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mortgage loan glossary I

Use the alphabet letters below to navigate to the words in this glossary.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

- I -

Impound Account (Escrow Account)

Please see Escrow Account.
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Index

An economic indicator that lenders use to set an adjustable rate mortgage's (ARM) interest rate. Each ARM is tied to a specific index. Some indices move up and down faster than others. Examples of indices are the rates on the 1-year constant-maturity Treasury (CMT) securities, 11th District Cost of Funds Index (COFI) and London Interbank Offered Rate (LIBOR).
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Initial/Introductory Interest Rate

The starting interest rate of an adjustable rate mortgage (ARM). The initial interest rate on an ARM is fixed for a certain period then adjusts to reflect overall market rates. Fixed rate loans, on the other hand, always have the same interest rate for the life of a loan.
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Interest Rate

The cost of borrowing money is interest. Your interest rate, along with the term and amount of your mortgage, determines the size of your monthly principal and interest payment.

Interest rates vary across the different types of mortgages we offer, as well as how much you are borrowing compared to the value of the home. Interest rates may also vary based on other factors such as whether the home will be a primary or secondary residence.

You can "buy down" the interest rate on your loan by paying points. Please see discount points.
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Interest Rate Cap

The maximum amount the interest rate can change annually or cumulatively over the life of an adjustable-rate mortgage (ARM). Most ARMs have several types of interest rate caps: (1) lifetime cap that limits the increase and decrease of a rate over the full course of a loan; (2) the first adjustment cap, which limits the rate change on the ARM's initial adjustment; and (3) the subsequent adjustment caps (also called periodic caps), which limit the rate changes on the following adjustment periods, even if the market interest rates significantly rise or fall during this time.
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Investment Property

Real estate or property bought to make a profit, either from renting or selling it. An investment property is not used as your primary residence.
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