10 Glossary

I

you. Interest is usually expressed as a

percentage of the amount borrowed.

Income Property: Real estate developed

Interest Accrual Rate: The percentage

or purchased to produce income, such

rate at which interest accumulates or

as a rental unit.

increases on a mortgage loan.

Index: A number used to compute

Interest Rate Cap: For an adjustable-

the interest rate for an adjustable-rate

rate mortgage (ARM), a limitation on the

mortgage (ARM). The index is generally

amount the interest rate can change per

a published number or percentage, such

adjustment or over the lifetime of the

as the average interest rate or yield on

loan, as stated in the note.

U.S. Treasury bills. A margin is added to

the index to determine the interest rate

Interest Rate Ceiling: For an adjust-

that will be charged on the ARM. This

able-rate mortgage (ARM), the maximum

interest rate is subject to any caps on

interest rate, as specified in the mort-

the maximum or minimum interest rate

gage note.

that may be charged on the mortgage,

stated in the note.

Interest Rate Floor: For an adjustable-

rate mortgage (ARM), the minimum in-

Individual Retirement Account (IRA):

terest rate, as specified in the mortgage

A tax-deferred plan that can help you

note.

build a retirement nest egg.

Investment Property: A property pur-

Inflation: An increase in prices.

chased to generate rental income, tax

benefits, or profitable resale rather than

Initial Interest Rate: The original inter-

to serve as the borrower's primary resi-

est rate for an adjustable-rate mortgage

dence. Contrast with "second home."

(ARM). Sometimes known as the "start

rate."

J

Inquiry: A request for a copy of your

credit report by a lender or other busi-

Judgment Lien: A lien on the property

ness, often when you fill out a credit

of a debtor resulting from the decree of a

application and/or request more credit.

court.

Too many inquiries on a credit report

can hurt your credit score; however,

Jumbo Loan: A loan that exceeds the

most credit scores are not affected by

mortgage amount eligible for purchase

multiple inquiries from auto or mortgage

by Fannie Mae or Freddie Mac. Also

lenders within a short period of time.

called "non-conforming loan."

Installment: The regular periodic pay-

Junior Mortgage: A loan that is subor-

ment that a borrower agrees to make to

dinate to the primary loan or first-lien

a lender.

mortgage loan, such as a second or third

mortgage.

Installment Debt: A loan that is repaid

in accordance with a schedule of pay-

ments for a specified term (such as an

K

automobile loan).

Keogh Funds: A tax-deferred retire-

Interest: The cost you pay to borrow

ment-savings plan for small business

money. It is the payment you make to

owners or self-employed individuals who

a lender for the money it has loaned to