Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
Initial interest rate
The starting percentage a borrower pays for the use of money on an adjustable-rate mortgage.
A product by which a policyholder pays a company a sum, and the company promises to pay compensation if a specified undesired event occurs. Owners can buy hazard insurance that pays to repair damage from fire, hail or other calamities; earthquake, flood and hurricane insurance to pay for damage caused by those events, and other types of policies.
A written statement that warrants that an insurance policy will be issued on a property when title is transferred.
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 expense on a home loan that governments allows homeowners to subtract from their income before computing their income tax.
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.
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 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.