This glossary is Alphabetical please choose your letter below.




That portion of a borrower's monthly payment 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.


Income-Expense Ratio
A qualifying ratio used in underwriting a residential mortgage loan which computes the percentage of monthly income required.


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 LIBOR, 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. The rate must be one that is outside the influence of the lender.


Indexed ARM
An ARM on which the interest rate adjusts mechanically based on changes in an interest rate index, as opposed to a "discretionary ARM" on which the lender can change the rate at any time subject only to advance notice. All ARMs in the US are indexed.


In File Credit Report
Unverified credit report which may contain unchecked, duplicated, or overlapping data. It is often used for a quick look at a prospective borrower's credit history.


Individual Retirement Account ( IRA )
A tax-deferred plan that can help build a retirement nest egg. Similar plans are 401-K and SEP.


The number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.


Initial Interest Rate
The interest rate that is fixed for some specified number of months at the beginning of the life of a an ARM. Sometimes referred to as a "teaser" when it is below the fully indexed interest rate.


Initial Rate Period
The number of months for which an initial interest rate holds, ranging from 1 month to 10 years value.


A request for a copy of your credit report. An inquiry occurs every time you fill out a credit application and/or request more credit. Too many inquiries on a credit report can lower your credit score.


Installment Insurance
Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.


Insured Loans
A loan insured by HUD-FHA or a private mortgage insurance company.


A fee charged for the use of money.


Interest Accrual
The period over which the interest due the lender is calculated.


Interest Cost
A time-adjusted measure of cost to a mortgage borrower.


Interest Due
The amount of interest, expressed in dollars, computed by multiplying the loan balance at the end of the preceding period times the annual interest rate divided by the interest accrual period.


Interest Only Mortgage
A mortgage on which for some period the monthly mortgage payment consists of interest only. During that period, the loan balance remains unchanged. interest only loans are often based on the LIBOR index.


Interest Payment
The dollar amount of interest paid each month.


Interest Rate
The amount of interest charged on a monthly loan payment; usually expressed as a percentage.


Interest Rate Adjustment Period
The frequency of rate adjustments on an ARM after the initial rate period is over. The rate adjustment period is sometimes but not always the same as the initial rate period.


Interest Rate Cap
A provision of an ARM limiting how much interest rates may increase per adjustment period. See also interest rate ceiling.


Interest Rate Ceiling
The highest interest rate possible under an ARM contract; same as "lifetime cap".


Interest Rate Decrease Cap
The maximum allowable decrease in the interest rate on an ARM each time the rate is adjusted. Also known as interest rate floor.


Interest Rate Floor
The lowest interest rate possible under an ARM contract.


Interest Rate Increase Cap
The maximum allowable increase in the interest rate on an ARM each time the rate is adjusted.


Interest Rate Index
The specific interest rate series to which the interest rate on an ARM is tied, such as "Treasury Constant Maturities, 1-Year," or "Eleventh District Cost of Funds".


Interest Rate Swap
A transaction between two parties in which each agrees to exchange payments tied to different interest rates or indices for a specified period of time, generally based on a notional principal amount.


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


Intermediate Term Mortgage
A mortgage loan with a contractual maturity at time of purchase equal to or less than 20 years.


Investment Property
Real estate owned with the intent of supplementing income and not intended for owner occupancy.


A money source for a lender.