Mortgage Glossary
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IMPUTED INTEREST:
Interest which is deemed to have been charged on a loan by a court.
IN REM:
Latin term meaning "Against the thing." Used to describe a legal action which is taken against land rather than against the land owner, such as a bank's foreclosure on a defaulted mortgage.
INDEPENDENT APPRAISAL:
An estimate of the value of a property prepared by someone who has no interest in the property or, if a mortgage is involved, in the lender.
INDEX:
1. Any rate published by an independent third party (the government, the federal bank, etc.) which serves as the base for calculating a variable item in a contract. (A Variable or Adjustable Rate Mortgage may use the Federal Bank's monthly prime interest rate as the index for the interest charged under that mortgage).
2. The listing in the Land Registry Office of all instruments registered on title to a property (the "abstract index").
INDEXED LOAN:
Any loan whose interest rate is adjusted in accordance with a rate published by an independent third party (an "index").
INITIAL INTEREST RATE:
The rate chargeable on a mortgage on the day it is signed.
INITIAL RATE PERIOD:
The period of time for which the "initial interest rate" is guaranteed on a Variable or Adjustable Rate mortgage before it begins to change according to its "index".
INSTALLMENT:
A regular periodic payment.
INSTALLMENT LOAN:
A loan which is paid back in periodic payments.
INSTITUTIONAL LENDER:
An accredited financial organization (i.e. a bank, trust company, credit union, etc.) which offers loans.
INSTITUTIONAL MORTGAGE:
A loan secured against real property offered to the land owner by a bank, credit union, trust company or other accredited financial organization. Opposite of "private mortgage".
INSURED MORTGAGE:
A loan secured against land for which an insurance policy exists promising to compensate the lender for all losses and costs resulting from the borrower's failure to meet her obligations under the loan agreement.
INTEREST:
1. A person's legal right to an asset or property.
2. The cost of borrowing money, charged as a percentage of the outstanding amount owed.
INTEREST ADJUSTMENT DATE:
The date upon which the borrower is required to pay accrued interest on the borrowed principal under a mortgage, which date falls one full payment interval before the first payment date as set out in the agreement. For example, if a mortgage is advanced on May 15 to be paid on the first day of each month, June 1 would be the interest adjustment date and July 1 the first payment date. On June 1, the borrower would be required to pay the interest that has accrued on the principal since the date of the advance (May 15).
INTEREST ACCRUAL RATE:
The rate, stated as a percentage, at which interest accumulates on a mortgage.
INTEREST PAYMENT:
The portion of each periodic payment on a loan, expressed in dollars, which is allocated toward accrued interest.
INTEREST RATE ADJUSTMENT PERIOD:
The length of time between changes in interest rate on an Adjustable or Variable Rate Mortgage.
INTEREST RATE BUY DOWN PLAN:
A method of reducing the effective interest charged to a borrower. A third party (often a vendor) deposits a lump sum into an account, portions of which are then used to reduce the amount required from the borrower for each periodic payment over a set period of time.
INTEREST RATE CAP:
A clause in an Adjustable or Variable Rate Mortgage which limits the change in the interest rate charged. May limit change within a single adjustment period or over the life of the mortgage.
INTEREST RATE CEILING:
The highest rate of interest chargeable under a Variable or Adjustable Rate Mortgage, as set out in the mortgage contract.
INTEREST RATE FLOOR:
The lowest rate of interest chargeable under a Variable or Adjustable Rate Mortgage, as set out in the mortgage contract.
INTEREST-ONLY LOAN:
A debt for which the periodic payments are enough to pay only the interest which accumulates on the principal over the payment period. Principal is due at maturity.
INTERIM FINANCING:
1. A construction loan to pay for costs up to completion;
2. Another name for a bridge loan, a short-term loan designed to cover a gap of time between the purchase of a new home and the sale of the old when equity becomes available.
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