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Glossary of Mortgage and Home Equity Terms

To navigate through our glossary, click on the first letter of the word you’re looking for.
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Impounds or Reserves
Terms used to mean “escrow” in some parts of the country. See Escrow.
Income/Expense Ratio
See Debt-to-Income Ratio (DTI)
Index/Index Rate
A published interest rate, such as the prime rate, LIBOR, T-Bill rate, or the 11th District COFI. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. On ARMs, a predetermined margin is added to the index to compute the interest rate adjustment.
Installment
The regular payment that a borrower agrees to pay a mortgage lender.
Interest
Amount of money paid for the use of funds provided by another party. Also a right, share, or title in property.
Interest Rate
The percentage of an amount of money that is paid for its use for a specified time.
Interest Rate Cap
A provision of an ARM limiting how much the interest rate may increase per adjustment period. See also Lifetime Cap.
Interest Rate Floor
On a floating-rate loan or line of credit, the lowest the interest rate may go.
Interest Rate Range
See Rate Lock Option.
Investment Property
Real estate owned with the intent of supplementing income and not intended for owner occupancy.
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