Mortgage Lingo, I - L

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Improvements - Man-made additions to the land that may or may not add value to it, including structures, building, or facilities placed on or in land, e.g., buildings, streets, sewers, water lines.

Indemnifiation Letter - A document given to the lender by a title insurance company that insures a lender against the failure of the title company's agent to perform his or her duties according to the lender's instructions.

Index - (1) An alphabetical listing in the public records of the names of parties to recorded real estate instruments together with the book and page number of the record. (2) The listing in abstract and title plans of recorded real estate instruments in groups according to land descriptions, known as a geographic index; (3) Specifically designated indexes are used by lenders to calculate the interest adjustment of variable (adjustable) rate loans. Some indexes are more volatile than others, which can affect adjustments in your interest rate and subsequently, your monthly payments, making it wise for the potential borrower to investigate the index used by their proposed lender prior to making application for the loan.

Inspection - Examination of a property to see that it meets the standards of the contract, of the lender, and of the buyer.

Installment Note - A note usually given in consumer and personal credit transactions in which the principal is payable in specified installments, together with interest on the unpaid balance until the note is paid in full. This note is usually of shorter duration than a promissory note or mortgage note. An installment note may be but is not necessarily secured by real property.

Institutional Lender - A financial institution that invests in mortgages and carries them in its own portfolio. Mutual savings banks, life insurance companies, commercial banks, pension and trust funds, and savings and loan associations are examples of institutional lenders.

Insurance Binder - See Binder (above)

Insured Bank - A bank that belongs to the FDIC (Federal Deposit Insurance Corporation).

Interest - A charge paid for borrowing money. (See mortgage note)

Interest Rate - The percentage rate charged for the use of money, usually quoted on an annual basis.

Interest Rate Cap - A safeguard built into variable rate loans to protect the consumer by limiting the movement in the rate of interest when adjusted.