We hope this Glossary of Mortgage and Real Estate Terms helps you understand the home buying and financing process. Should you have any further questions, please do not hesitate to contact your Loan Officer for answers.

Additional Terms: # A B C D E F G H I J K L M N O P Q R S T U V W XYZ

I Terms

illiquid: An investment that cannot be quickly sold or converted to cash without incurring a significant loss. Real estate is generally an illiquid investment.

 

illiquidity: Inadequate cash to meet obligations.

 

Impact fees: Fees that must be paid by developers of new homes and subdivisions for town facilities such as schools and parks.

 

Implied Contract: A contract created by actions, but not necessarily written or spoken.

 

Implied Easement: Continued use of another's property  for a special purpose can develop into a permanent use if conditions are met.  Also called an easement by prescription.

 

Implied Warranty: A warranty that is not written but exists under the law versus an expressed warranty.

 

Implied Warranty of Habitability: A legal doctrine that all new homes are assumed to meet building codes and are fit for habitation.

 

Impound account: Also called an esrow account. An account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insur- ance.The lender disburses impound account funds on behalf of the borrower when they become due.

 

Improved Land: Land that has been developed for use and has had installation of such utilities as water, sewer, roads, and building structures. These improvements increase the raw land's usability, thereby increasing its market value.

 

Improvements: Any permanent structures to land such as buildings, fences and driveways, as well as landscaping, drainage, utilities, etc.

 

Imputed Interest: A mortgage that states an insufficient interest rate, the law will impunte that the rate is higher and the principal is less.

 

Inchoate: Unfinished. Begun but not completed. In real estate, this can apply to dower or curtesy rights prior to the death of spouse.

 

Income: The money or other benefit coming from the use of property, skill, or business.

 

Income Approach: A method of establishing market value by using rental income as a factor for calculating value.

 

Income Property: Real estate property that generates rental income.

 

Income Stream: A regular and continuing flow of money generated by a business or investment.

 

Incompetent: One not legally capable of completing a contract. This includes the mentally ill, minors, and others considered incapable.

 

Incorporate: 1) To form a corporation under regulations provided by the Secretary of State in a jurisdiction. 2) To provide a geographic area the legal status of a political subdivision of the state.  

 

Incorporeal Property: Legal interests in real property that does not entail the right of possession. Also see easement and license. 

 

Incurable Depreciation: A defect that cannot be cured or that is not financially practical to cure; a defect in the core structure of a building.

 

Indemnify: 1) To protect another person against loss or damage. 2) To compensate a party for loss or damage.  

 

Indenture: A written agreement made between two or more persons having different interests. 

 

Independent Contractor: A contractor who is self-employed. 

 

Index: 1) Measurement used by lenders in a market to determine changes in an accrual rate. This can be based on a published, independent measure of current interest rates, such as a Treasury Bill. An index must be readily verifiable by the borrower and beyond the control of the lender. It provides a guideline that should accurately reflect the current cost of lending money. 2) A measure of prevailing market interest rates. The index is used with the margin to determine a new interest rate at the time of adjustment. If the index increases, the interest rate increases unless an interest rate cap is reached. Often, these interest rates are the rates for U.S. Treasury securities. Treasury securities have become popular as indexes because they are easy to monitor and reflect economic conditions accurately.

 

Indexed Loan: A long-term loan in which the term, payment, interest rate. or principal amount may be adjusted periodically according to a specific index. The index and the manner of adjustment is stated in the loan contract.

 

Index Lease: A rental agreement that requires changes in rent based on a published record of cost changes. Also see cost of living index

 

Industrial Park: An area designed and zoned for manufacturing and associated activities.

 

Industrial Property: A property used for industrial purposes, such as manufacturing, factories, warehousing.

 

Inheritance Tax: A tax based on property value, imposed in some states on those who acquire property from a decedent. Compare to estate tax. 

 

Initial Interest Rate: The beginning interest rate at the start of an adjustable-rate mortgage (ARM). It may be lower than the fully indexed rate or "going market rate" and it will remain constant until it is adjusted up or down on the adjustment date.

 

Injunction: An order issued under the seal of a court to restrain one or more parties to a legal proceeding, from performing an act deemed inequitable to another party or parties.

 

Inner City: Generally the older and more urbanized area of a large city surrounding the central business district. The term often refers residents and a high proportion of minority racial and ethnic residents and a high proportion of minority racial and ethnic groups. 

 

In Rem: Latin for "against the thing."  A proceeding against the property directly, as distinguished from a proceeding against a person (used in taking land for nonpayment of taxes, etc.)

 

Inside Lot: In a subdivision, a lot surrounded on each side by other lots, as opposed to a corner lot, which has road frontage on at least 2 sides of the property. 

 

Inspection: A physical scrutinizing review of property or of documents.

 

Installments: Parts of the same debt, payable at successive periods as agreed; payments made to reduce a mortgage. 

 

Installment Contract: Same as land contract. 

