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| GLOSSARY SELECTION | ||
 | SECTION 01: DEFINITIONS A - D | |
| SECTION 02: DEFINITIONS E - H | |
| SECTION 03: DEFINITIONS I - L | |
| SECTION 04: DEFINITIONS M - P | |
| SECTION 05: DEFINITIONS Q - T | |
| SECTION 06: DEFINITIONS U - Z | |
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INCOME PROPERTY Real estate developed or improved to produce income. 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. Some lenders provide caps that limit how much the interest rate or loan payments may increase or decrease. INSTALLMENT LOAN Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan. INSURABLE TITLE A property title that a title insurance company agrees to insure against defects and disputes. INSURANCE 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. INSURANCE BINDER 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. INTEREST The amount the lender charges to lend you 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 PAYMENT The portion of a monthly payment that goes to interest based on the amortization schedule. INTEREST RATE The percentage rate of return charged for use of a sum of money. This percentage rate is specified in the mortgage note. See note rate. INTEREST RATE BUYDOWN PLAN A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan. INVESTMENT PROPERTY A property that is not occupied by the owner and is generally rented to a tenant to produce income. JOINT TENANCY A form of co-ownership that gives each tenant equal undivided interest and rights in the property, including the right of survivorship. Contrast with tenancy in common, tenancy by the entirety. JUDGMENT LIEN A lien on the property of a debtor resulting from a judgment. JUDICIAL FORECLOSURE A type of foreclosure proceeding used in some states that is handled as a civil lawsuit where the court confirms the sales price for the property and the distribution of the sale proceeds. LEASE A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may use the real estate for a specified period of time and the amount of rent to be paid. LEASEHOLD ESTATE A tenant's interest in or right to hold possession of a property. LENDING GUIDELINES Every loan program has different guidelines. Guidelines are used to meet Federal, State and Local laws and enforce minimum requirements by the lender. Guidelines ensure that prospective borrowers won't purchase a home that they won't be able to afford. LINE/LOAN AMOUNT The entire HELOC or Fixed Rate Second mortgage loan amount. LINE OF CREDIT An agreement by a lender to extend credit up to a certain amount for a certain time without the need for the borrower to file another application. See home equity line of credit. LIQUID ASSET A cash asset or an asset that is easily converted into cash. LOAN AMOUNT The amount of money you want to borrow to purchase or refinance a home. Also called the principal and is generally repaid over time with interest. LOAN COMMITMENT A lender's agreement to advance money on specified terms after specified conditions are met. See commitment letter. LOAN-TO-VALUE RATIO The ratio of the total amount borrowed on a mortgage against a property compared to the appraised value of the property. For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%). LOCK-IN A written agreement in which the lender guarantees a specified loan program interest rate and points if a mortgage goes to closing within a set period of time. LOCK-IN PERIOD The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in. |