I Mortgage Terms | Oconee County Real Estate
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Index
An independent measure of the current Interest Rate
used as a basis for the interest rate of an Adjustable-Rate
Mortgage. Different Adjustable-Rate Mortgages are tied
to different Indexes. Some of the more popular Indexes
are the Treasury Bill and the 11th District Cost of
Funds. Your Interest Rate is calculated by adding the
Margin to the Index.
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 the Federal Housing
Administration (FHA) or by private mortgage insurance
(MI). If the borrower defaults on the loan, the insurer
must pay the lender the lessor of the loss incurred
or the insured amount.
Interest
The dollar cost of borrowing a given amount of money
for a period of time. If your mortgage Principal is
$100,000 and the Interest Rate is 8.00%, then the Interest
for one month is calculated as follows: ($100,000 X
0.08) ÷ 12 = $666.67
Interest Rate
The percentage cost of borrowing a given amount of money
(Principal) for a period of time.
Interest
Rate Buydown
An arrangement wherein the property seller (or any other
party) deposits money to an account so that it can be
released each month to reduce the mortgagor's monthly
payments during the early years of a mortgage. During
the specified period, the mortgagor's effective interest
rate is "brought down" below the actual interest rate.
See also Buydown.
Interest Rate Cap
The most that the Interest Rate on an Adjustable-Rate
Mortgage can ever change over the life of the mortgage.
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