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Investment Property
Real estate owned with the intention of extra income and not considered for owner occupancy. |
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Interest Rate
Percentage of a sum of money which is paid for its use for a specified period of time. |
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Interest
Sum paid for borrowing money. It pays the lender's costs of doing business. |
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Insured Loans
Loan which is insured by FHA or a private mortgage insurance company. |
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Initial Borrower Payment Rate
Annual interest rate used to calculate the initial cash payment of the borrower. If, for instance, the note states that a fully amortizing annual rate of 11% be used to calculate the initial monthly payment, and that rate is "brought down" 2%, the IBPR is 9%. |
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Initial Borrower Interest Rate
The borrower’s first payment is calculated on this rate. In case the loan is discounted or brought down, it may be lower than the Fully Indexed Accrual Rate.
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Indexed Rate
Calculation of the published index plus the margin. For instance if the index were 9% and the margin 2.75%, the indexed rate would be 11.75%. Frequently, lenders charge less than the indexed rate the first year of an adjustable-rate mortgage. |
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Index
Financial measure of economic conditions which is nationally published and normally relative to other financial instruments such as Treasury Bills or bonds. The lender uses a specific index (such as the 6 month Treasury Bill) to estimate the borrower’s particular monthly payment by adding a fixed margin to the index. The margin is the profit of the lender and is over and above the standard index due to the assumption of loan risk. Your lender will adjust the interest on your ARM at regular time intervals also called adjustment intervals (like 6 months), by means of adding their specific margin to the particular index of the loan. The total amount the loan is adjusted is also controlled by a periodic cap (maximum amount the loan can change during a particular time interval), the monthly cap (maximum amount the monthly payment can change from one time interval to the next), and the lifetime cap (total amount the loan can change from their initial rate of the loan). |
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Impound (Reserves)
Portion of a borrower's monthly payments. It is held by the lender or servicer to pay for taxes, mortgage insurance, hazard insurance, lease payments, and other items as they become due.
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