Glossary of Real Estate Terms I-L
Improved land – Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.
Improvements – Any item added to vacant land with the intent of increasing its value or usability.
Income Property – Real estate developed or purchased to produce income, such as a rental unit.
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 U.S. 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 on the maximum or minimum interest rate that may be charged on the mortgage, stated in the note.
Individual Retirement Account (IRA)- A tax deferred plan that can help you build a retirement nest egg.
Individual/Corporation – An in-plant index of matters affecting persons or companies which cannot be entered on Lot Books because no specific properties are mentioned. Individual/Corporation. An in-plant index of matters affecting persons or companies which cannot be entered on Lot Books because no specific properties are mentioned.
Inflation – An increase in prices.
Initial Interest Rate – The original interest rate for an adjustable rate mortgage (ARM). Sometimes known as the “start rate.”
Inquiry – A request for a copy of your credit report by a lender or other business, often when you fill out a credit application and/or request more credit. Too many inquiries on a credit report can hurt your credit score; however, most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time.
Installment – The regular periodic payment that a borrower agrees to make to a lender.
Installment Debt – A loan that is repaid in accordance with a schedule of payments for a specified term (such as an automobile loan).
Interest Accrual Rate – The percentage rate at which interest accumulates or increases on a mortgage loan.
Interest rate – A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.
Interest Rate Cap – For an adjustable rate mortgage (ARM), a limitation on the amount the interest rate can change per adjustment or over the lifetime of the loan, as stated in the note.
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 purchased to generate rental income, tax benefits, or profitable resale rather than to serve as the borrower’s primary residence. Contrast with “second home.”
J
Johnson vs. Davis – The landmark 1985 Florida Supreme Court case that holds that where a seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.
Joint Tenancy with Right of Survivorship (JTWROS)- (1) unity of possession (joint ownership and control); (2) unity of interest (the interests must be identical – i.e. Each party has the same percentage interest as the others); (3) unity of title (the interests must have originated in the same instrument – i.e. They must take title on the same instrument); (4) unity of time (the interests must have commenced simultaneously – i.e. Must take title at the same time); and (5) survivorship. See, BEAL BANK, SSB, v. ALMAND AND ASSOCIATES, 780 So.2d 45 (Fla. 2001). If a co-owner of property titled as joint tenants with right of survivorship breaks one of the unities creating that form of ownership, such as a conveyance to a third party, the property loses its survivorship status as to that portion and defaults as being held as tenancy in common. See, KOZACIK V. KOZACIK, 157 Fla. 597, 26 So. 2d 659 (1946).
Judgment – A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.
Judgment Lien – A lien on the property of a debtor resulting from the decree of a court. See, Fla. Stat. §55.10
Judicial foreclosure – A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. Other states use non-judicial foreclosure.
Jumbo Loan – A loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits; also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
Junior Mortgage – A loan that is subordinate to the primary loan or first lien mortgage loan, such as a second or third mortgage.
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Keogh Funds – A tax deferred retirement savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax deductible.
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Late Charge – A penalty imposed by the lender when a borrower fails to make a scheduled payment on time.
Latent defect – A hidden defect, one that is not readily discoverable by mere observation. In the famous case of Johnson v. Davis, it was held that sellers and their real estate agents must disclose known material latent defects concerning the property to prospective purchasers.
Lease (agreement)- A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.
Lease Purchase Option – An option sometimes used by sellers to rent a property to a consumer, who has the option to buy the home within a specified period of time. Typically, part of each rental payment is put aside for the purpose of accumulating funds to pay the down payment and closing costs.
Legal description – The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.
Lender – The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.
Lender’s Title Insurance Policy – Prior to bank lending Buyer/Borrower money to buy that property they want to make sure whomever sells you the property actually owns the property, that there aren’t any superior claims, outstanding judgments, liens, or other title defects that could cause the property to be ripped away. So as a condition of giving you that loan, Lenders will require a Lender’s Title Insurance Policy to protect themselves.
Letter of explanation – A written statement which explains the reason(s) why any derogatory or negative credit action such as late payments, collections, judgments, charge-offs or bankruptcy have occurred over time.
Liabilities – A person’s debts and other financial obligations.
Liability Insurance – Insurance coverage that protects property owners against claims of negligence, personal injury or property damage to another party.
LIBOR Index – An index used to deter mine interest rate changes for certain adjustable rate mortgage (ARM) plans, based on the average interest rate at which international banks lend to or borrow funds from the London Interbank Market.
Lien – A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.
Lifetime Cap – For an adjustable rate mortgage (ARM), a limit on the amount that the interest rate or monthly payment can increase or decrease over the life of the loan.
Liquid Asset – A cash asset or an asset that is easily converted into cash.
Listing Agent – The real estate agent that represents the seller. Listing agents list homes for sale on the regional Multiple Listing Service (MLS).
Loan – Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.
Loan Origination – The process by which a loan is made, which may include taking a loan application, processing and underwriting the application, and closing the loan.
Loan Origination Fees – Fees paid to your mortgage lender or broker for processing the mortgage application. This fee is usually in the form of points. One point equals one percent of the mortgage amount.
Loan To Value (LTV) Ratio – A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is approved, the loan generally costs the borrower more to borrow. Additionally, a loan with a high LTV ratio may require the borrower to purchase mortgage insurance to offset the risk to the lender. The LTV ratio is calculated as the amount of the mortgage lien divided by the appraised value of the property, expressed as a percentage. For example, a borrower taking on a $92,500 mortgage to purchase a home appraised at $100,000 would have an LTV ratio of 92.50% (92,500/100,000).
Lock In Rate – A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.
Low Down Payment Feature – A feature of some mortgages, usually fixed rate mortgages, that helps you buy a home with a low down payment.