Glossary of Mortgage Terms
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IMPLIED CONTRACT:
An agreement which is not reduced to writing but is created,
under the common law, on the basis of the behavior of the
parties which suggests that they are acting under an
agreement.
IMPLIED WARRANTY:
A guarantee of the condition of a thing or the truth of a
statement which is created as a result of the actions of a
party but not written down.
IMPOUND:
The portion of a borrower's periodic payment on a loan that
is collected to pay for items other than principal, interest
or penalties (such as realty taxes, insurance premiums,
etc.).
IMPOUND ACCOUNT:
The trust account held by a lender into which payments for
insurance, taxes, etc., paid by the borrower are placed
prior to being disbursed by the lender.
IMPROVED LAND:
Also known as "developed land". Opposite of "raw or vacant
land". Land which someone has, by dint of their labor, taken
out of the state of nature.
IMPROVEMENTS:
Things added to vacant land with the view to increasing its
usefulness and value, such as buildings, parking areas,
drainage works, etc.
IMPROVEMENT RATIO:
A comparison of the value of the improvements of a property
with the value of the property without the improvements.
IMPUTED INTEREST:
Interest which is deemed to have been charged on a loan by a
court.
IN REM:
Latin term meaning "Against the thing." Used to describe a
legal action which is taken against land rather than against
the land owner, such as a bank's foreclosure on a defaulted
mortgage.
INCHOATE:
Describes something that has been begun but never completed
or a right that has arisen but is not yet enforceable (such
as Dower rights).
INCOME APPROACH:
An appraisal technique whereby the potential of the property
to produce income is used to assess its value.
INCOME PROPERTY:
A property which is owned or developed specifically to
produce income for its owner.
INCOMPETENT:
Not capable, usually in the mental sense. When referring to
a contract or will, a person who is not legally capable of
signing and being bound to such a document.
INCORPOREAL PROPERTY:
Real estate in which a person has a legal interest but no
right of possession and occupation.
INCURABLE DEPRECIATION:
The presence of a defect in an asset (i.e. a building) which
is too costly to fix.
INDEMNIFY:
To take responsibility for the losses and damages suffered
by another person.
INDEMNITY:
A document in which one party agrees to take responsibility
for the losses and damages suffered by another party or
parties.
INDENTURE:
Similar to a contract. An agreement between two or more
parties, often referring to land.
INDEPENDENT APPRAISAL:
An estimate of the value of a property prepared by someone
who has no interest in the property or, if a mortgage is
involved, in the lender.
INDEPENDENT CONTRACTOR:
A legal term for a person who is hired to do work for
another person but who is not an employee or agent of that
person. The hiring person is not responsible for the actions
of the Independent Contractor nor does she owe that
Independent Contractor the same legal duties owed by an
Employer to an Employee under labor and employment laws.
INDEX:
Any rate published by an independent third party (the
government, the federal bank, etc.) which serves as the base
for calculating a variable item in a contract. (A Variable
or Adjustable Rate Mortgage may use the Federal Bank's
monthly prime interest rate as the index for the interest
charged under that mortgage).
INDEXED LEASE:
A rental agreement where the amount of the rent to be paid
changes in accordance with changes in a specified index
(i.e. the cost of living index).
INDEXED LOAN:
Any loan whose interest rate is adjusted in accordance with
a rate published by an independent third party (an "index").
INDIRECT COSTS:
Also known as "soft costs", those costs which are not
automatically considered in a construction project.
INDUSTRIAL PARK:
A parcel of land specifically developed to provide lots for
industrial activities.
INDUSTRIAL PROPERTY:
A plot of land used for a factory or other industrial use.
INFRASTRUCTURE:
Term for the public-use improvements made to an area such as
sewers, roads, bridges, and public utility installations.
INGRESS:
The right to enter over a parcel of land not owned by you
but not to occupy the land.
INHERITANCE TAX:
An assessment payable to a level of government based on the
value of assets inherited.
INITIAL INTEREST RATE:
The rate chargeable on a mortgage on the day it is signed.
INITIAL RATE PERIOD:
The period of time for which the "initial interest rate" is
guaranteed on a Variable or Adjustable Rate mortgage before
it begins to change according to its "index".
INJUNCTION:
An order of a court to stop a party from committing the act
specified in the order.
INNER CITY:
A slang term for the older, central residential area of a
municipality which, in many cases, has deteriorated into
poverty.
INSIDE LOT:
Term for a property that is not on a corner at the
intersection of two roads.
INSPECTION:
A physical examination of a person, document or other thing,
such as a home.
INSPECTOR:
Any person charged with the task of making a physical
examination of a person, document or other thing. Could be
employed by a government body (i.e. an electrical inspector,
fire inspector) or by a potential purchaser (a home
inspector).
INSTALLMENT:
A regular periodic payment.
INSTALLMENT CONTRACT:
Same as land contract.
INSTALLMENT LOAN:
A loan which is paid back in periodic payments.
INSTALLMENT SALE:
The sale of a property with the Vendor taking back a
mortgage from the purchaser and paying the taxes on the sale
proceeds as they are collected.
