mortgage

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the mortgage section

Interest Only Loan

Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.

Interest Rate

The annual percentage amount charged in return for borrowing funds.

Interim Financing

Short-term financing to help a buyer bridge the gap between the closing date on the purchase of a new home and the closing date on the sale of the current home.

Irrevocable

Incapable of being recalled or revoked; unchangeable, unalterable.

Leverage

Upside leverage in real estate occurs when the yield or net return on property exceeds debt service for a loan. Downside or reverse leverage occurs when the debt service is greater than he net return on investment.

Line of Credit

A maximum credit limit allowed by a bank to a borrower, as long as the borrower maintains an acceptable balance on account or has a good credit rating. The credit line will vary from time to time according to the changing circumstances of the borrower or the bank.

Loan Ratio

The ratio of the principal amount of the loan to the lending value of the property.

Home Equity

The difference between the price for which a home could be sold (market value) and the total debts registered against it.

Home Equity Line of Credit

A method of borrowing in which a homeowner may borrow against home equity as needed using a checkbook or credit card. It differs from a standard loan in that the borrowing may be done over a period of time, preventing excess borrowing and limiting interest costs.

Inspection

The examination of the house by a building inspector selected by the purchaser.

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