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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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 the 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 cost of borrowing a lender's money. Interest takes into account the risk and cost to the lender for a loan. The interest rate on a fixed rate mortgage depends on the going market rate and how many discount points you pay up-front. An adjustable rate mortgage's interest is a variable rate made up of the index and the lender's margin.
Interest Rate Buy-down Plan
An arrangement where the property seller, borrower or other party deposits money to an account so that it can be released each month to reduce the borrower's interest rate or monthly payments during a specified period of a loan.
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.