Real Estate Glossary

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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.

in-file credit report
An objective account, normally computer-generated, of credit and legal information
obtained from a credit repository.

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.

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."

installment
The regular periodic payment that a borrower agrees to make to a lender.

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

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

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.

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 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 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.

investment property
A property that is not occupied by the owner.

IRA (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.