Mortgage Glossaryi
What is Impound (or reserves)?
A portion of a borrower's monthly payments held by the lender to pay for taxes, insurance and other items as they become…
What is Impound account?
Savings account for accumulating that portion of a borrowers monthly payments designated for future payments of taxes and insurance. (Required by certain lenders or with certain types of…
What is Index?
A published rate used by lenders to calculate interest adjustments on ARMs (Index + Margin = Interest Rate). Some indexes are more volatile than…
What is Index (ARM)?
Established at loan origination, the index is a widely published financial indicator that, combined with the Margin, works to establish the effective rate of an adjustable-rate mortgage ("Index +…
What is Initial Interest Rate?
This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). It's also known as "start rate" or…
What is Insolvency?
Condition of a person who is unable to pay his debts as they fall…
What is Installment?
The regular periodic payment that a borrower agrees to make to a…
What is Insured Mortgage?
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance…
What is Interest?
Charge paid for borrowing money, calculated as a percentage of the amount…
What is 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…
What is Interest rate?
The periodic charge, expressed as a percentage, for use of…
What is Interest Rate Buydown Plan?
An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a…
What is Interest rate cap?
A safeguard built into ARMs to prevent drastic changes in interest…
What is Interest Rate Ceiling?
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage…
What is Interest rate change date?
Dates upon which the rate of interest is subject to change. Initial change date and subsequent change dates may feature different…
What is Interest Rate Floor?
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage…
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