INSTITUTIONAL LENDER:
An accredited financial organization (i.e. a bank, trust
company, credit union, etc.) which offers loans.
INSTITUTIONAL MORTGAGE:
A loan secured against real property offered to the land
owner by a bank, credit union, trust company or other
accredited financial organization. Opposite of "private
mortgage".
INSTRUMENT:
A legal document in written form setting out certain rights
of parties to it.
INSURABLE INTEREST:
A legal right to a property which results in the holder of
that right suffering damages in the event of the destruction
of the property.
INSURABLE TITLE:
Ownership of land which a Title Insurance Company is willing
to insure.
INSURABLE VALUE:
The cost of replacement of all improvements to a property
which could conceivably be destroyed.
INSURANCE:
A contract in which one party agrees to compensate another
party for any losses or damages caused by risks identified
in the contract in exchange for the payment of a lump sum or
periodic amounts of money to the first party.
INSURANCE BINDER:
Written evidence that insurance is in effect with regard to
the property and the risks set out in the binder. Temporary
in nature, the binder assures coverage until permanent
coverage can be arranged.
INSURANCE COVERAGE:
Term to describe the monetary limits and risks covered as
set out in a contract or policy of insurance.
INSURED CLOSING LETTER:
A promise by a Title Insurance Company to a lender to pay
for all costs and losses to the lender which might result
from the actions of the Company's closing agent while
closing a transaction.
INSURED MORTGAGE:
A loan secured against land for which an insurance policy
exists promising to compensate the lender for all losses and
costs resulting from the borrower's failure to meet her
obligations under the loan agreement.
INTER VIVOS:
Latin meaning "during life". Used to describe a gift made
during a person's lifetime (as opposed to a bequest in a
will) or a trust.
INTEREST:
1. A person's legal right to an asset or property.
2. The cost of borrowing money, charged as a percentage of
the outstanding amount owed.
INTEREST ADJUSTMENT DATE:
The date upon which the borrower is required to pay accrued
interest on the borrowed principal under a mortgage, which
date falls one full payment interval before the first
payment date as set out in the agreement. For example, if a
mortgage is advanced on May 15 to be paid on the first day
of each month, June 1 would be the interest adjustment date
and July 1 the first payment date. On June 1, the borrower
would be required to pay the interest that has accrued on
the principal since the date of the advance (May 15).
INTEREST ACCRUAL RATE:
The rate, stated as a percentage, at which interest
accumulates on a mortgage.
INTEREST PAYMENT:
The portion of each periodic payment on a loan, expressed in
dollars, which is allocated toward accrued interest.
INTEREST RATE ADJUSTMENT PERIOD:
The length of time between changes in interest rate on an
Adjustable or Variable Rate Mortgage.
INTEREST RATE BUY DOWN PLAN:
A method of reducing the effective interest charged to a
borrower. A third party (often a vendor) deposits a lump sum
into an account, portions of which are then used to reduce
the amount required from the borrower for each periodic
payment over a set period of time.
INTEREST RATE CAP:
A clause in an Adjustable or Variable Rate Mortgage which
limits the change in the interest rate charged. May limit
change within a single adjustment period or over the life of
the mortgage.
INTEREST RATE CEILING:
The highest rate of interest chargeable under a Variable or
Adjustable Rate Mortgage, as set out in the mortgage
contract.
INTEREST RATE FLOOR:
The lowest rate of interest chargeable under a Variable or
Adjustable Rate Mortgage, as set out in the mortgage
contract.
INTEREST-ONLY LOAN:
A debt for which the periodic payments are enough to pay
only the interest which accumulates on the principal over
the payment period. Principal is due at maturity.
INTERIM FINANCING:
1. A construction loan to pay for costs up to completion;
2. Another name for a bridge loan, a short-term loan
designed to cover a gap of time between the purchase of a
new home and the sale of the old when equity becomes
available.
INTERNATIONAL ARCHITECTURE:
Simple style of house, with little or no ornamentation.
INTERSTATE LAND SALES ACT:
Federal law administered by HUD regulating the practice of
the sale of land between people in different states.
INTERVAL OWNERSHIP:
Where title in a property is shared among a group of people,
each of whom is entitled to occupation of the property for a
specified period of time each year. Also known as "time-sharing"
INTESTATE:
1. A person who dies without leaving a will.
2. A description of having died without leaving a will.
INVERSE CONDEMNATION:
A court remedy for a private land owner whose interest or
ownership in land has been interfered with or taken away
outright by a governmental body.
INVESTMENT PROPERTY:
A piece of real estate that is owned for the purposes of
financial gain, either through appreciation in value or
through income from the property.
INVOLUNTARY CONVERSION:
Loss of land through natural forces or through government
action.
INVOLUNTARY LIEN:
A claim registered against a property without the consent
(and sometimes without the knowledge of) the owner of the
land.
IRREVOCABILITY DATE:
Time and day specified in an offer until which the offeror
may not retract the offer, until which the offeree may
accept the offer.
IRREVOCABLE:
Unchangeable. Not able to be recalled.
ITALIAN VILLA:
A large, two- or three-story house in the Latin style, with
overhanging eaves and masonry construction.
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