Mortgage Glossary - I
Definitions of Mortgage Terms
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- Initial Interest Rate - The starting percentage a borrower pays for the use of money on an adjustable-rate mortgage.
- Interest Accrual Rate - Percentage a borrower pays for the use of money, usually expressed as an annual percentage.
- Interest Deduction- Interest expense on a home loan that governments allows homeowners to subtract from their income before computing their income tax.
- Interest Rate - The amount charged per year on a personal or home loan. The rate varies according to the type of loan. Or, the percentage of interest paid for money in deposit accounts, without regard to compounding, shown as an annual figure.
- Interest Rate Buy-down Plan - A fixed-rate loan in which the borrower pays a fee for a lower rate in the first years (usually two years) of the loan. The rate later rises to its full fixed rate.
- Interest Only Loan - An advance of money in which the installments pay only the interest that accumulates on the loan balance. The loan balance does not decrease with the payments. Usually the interest-only payments last for a limited period, after which payments rise and the borrower begins paying principal in addition to interest.
- Investment Property - Real estate that generates income, such as an apartment building or a rental house.
- Itemized Deductions - Expenses that can be deducted to reduce your income after your adjusted gross income before you calculate the tax you owe. Itemized deductions include medical expenses, taxes, deductible interest, charitable contributions, casualty and theft losses, unreimbursed employee expenses and miscellaneous deductions.