I



Glossary



mpound account
The portion of a monthly mortgage payment that is earmarked to pay property taxes and property insurance premiums.


Impounding

The collection and placement of monies by a lender into an account in order to pay the borrower’s property taxes and insurance premiums when they become due.



Income

Regular income from earnings, commissions, investments, rental payments or other sources.



Income property

Real estate developed or improved to produce income. A property that produces income, such as rental property.



Index

When used in a mortgage note or credit agreement, a financial index is the measurement used to decide how much the annual percentage rate will change at the beginning of each adjustment period. Generally, the index plus or minus margin equals the new rate that will be charged, subject to any caps. Lenders use various financial index rates: London Interbank Offered Rate [(LIBOR and Treasury-Indexed ARMs (T-Bills)]. A number, usually expressed in the form of a percentage or ratio, that indicates or measures a series of observations, especially those involving a market or the economy.



Indexed Rate

An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index increase rate and a specified margin. The indexed rate is used to calculate the interest rate on an Adjustable Rate Mortgage (ARM).



Inflation

A general increase in prices coinciding with a fall in the real value of money. A result of excessive money chasing goods.



Inflation rate

The increase in price of consumer goods, usually expressed as a percentage over a specific period of time.



Initial advance

The process of obtaining an advance against available credit under your line of credit.



Initial Interest Rate

The interest rate that applies on the first day of the loan's term.



Initial advance at closing

You have chosen our funds transfer option to reduce your interest rate. Please verify that the account information is correct. If you maintain at least this $25,000 balance for the first three consecutive billing cycles the account is open, you will receive .25% off your approved rate for the life of the line.



Initial advance of $25,000 or more

The initial advance of $25,000 or more discount applies for drawing an initial advance of $25,000 or more, and maintaining at least that minimum balance for the first 3 full consecutive billing cycles.



Initial draw amount

The proceeds of the home equity line of credit or construction loan up to an amount the borrower is allowed to request at closing.



Initial rate

The starting interest rate. Some people call this the “teaser rate,” because it gives you low interest and low monthly payments at the beginning, but may adjust up at the next adjustment period (it will usually adjust even if the index doesn’t go up, since it’s lower than index plus margin for the initial period)



Inquiry

A request for your credit report, made by you or a company considering you for an offer of credit.



Insolvency

Insolvency is a term for when an Individual or organization can no longer meet its financial obligations with its lender(s) as debts become due.



Installment

A periodic partial payment of a debt.



Installment Debt

A loan that is repaid by the borrower in regular installments. Installment debt is generally repaid in equal monthly payments that include interest and portion of principal.



Installment loan

A loan that is repaid in equal payments, known as installments.



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.



Insured mortgage

A mortgage that is protected by an insurer in case of default. The insurance protects the lender (not the borrower) if a borrower defaults on the loan.



Interest

Interest is the charge for the privilege of borrowing money, typically expressed as an Annual Percentage Rate (APR).



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-only loan

A loan for which you pay only the interest due for a portion of the loan term. This lowers your periodic payment but does not decrease your principal balance on the loan. Making interest-only payments will result in larger payments being due at the end of the interest-only payment period.



Interest rate

The annual cost of a loan to a borrower, usually expressed as a percentage. The interest rate does not include fees charged for the loan.



Interest rate Buy Down Plan

Arrangement that allows the seller to deposit money to an account, from which the money is released each month to reduce the Mortgagor's monthly payments during the early years of the mortgage.



Interest rate Ceiling (Cap)

A limit on how much the variable interest rate can increase at any one time. Many home loans have both annual (or semiannual) caps and lifetime caps, which limit the amount your payments can increase in an adjustment period and over the life of the loan. Many caps allow a rate increase of 2-5% over the starting interest rate in an adjustment period (for example, a starting rate of 5% could increase to 7% or, depending on the loan guidelines, to as much as 10%). A lender’s lifetime interest rate cap is typically 6% over the life of the loan.



Interest Rate Change Date

Date upon which the rate of interest is subject to change.



Interest Rate Floor

The minimum interest rate allowed according to the contractual terms of the mortgage loan.



Investment property

Property that is purchased to generate rental income, or to be sold once it has appreciated in value.



Immediate annuity

You can convert a lump sum into payments for life or for a certain number of years from an immediate annuity. Payments begin immediately.



iMoneyNetTM Prime Retail Index

An unmanaged index that is an average of non-government retail money market mutual funds. Portfolio holdings of prime money market mutual funds include U.S. Treasury, U.S. non-Treasury obligations, repurchase agreements, time deposits, domestic and foreign bank obligations, commercial paper, floating-rate notes and asset-backed commercial paper.



Inception date

The date a fund’s operations begin.



Income fund

A fund that primarily seeks current income rather than capital appreciation.



Index

A benchmark used to evaluate a fund’s performance. The most common indexes for stock funds are the Dow Jones Industrial Average and the Standard & Poor’s 500 Index.



Index fund

An investment fund that seeks to parallel the performance of a particular stock market or bond market index. Often referred to as passively-managed investments.



Individual annuity contract

An annuity contract between an insurance company and a person or persons.



Individual Retirement Account (IRA)

IRAs are accounts that you own and fund through your own contributions. Two common types of IRAs are:


• Traditional IRAs – Contributions are made with pre-tax dollars, and earnings are tax-deferred. This means that you don’t owe taxes until the funds are withdrawn, usually at retirement.

• Roth IRAs – Contributions are made with after-tax dollars, so you don’t pay taxes on the money as it accumulates.




Individual service expenses

Charges applied to participants who take advantage of special plan features, such as participant loans.



Inflation

The general upward price movement of goods and services in an economy. Inflation is generally one of the major risks to investors over the long term because it erodes the purchasing power of their savings.



Interest / Interest rate

The fee charged by a lender to a borrower, usually expressed as an annual percentage of the principal. For example, someone investing in bonds will receive interest payments from the bond’s issuer.



Interest rate risk

The possibility that the market value of a bond or bond fund will decrease due to rising interest rates. When interest rates (and bond yields) go up, bond prices usually go down, and vice versa.



Interim Financing

A short term loan secured to cover certain major expenditures, such as construction costs, until permanent financing is obtained.



International fund

A fund that invests primarily in the securities of companies located outside of the United States. Or whose revenues come from outside the United States.



Investor

A buyer of a security or other property who seeks to profit from it without exhausting the principal.



Investment adviser

A person or organization hired by an investment fund or an individual to give professional advice on investments and asset management practices.



Investment company

A corporation or trust that invests pooled shareholder dollars in securities that are appropriate to the organization’s objective. The most common type of investment company, a mutual fund, stands ready to buy back its shares at their current net asset value.



Investment objective

The goal that an investment fund or investor seeks to achieve, such as growth or income.



Investment return

The gain or loss on an investment over a certain period, expressed as a percentage. Income and capital gains or losses are included in calculating the investment return.



Investment risk

The possibility of losing some or all of the amounts invested, or not gaining value in an investment.






Acronyms



IASB
International Accounting Standards Board



ICBA
Independent Community Bankers Association



IED
Initial Excrow Disclosure



IO
(interest only) a payment that only covers the interest on the loan

ILC
Improvement Location Certificate



IMF
International Monetary Fund


IO
Interest Only



IP
(Investment property) non owner occupied property that is rented out by the borrower



IRRRL
VA interest rate reduction refinance loan. This refinance loan allows you to lower your interest rate on an existing VA home loan



IR
Interest rate



IRLC
Interest rate Lock Commitment



ISAOA
Its Successors and/or Assigns