Glossary of commonly used terms and phrases

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Impound - The portion of a borrower's monthly payment that is held by the lender in order to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other additional items.
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Improvements - Any permanent improvements to a structure such as buildings, streets, utilities, etc.
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Inchoate Instrument - An unrecorded instrument, such as a deed, which is valid only between the parties involved but not as it would be after recording.
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Income Approach - A method of appraising a property that is based on the property’s anticipated future income. The net income is established and then divided by the estimated capitalization rate to arrive at a fair market value.
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Income Property - Real estate developed or improved to produce income.
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Index (Also called 'Rate Index') - A regularly published rate, independent of the lending institution, that measures the prevailing cost of funds, and is used periodically with the margin to set AML accrual rates.
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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 worthless.
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Ingress and Egress - Easements that give the right to go in and out of a section of property, but not the right to park on it.
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Inheritance Tax - A tax on the transfer of property from a deceased person, based on the right to acquire the property rather than the property itself.
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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 original interest rate of the mortgage at the time of closing.
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Insolvency - When a debtor is unable to meet his/her debt obligations.
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Installment - A borrower's periodic payment to a mortgage lender.
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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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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 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 Only Loans - These are short term loans whose only payment is on the interest, not on the principle loan amount.
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Interest Rate - The percentage of an amount of money, which is paid for its use for a specified time.
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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 - For an adjustable rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
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Interest Rate Floor - For an adjustable rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
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Interim Financing - Short-term financing issued during the completion of a building or project, in anticipation of longer-term financing.
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Interpleader - A court action which may be filed in an existing case to be the initial action. A neutral third party holding funds that are in dispute would file an interpleader.
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Investment Banker - An individual or institution that operates as an underwriter or agent for corporations issuing securities, but that does not accept deposits or make loans. In addition, most investment bankers maintain broker/dealer operations, maintain markets for previously issued securities, and offer advisory services to investors.
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Investment Property - A property that is not occupied by the owner. Also known as non-owner occupied (NOO).
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Investor - An individual or organization that invests in mortgages.
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Involuntary Conversion - When a property is taken by eminent domain, the owner can convert the money from the condemned property into real property without paying taxes on the gain. This is for a period up to 3 years.
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