Impact fees

Impact fees are fees that are collected from developers of new homes and are used to pay for schools, parks, and other facilities.  Impact fees are assessed by municipalities and counties as a way to build revenue for necessary facilities that will accommodate a growing population for which such new homes are developed and built.  Impact fees vary widely among communities, depending upon factors such as the needs of the particular area, the size of the population and expected growth, and the like.  Developers pay the required impact fees, but distribute the cost among the prices for which they sell the homes to buyers who will ultimately make use of the amenities funded by those fees.

Implied warranty of habitability

An implied warranty of habitability is a warranty that is presumed by law to apply to new home construction.  An implied warranty is one that is not necessarily explicitly stated in writing in a housing contract, but which is by law required of a new home builder and the violation of which gives the home owner recourse against a builder before a court.  All new homes are assumed to be fit for habitation under an implied warranty of habitability, and are assumed to meet all applicable building codes.  In the event that such a warranty is violated by the builder, the home owner has a right to sue for any damages that he or she has suffered as a result.

Impounds

Impounds are portions of monthly mortgage payments that are placed in special separate account upon payment by the borrower.  The money in an impound account is used to pay for necessary expenses such as hazard insurance, property taxes, and private mortgage insurance, which are payable in addition to the regular monthly payment due towards the principal of a mortgage and applicable interest.  Impounds are used to ensure that the tax and insurance expenses are guaranteed to be paid, rather than leaving the responsibility for their direct payment to the borrower him- or herself.

In-file credit report

An in-file credit report is a computer-generated financial report that is drawn from credit repositories regarding a particular borrower of a mortgage or other loan.  In-file credit reports are generally regarded as objective histories of a borrower´s credit because they are drawn from repositories such as Experian, Equifax, TransUnion Corporation, or a combination of all three, which are in the business of collecting, organizing, and distributing to lenders upon request the true credit history of a loan applicant.  In-file credit reports are used by lenders to evaluate a borrower´s credit worthiness and the risk likely to be involved in issuing a mortgage to him or her. 

Income property

Income property is any parcel of real property that is not occupied by the owner of the title to that property, but rather that is used to generate income for the owner, usually through rent paid by the tenants of the property.  In most cases, income property is treated by the owner as an investment; the owner makes an income by collecting rent payments from the occupants of the property, and is responsible for reporting that income on his or her income tax return.  In addition, the owner/investor, although he or she is not an occupant of the property, is responsible for maintenance and repairs on the property and for payment of any applicable property taxes.

Incurable defect

An incurable defect is a defect in a parcel of real property that cannot be fixed.  Incurable defects may include such aspects of a property such as a location that is adjacent to a hazardous waste site, proximity to a noise- or pollution-generating facility, or physical defects in the property itself that would cost too much to repair relative to the value of the property.  A property with an incurable defect is likely to be more difficult to sell, and thus the list price for such a property is in many instances lower than a similar property without the existence of an incurable defect. 

Index

An index is a financial table that is used by lending institutions in order to calculate interest rates applicable to adjustable mortgages, which are mortgages that carry a lower interest rate near the beginning of the term of the loan with a gradual increase in the interest rate as the term of the loan progresses; and to Treasury bills, which are securities consisting of a negotiable debt obligation issued by the United States government, backed by its full faith and credit, and which are exempt from state and local taxes and have a maturity period of less than one year.

Individual Retirement Account

An individual retirement account (or IRA) is a tax-deferred savings account that allows an individual to accrue retirement funds.  IRAs may be issued by a bank, a brokerage, or a mutual fund.  Such a retirement plan allows a person to set some specified amount of money every year, which varies depending on a person´s age and the entity issuing the IRA, which is invested for growth of the total amount of funds in the account.  The earnings on such an account are tax-deferred during the time when the money remains in the account; tax does not apply to the money until withdraws begin upon retirement.

Infill development

Infill development refers to any significant new construction that occurs in an established area.  In infill development, a builder or developer constructs new residential or commercial buildings in an available space located in and among existing residential or commercial areas, taking advantage of the available space for additional development rather than expanding development beyond an already-developed area.  Infill development helps to protect green spaces and preserve natural resources that lie beyond urban or otherwise developed areas by limiting new development to within already-developed boundaries.

