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| • | Impound - That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves. |
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| • | Income Property - Real estate developed or improved to produce income. |
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| • | 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 (such as one- three-, and five-year U.S. Treasury Security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average Costs-of-Funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down. |
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| • | In-File Credit Report - Information issued by one credit repository that contains an individual credit history for you to review in determining a loan applicant's creditworthiness. |
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| • | 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. |
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| • | Initial Borrower Interest Rate - The rate on which the borrower's first payment is calculated. |
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| • | Initial Borrower Payment Rate - The annual interest rate used to calculate the borrower's initial cash payment. |
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| • | Initial Interest Rate - The initial interest rate is the rate you pay when you first get your loan. On an ARM, this rate may be for 5 years (5/1 ARM) or only a month. |
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| • | Installment - The regular periodic payment that a borrower agrees to make to a lender. |
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| • | Installment Debt - Liability that typically has a fixed interest rate, fixed term, and equal payments amortized over a set number of months, agreed upon by the lender and the borrower prior to disbursement. |
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| • | Installment Loan - Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan. |
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| • | Insurable Title - A property title that a title insurance company agrees to insure against defects and disputes. |
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| • | 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. |
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| • | 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. |
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| • | 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. |
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| • | Interest - A charge paid for borrowing money. Interest is usually expressed as a percentage of the amount borrowed or interest rate. |
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| • | 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. |
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| • | Interest Cost - Interest cost shows how much you will pay in interest over the life of the loan, assuming you keep the loan for the entire period. |
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| • | Interest Due - Interest due is the portion of the mortgage payment that goes toward interest. When you close on your home, you will usually owe interest for the time between your closing date and when you make your first payment. |
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| • | Interest Rate - The annual rate of interest on the loan, expressed as a percentage of 100. |
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| • | Interest Rate Adjustment Period - The interest rate adjustment period is how often your rate is adjusted on an ARM after the initial rate period is over. For example, a 5/1 ARM means you have an initial rate period of 5 years that is fixed and then after 5 years, your rate changes every year. |
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| • | Interest Rate Cap - A provision of an ARM limiting how much interest rates may increase per adjustment period. |
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| • | Interest Rate Ceiling - The interest rate ceiling is the highest interest rate possible under an ARM. You may hear this called the lifetime cap and it based on the number of percentage points your rate can increase from your initial rate. |
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| • | Interest Rate Decrease Cap - An interest rate decrease cap is the maximum allowable decrease in your interest rate (on an ARM) each time your rate is adjusted. It is usually 1 or 2 percentage points. If rates go down 4% your rate may only go down 2% due to the cap. |
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| • | Interest Rate Floor - The rate floor is the lowest interest rate possible under an ARM loan. |
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| • | Interest Rate Increase Cap - The interest rate increase cap is the maximum allowable increase in your interest rate (on an ARM) each time your rate is adjusted. It is usually 1 or 2 percentage points. For example, if your rate adjusts every year, each year it cannot exceed the stated cap. |
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| • | Interest Rate Index - The interest rate index is the specific fund/security that your interest rate on an ARM is tied to. Common indexes are Treasury Constant Maturities or Cost of Funds indices. All the indices are published regularly in readily available sources. |
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| • | Investment Property - A property that is not occupied by the owner. |
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| • | Investor - Money source for a lender. |
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| • | 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. |
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