Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
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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.
Impounds
An impound refers to the funds a mortgagor pays to the lender along with their monthly principal and interest payments for the payment of real estates taxes and hazard insurance. This is also referred to as an escrow account. The money is held by the lender to make payments when they are due.
In-file Credit Report
A computer-generated report containing credit and legal information obtained from one of the main credit bureaus.
Income Property
Real estate developed and improved to produce steady income.
Index
A published interest rate used to establish the interest rate offered on an Adjustable Rate Mortgage (ARM). Some of the most common indices are treasury bills, treasury securities, London Inter-Bank Offering Rates (LIBOR) and the Cost of Funds Index (COFI).
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
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.
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.