Glossary Letter: I

An interest-only loan is a type of loan where the borrower pays only the interest on the principal balance for a specified period, without reducing the principal amount. After this period, the borrower must begin repaying both principal and interest, often resulting in higher payments. This loan structure can offer lower initial monthly payments but… Continue reading Interest-Only Loan

Interest is the cost of borrowing money, expressed as a percentage of the loan amount, charged by lenders to borrowers. It represents the compensation lenders receive for the risk of lending and the opportunity cost of their capital. Interest can be calculated as a fixed or variable rate, depending on the loan terms.  In loan… Continue reading Interest

An installment loan is a type of loan that is repaid in regular, fixed payments (installments) over a specified period. These loans can be secured or unsecured and are commonly used for financing large purchases, such as vehicles, homes, or personal expenses. Each installment typically includes both principal and interest, with the loan balance decreasing… Continue reading Installment Loan

An impound balance is the current amount of money set aside in a real estate escrow account. This account, managed by a neutral party, collects funds from the borrower each month to cover future property expenses like taxes and insurance. By monitoring this balance, both the borrower (avoids late fees) and lender (reduced foreclosure risk)… Continue reading Impound Balance

An impound schedule, the same as an escrow schedule, is a detailed schedule that outlines the periodic payments a borrower must make into an escrow account, typically held by a lender or a servicer, for future expenses such as property taxes, homeowner’s insurance, and other property-related costs. This schedule ensures that funds are available to… Continue reading Impound Schedule

Insurance tracking is a feature within a loan management software that helps lenders monitor and manage various insurance policies associated with loans. The software allows lenders to store key details of the borrower’s insurance policy, such as Insurance company name and contact information, policy type (e.g., homeowners, flood), coverage amount and policy expiration date. This… Continue reading Insurance Tracking

Interest Accrual Rate refers to the percentage at which interest accumulates on a loan, investment, or financial product over a specific period. This rate determines how much interest is added to the principal balance during each compounding period. For example, if a savings account has an annual interest accrual rate of 5%, compounded monthly, the… Continue reading Interest Accrual Rate

An impound account, also known as an escrow account, is a specialized financial account used to hold funds securely until specific conditions of the agreements are met. It acts as a neutral third-party holding ground, ensuring a safe and controlled exchange of money between two parties involved in a transaction. Escrow accounts provide a secure… Continue reading Impound Account