Real estate developed or improved to produce income.
A number used to compute the interest rate for an adjustable-rate
mortgage (ARM). The index is generally a published number or percentage,
such as the average interest rate or yield on Treasury bills. A margin is
added to the index to determine the interest rate that will be charged on
the ARM. This interest rate is subject to any caps that are associated
with the mortgage.
in-file credit report
An objective account, normally computer-generated, of credit and legal
information obtained from a credit repository.
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.
initial interest rate
The original interest rate of the mortgage at the time of closing.
This rate changes for an adjustable-rate mortgage (ARM). Sometimes known
as "start rate" or "teaser."
The regular periodic payment that a borrower agrees to make to a
Borrowed money that is repaid in equal payments, known as
installments. A furniture loan is often paid for as an installment loan.
A property title that a title insurance company agrees to insure
against defects and disputes.
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.
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.
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.
The fee charged for borrowing money.
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
The rate of interest in effect for the monthly payment due.
interest rate buydown plan
An arrangement wherein the property seller (or any other party)
deposits money to an account so that it can be released each month to
reduce the mortgagor's monthly payments during the early years of a
mortgage. During the specified period, the mortgagor's effective interest
rate is "bought down" below the actual interest rate.
interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum interest rate, as
specified in the mortgage note.
interest rate floor
For an adjustable-rate mortgage (ARM), the minimum interest rate, as
specified in the mortgage note.
A property that is not occupied by the owner.
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.