Mortgage and Loan Glossary (I)
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illiquidity
Having inadequate cash to meet current obligations. Real property is
considered an illiquid investment because of the time and effort
required to convert it to cash.
implied agency
Form of agency that occurs when the words and actions of the parties
indicate that there is an agency relationship.
implied contract
A contract created by actions, but not necessarily written or spoken.
impound account
A fund set aside for future needs, such as an escrow or reserve account.
income property
Real estate developed and improved to produce steady income.
index
A number used to compute the interest rate for an adjustable-rate mortgage
(ARM). The index is usually a widely published number or percentage,
such as the average interest rate or yield on Treasury bills. The
index is added to a margin to determine the interest rate that will
be charged on the ARM.
Index of Leading Indicators
An index of eleven indicators designed to forecast the strength of
the economy six to nine months in the future. Frequency: monthly.
Source: Commerce Department.
Individual Retirement Account (IRA)
A retirement account that allows individuals to make tax-deferred contributions
to a personal retirement fund. Individuals can place IRA funds in
bank accounts or in other forms of investment such as stocks, bonds,
or mutual funds.
Industrial Production
A fixed-weight measure of physical output of the nation's factories,
mines and utilities. Monthly percent changes in the index reflect
the rate of change in output. Changes in industrial production are
widely followed as a major indicator of strength in the manufacturing
sector. Frequency: monthly. Source: Federal Reserve.
in-file credit report
A computer-generated report containing credit and legal information
obtained from one of the main credit bureaus.
inflation
An increase in the amount of money or credit available relative to
the amount of goods or services available. Inflation causes an increase
in the general price level of goods and services. Over prolonged
periods inflation can reduce the purchasing power of a dollar, making
it worth less.
initial interest rate
The original starting interest rate of a loan at the time of closing.
This rate changes for an adjustable-rate mortgage (ARM). Sometimes
called a teaser rate.
installment
A regularly scheduled periodic payment that a borrower agrees to make
to a lender.
installment loan
Borrowed money that is repaid in equal periodic payments. Cars and
furniture are often paid for with installment loans.
insurable title
A property title that a title insurance company agrees to insure against
defects and claims.
insurance
A form of contract that provides compensation for specific losses in
exchange for a periodic payment. An individual contract is known
as an insurance policy. The periodic payments are known as insurance
premiums.
insurance binder
A document stating that insurance is only temporarily in effect. Because
the coverage will expire by a certain date, a permanent policy must
be obtained prior to expiration date.
insured mortgage
A mortgage that is protected by the Federal Housing Administration
(FHA) or by private mortgage insurance (PMI). If the borrower defaults
on the loan, the insurer must pay the lender the lesser of the loss
incurred or the insured amount.
interest
The cost of the use of money.
interest accrual rate
The rate at which interest accrues on a mortgage. Usually, it is also
the rate used to calculate the monthly payments.
interest rate
The rate of interest used to calculate the monthly payment due.
interest rate buydown plan
An arrangement where the property seller deposits money to an account
so that it can be released each month to reduce the buyer's monthly
payments during the early years of a loan. During the specified period,
the borrower's effective interest rate is bought down below the actual
interest rate.
interest rate ceiling
The maximum interest rate for an adjustable-rate mortgage (ARM), as
specified in the mortgage loan note.
interest rate floor
The minimum interest rate for an adjustable-rate mortgage (ARM), as
specified in the mortgage loan note.
investment property
A property that is not occupied by the owner.