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Houston Mortgage > Glossary >
Home Equity > I 1-10
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Independent bank
A bank that is locally owned and operated, and not associated with a bank holding company. Also referred to as a community bank.
Index
A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable rate loans such as credit card debt. Some of the most common indices are: the one-year Treasury Constant Maturity Yield; the Federal Home Loan Bank (FHLB) 11th District Cost of Funds; prime rate as listed in the Wall Street Journal.
Indexed rate
The sum of the published index plus the margin. For example, if the index is 9 percent and the margin 2.75 percent, the indexed rate is 11.75 percent.
Interest
1. Money paid for a borrower’s use of money, calculated as a percentage of the money borrowed and paid over a specified time. 2. A right to, or share of, title to property.
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 cap
A limit on how much a borrower¡¯s percentage rate can increase or decrease at rate adjustment periods and over the life of the loan.
Interest rate ceiling
Specified in the loan agreement, the highest percentage a lender can charge før an adjustable-rate mortgage.
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.
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