glossary - I

Mid-Island Mortgage Corp. understands that the mortgage process is filled with phrases and terms that may be confusing and unfamiliar to those new to buying a home as well as those who have purchased and refinanced their homes in the past. We've provided a glossary to help clear away some of the mystery associated with the mortgage process. 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

index

A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, 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 the ARM. This interest rate is subject to any caps that are associated with the mortgage.

in-file credit report

An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

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."

installment

The regular periodic payment that a borrower agrees to make to a lenders

installment loan

Borrowed money that is repaid in equal payments, known as installments. A furniture 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 (MI). 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.

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 rate of interest in effect for the monthly payment due.

interest rate buydown 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

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.

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.