Mortgage Terms GlossaryMortgage Terms - H thru JHazard Insurance A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like. Housing Expenses-to-Income Ratio The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio. HUD-1 Statement A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD -1 statement define the seller's net proceeds and the buyer's net payment at closing. Impound The portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves. Index A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one, three, and five year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average costs-of-funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down. Indexed Rate The sum of the published index plus the margin. For example if the index is 4% and the margin is 2.75%, the indexed rate would be 6.75%. Often, lenders charge less than the indexed rate the first year of an adjustable rate mortgage. Initial Interest Rate This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable rate mortgage (ARM). It's also known as "start rate" or "teaser." Installment The regular periodic payment that a borrower agrees to make to a lender. Insured Mortgage A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). Interest The fee charged for borrowing money. 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 Rate Buydown Plan An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. Interest Rate Ceiling For an adjustable rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note. Interest Rate Floor For an adjustable rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note. Interim Financing A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion. Investor A money source for a lender. Jumbo Loan A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate. read more at mortgage terms glossary page More Mortgage TermsMortgage Term Glossarymortgage-terms-glossary-A-thru-D Mortgage-Terms-Glossary-E-thru-G mortgage-terms-glossary-H-thru-J mortgage-terms-glossary-K-thru-N mortgage-terms-glossary-O-thru-Q mortgage-terms-glossary-R-thru-Z PMI Private Mortgage Insurance Mortgage Interest- How to Calculate
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