Infill housing

Infill housing refers to home construction that occurs in previously established areas, rather than in new developments that extend urban or otherwise developed areas out to undeveloped areas.  Development and construction of infill development is referred to as infill development, and is often used in an effort to protect green spaces and preserve natural resources that lie beyond urban or otherwise developed areas.  In some cases, developers and builders who are involved in the construction of infill housing are entitled to certain incentives because of the preservation benefits associated with infill housing, such as tax breaks.

Inflation

Inflation is an economic event that occurs when there is more money available for use than there are goods and services available to be purchased.  Inflation is usually measured by two indices, known as the Consumer Price Index and the Producer Price Index.  The Federal Reserve Board, a contingent of the United States Federal Government, actively tries to maintain a specific rate of inflation to protect workers and consumers; the rate is commonly between 2% and 3%, but changes with respect to various circumstances.    Mortgage rates, which are determined by the marketplace and the actions of the Federal Reserve Board and Wall Street, are sensitive to inflation fears.

Infrastructure

Infrastructure refers to the roads, schools, parks, utilities such as sewer and waste management systems, bridges, and communications systems in a particular community.  The various infrastructure elements are commonly referred to as civil infrastructure, municipal infrastructure, or public works, and they may be developed and operated either by the government or through the private sector.  Infrastructure allows for an organized structure and support for the city or area it serves.  Infrastructure may be operated and maintained by various sources of funding, including taxes levied on affected residents and state and federal monies.

Initial interest rate

An initial interest rate is the original interest rate applicable to an adjustable-rate mortgage.  With an adjustable-rate mortgage, the borrower pays installment payments on the loan to which a lower interest rate applies at the beginning of the term of the loan, with the applicable interest rate increasing over the term of the loan.  The low interest rate at the beginning of the loan term is referred to as the initial interest rate, and is often used by lending institutions as a way to entice potential borrower to apply for a loan through that particular institution.

Inspection report

An inspection report is an examination by a professional home inspector of a home, including its exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathrooms, other interior elements, roofing, and any additional buildings, such as garages or sheds, that are sold as part of the property in a single real estate transaction.  An inspection report includes descriptions of the condition of the various aspects of the home, and highlights for the potential buyer any problems, from minor cosmetic defects to major issues such as safety hazards.  In many cases, a contract for the purchase of real estate is contingent on a satisfactory home inspection report.

Installment contract

An installment contract is an agreement for the purchase of real property in which the buyer does not receive title to the property until all installments toward the amount of money borrower through a mortgage are paid.  Installments are usually timed to occur on a monthly basis, although alternative payment schedules may be agreed to between the property purchaser and the mortgage issuer in some circumstances.  The buyer of the property is entitled to occupy and use the property, but legal title resides with the mortgage company until the loan has been repaid in full by the borrower.

Insulation

Insulation refers to any materials that are installed in a home in order to slow the loss of heated or cooled air from the home´s interior through the walls out to the exterior.  Commonly used insulation materials include: cellulose, which is a plant-based material; glass fiber, made of thin strands of silica-based or other formulation glass; rock wool, which is made of thin natural rock fibers; polystyrene, which is a polymer that is derived from petroleum; and vermiculite, which is a natural, non-toxic mineral that expands when it is exposed to heat.

Insurable title

Insurable title is title to a parcel of real property that a company agrees to insure against defects and disputes.  Insurable title is usually transferred in real estate transactions in which no title insurance is being purchased by the property buyer.  Insurable title is not the same as marketable title; in other words, while insurable title guarantees that the buyer of a property is insured against the defects and disputes specifically laid out in the insurance contract, no guarantees are made beyond the contract, and other disputes or defects still have the potential to arise that render the title to the property unmarketable.

Insurance

Insurance is a policy, paid for by the insured party (or beneficiary) at a rate called a premium, established in a contract between the insured and the insurance provider, which obligates the insurance provider to pay compensation for specific damages resulting from occurrences and events that fall under the insurance policy.  Owners and buyers of real property can purchase various types of insurance.  Hazard insurance protects against damages from hazards such as fires, wind damage, storm damage, hail damage, and similar risks; insurance against specific, geography-sensitive risks such as earthquakes or floods; and personal property insurance, which covers personal property located on a real property from theft.

