I

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.

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.

These other investments may include 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. This information is then used to adjust the interest rate on an adjustable mortgage up or down.

Initial interest rate
The interest rate of the mortgage at the time of closing. This rate will change for an adjustable-rate mortgage (ARM). Also known as the "start rate" or "teaser."

Interest
The amount of money, expressed as a percentage of the principal, charged for the use of the money borrowed.

Interest Adjustment
If the closing (the date on which the buyer takes possession of the property) occurs at a time of the month other than the date on which the mortgage payment is due, the borrower will pay an amount to cover interest from the "interest adjustment date."

Interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum rate to which your loan can climb.

Interest rate floor
For an adjustable-rate mortgage (ARM), the minimum interest rate to which your loan can sink.

Interim Financing
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion of the project.

Investor
A money source for a lender.

Back to Top