments, known
as installments. A car loan is often paid for as an installment loan. Insurable Title
A property title that a title insurance company agrees
to insure against defects and disputes. Insurance
A contract that provides compensation for specific losses in
exchange for a periodic payment. An individual contract is known as an insurance
policy, and the periodic payment is known as an insurance premium. Insurance Binder
A document that states that insurance is temporarily in
effect. Because the coverage will expire by a specified date, a permanent policy
must be obtained before the expiration date. Insured Mortgage
A mortgage that is protected by the Federal Housing
Administration (FHA) or by private mortgage insurance (PMI). If the borrower
defaults on the loan, the insurer must pay the lender the lesser of the loss
incurred or the insured amount. Interest
The fee charged for borrowing money. Also, a right, title, or
share in property. Interest Accrual Rate
The percentage rate at which interest accrues
on the mortgage. In most cases, it is also the rate used to calculate the
monthly payments, although it is not used for an adjustable-rate mortgage (ARM)
with payment change limitations. Interest Rate
The cost to borrow money expressed as a percentage per
year. Interest Rate Buy Down Plan
An arrangement wherein the property seller
(or any other party) deposits money to an account so that it can be released
each month to reduce the mortgagor's monthly payments during the early years of
a mortgage. During the specified period, the mortgagor's effective interest rate
is "bought down" below the actual interest rate. Interest Rate Ceiling (CAP)
For an adjustable-rate mortgage (ARM), the
maximum interest rate, as specified in the mortgage note. Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum
interest rate, as specified in the mortgage note. Interim Interest
An amount you will pay when your loan is funded. It's
the interest due on your loan to cover the number of days from the day you get
your money to the beginning of the next month. For example, if your loan is
funded on September 20, you would pay 20 days of interest when the loan closes
to cover the period between September 20th and the 30th. Your first payment in
this scenario would be due on October 1. You may hear interim interest also
referred to as "odd days interest." Investment Property
A property that is not occupied by the owner. IRA (Individual Retirement Account)
A retirement account that allows
individuals to make tax-deferred contributions to a personal retirement fund.
Individuals can place IRA funds in bank accounts or in other forms of investment
such as stocks, bonds, or mutual funds. | 