Insurance binder

An insurance binder is a temporary insurance arrangement that is put in force until a permanent policy can be obtained.  Insurance binders provide immediate insurance coverage in the event that insurance is necessary at once but formalities, including contracts and other documents, have not yet been collected or organized.  An insurance binder provides insurance coverage for only a specific amount of time, established in the agreement for the binder, which may be written or oral.  Coverage by insurance binders varies, but is usually more limited than that offered by full, long-term insurance policies.

Interest

Interest is the fee which borrowers pay to obtain a loan.  Interest is calculated based on a percentage of the total loan amount, and varies from lender to lender and among types of loans based on an interest rate.  Interest is charged to a borrower for the privilege of using money that is not his or her own-the loan funds-in order to make a purchase, such as a home.  Interest may also vary over the course of a loan´s lifetime, as with an adjustable-rate mortgage, which carries a lower interest on payments made near the beginning of the term of the loan and higher interest on later payments.

Interest accrual rate

Interest accrual rate is the rate at which interest accrues on a mortgage.  The interest accrual rate is usually expressed as an annual percentage.  The interest accrual rate is in most cases used to calculate the monthly payments for which a loan borrower will be responsible.  However, interest accrual rate is not used to calculate payments when the loan in question is an adjustable-rate mortgage, because in an adjustable-rate mortgage situation, the interest rate varies periodically and the amount of variation is subject to limitations in amount and frequency (called caps).

Interest rate

An interest rate is the sum, expressed as a percentage, which is charged by a lending institution to a borrower for the issuance of a loan.  Interest payments on most home loans are tax-deductible, which means that the amount paid by a home owner in interest on his or her loan can be reported as an amount to offset total taxes due.  An interest rate may be fixed, which means that the same interest rate applies to the loan over the entire term of the loan, or adjustable, in which case early payments by the borrower usually involve lower interest rates which increase gradually over the term of the loan.

Interest rate buy-down plans

An interest rate buy-down plan is an arrangement in which a seller of real property is willing to advance some funds from the sale of his or her property in order to buy down the interest rate associated with a buyer´s mortgage and thereby reduce the buyer´s monthly obligation.  Interest rate buy-down plans are typically used in situations where a buyer is short on cash; a seller may be amenable to such an arrangement because he or she desires to sell the property quickly and the only way the prospective buyer could participate in the real estate transaction would be if the interest rate on his or her mortgage was lowered.

Interest rate caps

An interest rate cap is a limit on the amount of interest that can be charged to the monthly payment of an adjustable-rate mortgage during an adjustment period.  Interest rate caps are imposed by law in an effort to protect borrowers against unreasonable methods of interest rate increase or predatory lending practices.  Interest rate caps may be applied to the amount by which an interest rate that is due can change each time, how much it can change over the entire life of the loan, and the frequency with which the interest rate can change.

Interest rate ceiling

An interest rate ceiling is the highest interest rate that a lender can charge for an adjustable-rate mortgage (ARM).  Adjustable rate mortgages usually are set up so that payments made by the borrower early in the term of the loan carry a lower interest rate, which gradually increases to a higher interest rate over the course of repayment of the loan.  To protect the borrower, the law imposes an interest rate ceiling on the interest rate that is applicable to the mortgage, which throughout the loan repayment period, with its attendant increases in applicable interest rate, is the maximum rate of interest that can be charged.

Interest-only loan

An interest-only loan is a loan in which the borrower is responsible initially for payment of only the interest that accrues on the loan balance each month, and not any payment towards the principal of the loan.  An interest-only loan may be an attractive option for a borrower who is short on cash at the time the repayment period on his or her loan begins.  However, because each payment goes completely toward interest, the outstanding balance of the principal of the loan does not decline with each payment, which in turn means that the borrower´s equity in his or her home or other purchase for which the loan funds are used does not increase.

Investment property

Investment property refers to any parcel of real estate that generates income for its owner.  Examples of investment property include apartment buildings, rental houses, or business property that is leased to an individual or entity for commercial purposes.  The income that a property owner generates from investment property, usually through rent paid by the tenants who reside on or use the property, must be reported on his or her income tax return.  In addition, the property owner, even though he or she is not an active occupant of the property, usually remains responsible for maintenance and repairs thereto and any applicable property taxes.