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Term Definition
Implied Warranty of Habitability
A legal doctrine that states that landlords must offer and maintain livable premises for their tenants. If a landlord does not provide habitable housing, tenants in most states may legally withhold rent or take other measures, including hiring someone to fix the problem or moving out.

Impound Account
See Escrow Account.

Improvements
Any additions to raw land, such as buildings, streets, sewers, etc. that will increase the property’s value.

Incidents of Ownership
Any control over property. If you give away property but keep an incident of ownership, then no gift has legally been made. For example, you may give away an apartment building but retain the right to receive rent form the property. This distinction can be important for those attempting to make large gifts to reduce your eventual estate tax.

Indemnify
To protect someone against damage or loss.

Index

The published cost of money that serves as the minimum basis to determine an adjustable rate mortgage’s interest rate. Indices such as the Prime Rate (Prime), the London Interbank Offering Rate (LIBOR), the Cost of Funds (COF) and the 1 year Treasury Bill (1 year T) are commonly used. The particular index is usually, but not always, selected based the frequency of adjustment to an interest rate. Loans that allow monthly interest rate adjustments often use the Prime Rate. Loans that adjust semi-annually may use LIBOR. The 1 year Treasury and the Cost of Funds are generally used for loans that adjust annually.

There are other Treasury instruments which can be used for 3 and 5 year adjustment periods. The loan’s interest rate is determined by adding a margin to the index. The size of the margin is generally a function of the index used and the credit worthiness of the borrower. Typical margins on a Prime Rate based loan are 0.0 to 5.0. As an example, if the Prime Rate is 8.25% and the margin is 2.0 (which is typical for an "average" borrower), the interest rate would be 10.25% (8.25 + 2.0).


Initial Note Rate
With regard to an adjustable rate mortgage, the note rate upon origination of the mortgage. This rate may be different from the fully indexed note rate.

Installment Contract
See Contract for Deed.

Installment Sale
The act of paying tax on the gain as the mortgage principal is collected. This occurs when a seller accepts a mortgage for part or all of the sale.

Insurance Binder
A document stating that temporary insurance is in effect. Since the coverage will expire by a certain date, a permanent policy must be obtained before the expiration date.

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

Inter Vivos
A Latin phrase meaning "during one's life."

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.

Interest Rate
The percentage of the loan amount that is charged for borrowing money; the cost of the money in a percentage.

Interest Rate Buydown Plan
The seller, lender, or borrower pays an initial lump sum, which will entitle the borrower to a reduced monthly payment during the first few years of a home loan. A permanent buydown is paid in the same way, but it reduces the interest rate over the entire life of a home loan.

Interim Financing
A loan that is used when the property owner is unwilling or not able to arrange permanent financing.

Internal Rate of Return (IRR).
Also viewed as a discount rate at which the net present value of an investment is zero. This metric takes into account both the timing and the magnitude of future cashflows produced by the property

Intestate
A person has left no valid will.

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