 

Installment Sale: When a seller accepts a mortgage for part of the sale, the tax on the gain is paid as the mortgage principal is collected. Also see contract price, gross profit ratio, imputed interest.

 

Institute of Real Estate Management (IREM): A professional organization of property managers. Affiliated with National Association of Realtors®. IREM publishes the Journal of Property Management. 

 

Institutional Lender: A financial institution that invests its own funds or funds it is managing in real estate. For example, mutual savings banks, life insurance companies, commercial banks, pension and trust funds, and savings and loan associations.   Some organizations, such as savings and loan associations and commercial banks, originate loans directly; others, such as insurance companies, lend through mortgage brokers. 

 

Instrument: A written legal document, created to establish the rights and liabilities of the parties to it.  Such as a deed, mortgage, land contract, lease, and an assignment.

 

Insurable Interest: An interest in a person or property that would cause one a loss if that person or property were injured.  For example, hazard insurance is required on a property with a mortgage as the mortgagee has an insurable interest in the property should it be destroyed by a fire.

 

Insurable Title: Title to real property that can be insured by a title insurance company.

 

Insurance Coverage: The total amount and type of insurance carried.

 

Insurance (Mortgage) (MI): A type of insurance, that will indemnify the lender in case of foreclosure of the loan. Indemnification is generally limited to losses suffered by the lender in the foreclosure process.  An FHA loan is a loan that carries FHA mortgage insurance government) versus a conforming loan that has less than 20% equity and has private mortgage insurance.  Often called PMI, the true name is MI as PMI the name of an MI company.

 

Insured Loan: A loan insured by the Federal Housing Administration (FHA) or a private mortgage guaranty insurance company.

 

Intangible Value: Value that cannot be neither be seen or touched.  The goodwill of an established business is an intangible value. 

 

Interest: 1) The cost of borrowing money. It is usually expressed as an annual rate, or as a percentage. For example, the interest rate might be 10%. If a person borrowed $10,000 and agrees to pay it in full at the end of one year, the interest will be $1,000. 2) A right, share or title in property. 3) A general term meaning partial or total right to a property. An interest in real estate might be a right, such as an easement, a lease or partial or full ownership.

 

Interest Only Loan: A loan in which only the interest is payable at regular intervals until loan maturity, when the full loan balance is due.  An interest only loan does not amortize and no principle payments are required. 

 

Interest Rate: 1) The percentage of an amount of money, which is paid for its use for a specified time; usually expressed as an annual rate or as a percentage. 2) The rate of return on an investment.

 

Interim Financing: A loan, includes construction loans and bridge loans, used when the owner is unable or unwilling to arrange permanent financing. Generally for interim financing is less than a year. 

 

Internal Rate of Return (IRR): The true annual rate of earnings on an investment.  Equates the value of cash returns with cash invested. IRR takes into account compound interest factors.

 

Internal Revenue Code: The law, passed by Congress, that specifies how and what income is to be taxed and what may be deducted from taxable income. 

 

Internal Revenue Service (IRS): An agency of the federal government that is responsible for the administration and collection of federal income taxes. The IRS prints and distributes tax forms and audits tax returns.

 

International Association of Assessing Officers (IAAO): A professional organization of property tax assessors. IAAO awards the designation of Certified Assessment Evaluator (CAE) and publishes the Assessor's Journal. 

 

International Right of Way Association (IRWA): An association that offers courses covering various phases of right-of-way work. Educational curriculum includes law, engineering, appraisals. 

 

Interstate Land Sales Act: A federal law administered by the Department of Housing and Urban Development (HUD), which requires certain disclosures and advertising procedures when land is marketed and sold to purchasers in other states. 

 

Inter Vivos: Latin for "during one's life". 

 

Intestate: The act of having no valid will, or a person who dies leaving no will or leaving a will that is defective. Property goes to the legal heirs of the intestate. 

 

Inverse Condemnation: A legal procedure to obtain compensation when a property interest has been taken or diminished value by a government activity or action. 

 

Investment Analysis: A study of the predicated return from a proposed real estate investment with the objective of evaluating the amount an investor may pay for it; the investment's suitability to that investor, or the feasibility of a proposed real estate development.  Appraised value is based on a synthesis of people in the market whereas investment analysis is based on the value to a specific investor. There are various methods of investment analysis, including: cash return; payback period; internal rate of return, and net present value.

 

Investment Life Cycle: The time span from the acquisition of a investment to final disposition. 

 

Investor: 1) In mortgage lending, the holder of a mortgage, or a permanent lender for whom the mortgage banker services the loan. 2) A purchaser, owner, or mortgage for a property that is not a primary residence, but is held for income. 

 

Involuntary Conversion: Condemnation or sudden destruction of a property by nature. 

 

Involuntary Lien: A lien imposed against property without consent of the owner such as unpaid taxes, special assessments, etc., versus a voluntary lien such as a mortgage lien. 

 

Irrevocable: Incapable of being recalled or revoked; unchangeable.