Terms starting with the letter I
Impound
Impounds are payments made in advance for homeowner's insurance premiums
and real estate taxes. These payments are made to an escrow account
at loan closing, and periodically replenish the escrow account.
An escrow agent pays the local tax authority and insurer from this account.
Analyzers calculate impounds for two months. Local lending requirements
on funding the escrow account vary.
Indemnify
To insure; to secure against loss.
Index
A published interest rate against which lenders measure the difference
between the current interest rate on an adjustable rate mortgage and
that earned by other investments, which is then used to adjust the interest
rate.
Index
rate
An index is a widely used published interest rate that lenders use
to set the interest rate on loans. 10-year U.S. Treasury securities
are often used for 30-year fixed-rate loans. ARM
loans are commonly based upon the, one-, three-, and five-year U.S.
Treasury security yields; the monthly average interest rate on loans
closed by savings and loan institutions; or the monthly average costs-of-funds
incurred by savings and loans. Lenders adjust the interest rate
up or down on an adjustable rate mortgage by measuring the difference
between a current index rate to the ARM interest rate, and adding a
margin.
Initial
interest rate
The starting interest rate on an adjustable-rate mortgage loan, which
is often below market ARM rates. The intent of a low initial rate is
to assist homebuyers that may not otherwise qualify for a mortgage loan.
Installment
Land Contract
Often called a land contract or an installment contract; an agreement
for the purchase of real estate upon an installment basis, the deed
to the property is not given to the purchaser until either all or a
certain portion of the purchase price is paid.
Installment
Loans
A loan that has a fixed (or closed-end) term (i.e., 36 months) and fixed
unchanging monthly payments. When the loan is paid in full the
borrower cannot advance additional money unlike a revolving loan.
Insured
Mortgage - See MIP and PMI
A mortgage that is protected by the Federal Housing Administration (FHA) called MIP (mortgage insurance premium), 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 by the lender for borrowing money.
Interest-only
payments
Mortgage payments that include only interest. No loan amortization
occurs and, thus, the homeowner does not accrue any equity (unless the
home value increases).
Interest
Rate
The percentage of an amount of money that is borrowed and is paid for
during a specific period specified in the terms of the loan.
Interest
rate cap
A limit on the amount the interest rate can increase. See Cap or
Adjustment period
Interim Financing
A construction loam made during completion of a building or a project.
A permanent loan usually replaces this loan after completion.
Intestate
When a person dies without leaving a will.
Investment
Property
A property designated solely as a "rental" or "leased"
property.
Investor
The ultimate owner of a loan. This can be the institution
that originated the loan (then the loan is held in their portfolio),
another large lender or Fannie Mae or Freddie Mac.
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