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Glossary I
Impound Account
See Escrow account.
Impounds
The money paid each month by the borrower to cover property taxes and insurance. This money is held by the lender in an interest-bearing account for the payment of that specific borrower’s property taxes and insurance as they become due.
Index
A published interest rate against which lenders measure the difference between the current interest rate on an adjustable mortgage and that earned by other investments. The difference is used to adjust the interest rate on an adjustable rate mortgage either up or down.
Initial Rate
The beginning interest rate of an adjustable rate mortgage
Interest
The cost of borrowing and using money.
Interest Only Mortgage
A mortgage that for a certain period of time the payments consist of interest only. The payment is lower because it does not include that portion of the payment that would normally go towards paying down the principal. At the end of the specified period of time, the payment increases to include the portion of the payment for the principal. At this time, the loan balance has not decreased since the beginning of the loan.
Interest Rate
The interest rate charged by a lender for the use of the money, expressed as a percentage.
Interest Rate Cap
The limit to which a rate can increase with an adjustable rate mortgage.
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Letter A