Mortgage Glossary I

Mortgage Glossary I - J

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Impound

That portion of a borrower's monthly payments 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 Property

Real estate that is owned for investment purposes and not used as the owner's residence.

Index

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.

Indexed Rate

The sum of the published index plus the margin. For example if the index were 9% and the margin 2.75%, the indexed rate would be 11.75%. Often, lenders charge less than the indexed rate the first year of an adjustable rate mortgage.

In-file Credit Report

An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

Inflation

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.

Installment

The regular periodic payment that a borrower agrees to make to a lender.

Insurance

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

Insured Mortgage

A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI).

Interest

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.

Interest Due

The portion of the mortgage payment that goes toward interest on the loan, expressed in dollars. It is computed by multiplying the loan balance at the end of the preceding period times the annual interest rate divided by 12 (on a biweekly mortgage it is divided by 26). It is the same as interest payment except when the total mortgage payment is less than the interest due, in which case the difference is added to the balance and constitutes negative amortization.

Interest Payment

The dollar amount of interest paid each month. It is the same as interest due except when the total mortgage payment is less than the interest due, in which case the interest payment is less than the interest due; the difference is added to the balance and constitutes negative amortization.

Interest Rate

The rate of interest in effect for the monthly payment due.

Interest Rate Buydown Plan

An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.

Interim Financing

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

Investor

A money source for a lender.

Joint Tenancy

A form of ownership or taking title to property, which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

Judgment

A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.

Judicial Foreclosure

A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. Other states use non-judicial foreclosure.

Jumbo Loan

A loan that exceeds Fannie Mae's and Freddie Mac's loan limits, currently at $333.700. Also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans.

Junk Fees

Fees charged the borrower by the lender for a wide variety of services, actual and hypothetical, expressed in dollars rather than as a percent of the loan amount.

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