Bear Island Land Co., Inc.

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Dictionary of Terms



That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, and other items as they become due. Typically, a monthly mortgage payment has four components: principal, interest, taxes and insurance ("PITI"). The taxes and insurance portions represent property taxes and homeowner's insurance premium, respectively. These are often required by the lender to be included in a monthly payment since regular and timely payment of both of these obligations improves the lender's collateral position.
To insure; to secure against loss.
A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one, three, and five year US Treasury security yields, the monthly average interest rate on loans closed by saving and loan institutions, and the monthly average cost-of-funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down.
Interest Rate Cap
A limit on the amount the interest rate can increase. A periodic cap limits how much the rate can increase at each adjustment period. A lifetime cap limits how much the rate can increase during the term of the loan. Also called an interest rate ceiling.




Ely, Minnesota's most experienced Realtors, serving Buyers and Sellers in the Ely, MN area since 1995.