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Real Estate Glossary

Real Estate Glossary
Glossary of real estate terms

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There are 40 entries in the glossary.
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Term	Definition
Impound account	See Escrow.

Improvement	Anything done to a house that increases its value, such as adding a sun porch or modernizing the kitchen.

In-File Credit Report	An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

Income approach	A valuation method that capitalizes or converts the current benefits of the property into an estimated value.

Income capitalization	A way to determine the market value of an income-producing property by approach converting its future income stream into a single capital value.

Income Property	Real estate developed or improved to produce income.

Index	A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. This interest rate is subject to any caps that are associated with the mortgage.

Index Lease	A lease in which the rental amount adjusts according to changes in a price index, commonly the consumer price index.

Individual Retirement Account	A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds.

Industrial revenue bond	Bonds issued to raise funds for developing commercial buildings for lease or industrial parks.

Inflation	An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.

Ingress	A means of entry to a property. (See egress.)

Initial Interest Rate	The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as "start rate" or "teaser."

Inspection	When a house is remodeled or rehabbed it must be inspected by an inspector from the local government to be sure all work is done properly.

Installment	The regular periodic payment that a borrower agrees to make to a lender. The regular periodic payment that a borrower agrees to make to a lender. The installment is more often referred to as your monthly mortgage payment. Installments, or monthly payments, can be made either monthly or biweekly, depending on your mortgage type. Your approved lender may also offer additional payment plans tailored to fit your needs.

Installment debt	Debts or accounts that are paid off in monthly payments, or install-ments, such as credit-card accounts.

Installment Loan	Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.

Installment sale contract (land contract	A contract in which a seller of real estate promises to deliver a deed to the buyer at some time in the future after the buyer has, in an agreed upon num ber of payments of principal and interest, paid the purchase price in full.

Insurable interest	A person's interest in property such that an occurrence of a peril would cause financial loss to that person.

Insurable Title	A property title that a title insurance company agrees to insure against defects and disputes.

Insurable value	The value of the portions of the property that are physically destructible.

Insurance	A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

Insurance Binder	A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Insured Mortgage	A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.

Interest	The fee charged for borrowing money. Simply put, this is the fee that is charged for borrowing money from lenders. The interest rate is the rate of interest that is in effect when the monthly payment is due. An interest rate ceiling for an adjustable-rate mortgage (ARM) is the maximum interest rate, as specified in the mortgage note; the interest rate floor is the minimum interest rate, as specified in the mortgage note.

Interest Accrual Rate	The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.

Interest escalation clause	Provides for variable rate of interest according to a standard index.

Interest Rate	The rate of interest in effect for the monthly payment due.

Interest Rate Buydown Plan	An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specified period, the mortgagor's effective interest rate is "bought down" below the actual interest rate.

Interest rate cap	A provision of an ARM limiting how much interest rates may increase or decrease per adjustment period or over the life of a mortgage. See also Lifetime cap.

Interest Rate Ceiling	For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

Interest Rate Floor	For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

Interest Rate for HECMs	The interest rate on a Home Equity Conversion Mortgage (HECM) adjusts monthly or yearly. It is tied to the weekly average yield of U.S. Treasury securities adjusted to a constant maturity of one year. The interest charged on the HECM loan will be payable to your lender when the loan terminates.

Interest-only loan	A method of loan amortization in which interest is paid periodicaly over the term of the loan and the entire original loan amount is paid at maturity.

Internal Rate of Return (IRR)	The percentage rate earned on each dollar that remains in an investment each year. The IRR of an investment is the discount rate at which the sum of the present value of future cash flows equals the initial cap ital investment.

Intestate	Without a last will and testament.

Investment	An item, such as a house, on which money is spent in the hope of getting money or other benefits back in return.

Investment Property	A property that is not occupied by the owner.

Investment value	The value to a specific investor, based on that investor's requirements, tax rate, financing, etc.

Involuntary lien	A lien such as taxes or mechanic's lien imposed without consent of the property owner.

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