A
- ARM Flag: ARM stands for Adjustable Rate Mortgage, which is a type of home loan with an interest rate that can change over time. ARM Flag is used to identify if a buyer chooses to finance an ARM option for purchasing a property.
- ARM Flag for Refinancing: ARM stands for Adjustable Rate Mortgage, which is a type of home loan with an interest rate that can change over time. ARM Flag is used to identify if a buyer chooses to finance an ARM option for refinancing a property.
- ARM Index: ARM index is an interest rate that fluctuates periodically based on general market conditions for an adjustable-rate mortgage.
- ARM Margin: The ARM margin is a fixed percentage rate that is added to an indexed (variable) rate to determine the fully indexed interest rate of an adjustable-rate mortgage (ARM).
- Adjustable Rate Mortgage (ARM): Adjustable-rate mortgage (ARM) is a type of home loan where the interest rate can change periodically over the life of the loan, typically in response to changes in a financial index or benchmark. This means the monthly payment for the loan can increase or decrease depending on the interest rate adjustments.
- Advance Rate: An advance rate is the percentage of a property's value that a lender is willing to extend as a loan. It's a key factor in determining how much a borrower can borrow and the interest rate they'll receive
- Application Fee: An application fee is a non-refundable charge required to process an application, eg Loan Application, Lease Application. Application fees cover the time and cost of gathering information about the applican
- Appraisal Fee: An appraisal fee is the cost to have a professional evaluate the market value of a property. Appraisal fees can vary depending on the property's size, condition, and location
B
- Balloon Payment: A balloon payment on a mortgage is a large, one-time payment at the end of the loan term. If you have a mortgage with a balloon payment, your payments may be lower in the years before the balloon payment is due, but you could owe a big amount at the end of your loan
- Brokerage/Real Estate Agency: brokerage refers to a business or company that facilitates the buying, selling, or leasing of real estate properties. It acts as an intermediary between buyers, sellers, landlords, and tenants, providing expertise and services to help clients complete transactions efficiently and legally.A real estate broker is a licensed professional who manages or owns a brokerage and may employ or oversee real estate agents.
C
- Cap Rate: Also referred as Net Cap Rate . In real estate, cap rate measures estimated rates of return for income-producing properties . Cap rates are calculated by dividing a property's net operating income ( Revenues - Expenses) by its current market value.
- Cap Rate Termination: The terminal capitalization rate, also known as the exit rate, is the rate used to estimate the resale value of a property at the end of the holding period.
- Capex Adjustment: Capital expenditure (CapEx) adjustment in real estate is the process of adjusting for depreciation when calculating the amount spent on a property's improvements. CapEx adjustments are important for creating accurate property management budgets and for understanding how much a property is worth
- Cash On Cash Yield: A cash-on-cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property
- Cash to Close: Cash to close refers to the total amount of money a home buyer needs to bring to the closing table to finalize the purchase of a property, including the down payment, closing costs, prepaid expenses like property taxes and homeowners insurance, and any other fees due at the time of closing; essentially, it's the entire sum needed to complete the transaction on closing day.
- Credit Report Fee: A credit report fee is a charge that a lender may impose to pull your credit report when you apply for a loan. Lenders use credit reports to assess your creditworthiness and determine your interest rate and loan amount
- Current ARM Index Rate: The current ARM index rate is the interest rate that is used to calculate the interest on an adjustable-rate mortgage (ARM). The index rate is a financial indicator that changes based on market conditions
- Current Index Rate: The current index rate in real estate is the most recent value of the interest rate that fluctuates based on market conditions. It's used to calculate the interest rate for adjustable-rate mortgages (ARMs)
D
- Deed: A real estate deed is a legal document that proves who owns a property and how the property is described. It's used to transfer ownership of a property from one person to another
- Deposit Including Earnest Money: A deposit including earnest money is a payment made to a seller by a buyer to show their commitment to purchase a property. It's also known as an earnest money deposit or good faith deposit. Earnest money deposits can be anywhere from 1–10% of the sales price, depending mostly on market interest.The specifics of whether the deposit is refundable or not should be clearly outlined in the purchase agreement.
- Discount Points: Discount points refers to a fee a homebuyer pays upfront to their lender at closing, essentially prepaying a portion of their mortgage interest, in exchange for a lower interest rate on the loan, effectively reducing their monthly mortgage payments; one point is typically equal to 1% of the loan amount
- Down Payment: A down payment is the initial payment made toward a home purchase. It's usually a percentage of the home's purchase price. Down payments are paid in cash at closing
E
- Escrow Homeowner's Insurance: Escrow Homeowners insurance is a savings account that holds money to pay for homeowners insurance premiums. Lenders often set up escrow accounts when a mortgage is closed
- Escrow Property Taxes: Escrow Property Taxes is a savings account that holds money to pay for homeowners property taxes. The funds are usually collected monthly and held in an escrow account until the taxes are due.
- Excess Deposit: An excess deposit in real estate is the amount of money left over after the real estate agent's commission is deducted from the buyer's deposit. The seller usually receives the excess deposit.
- Existing Loans Assumed: An assumable loan is a loan that allows a new buyer to take over, or assume, the existing loan obligations from the current owner of a property.
F
- FHA Mortgate: An FHA loan is a type of mortgage insured by the Federal Housing Administration (FHA), which is a government real estate agency within the U.S. Department of Housing and Urban Development (HUD). These loans are designed to help low-to-moderate-income borrowers who may not qualify for conventional loans due to lower credit scores or smaller down payments
- First Adjusted Interest Rate Cap: The initial interest rate cap is the maximum amount that an interest rate can increase during the first adjustment period of an adjustable-rate mortgage (ARM)
- Fixed Rate Mortgage: A fixed-rate mortgage is a type of home loan where the interest rate remains constant for the entire term of the loan. This means that your monthly principal and interest payments stay the same throughout the life of the loan, regardless of fluctuations in market interest rates
- Fixed Rate Period in Years: Fixed rate period in years refers to the length of time during which a borrower's mortgage interest rate remains the same, essentially meaning the number of years their monthly payment will stay consistent due to a fixed interest rate on their loan; this is typically associated with a fixed-rate mortgage where the rate stays the same for the entire loan term, which could be 15, 20, or 30 years depending on the chosen mortgage plan
G
- Gross Potential Rent: The maximum amount of rent a property could earn if it were fully occupied at current market rates. This figure that doesn't account for vacancies or discounts.. Gross Potential Rent = Rent Amount x 12 months
- Gross Yield: Gross yield is the total income which an investment property generates before subtracting costs. It is calculated as the annual revenues of the property (before taxes and expenses) divided by the current price of that property
H
- HOA: An HOA, or Homeowners Association, is an organization in a residential community that creates and enforces rules for the properties and residents that fall within its jurisdiction. Typically HOAs create and enforce rules to maintain uniformity and protect real estate prices.
- Home Warranty Fee: Home warranty fee refers to the cost a homeowner pays for a home warranty plan, which protects them against the cost of repairing major appliances and systems in their home if they break down; this fee is usually paid at the time of purchase and can sometimes be included in the closing costs of a real estate transaction
I
- IO Flag: IO in real estate stands for interest-only, which is a type of loan where the borrower only pays interest for a set period of time. IO Flag is used to identify if a buyer chooses to finance an IO option for purchasing a property.
- IO Flag for Refinancing: IO in real estate stands for interest-only, which is a type of loan where the borrower only pays interest for a set period of time. IO Flag is used to identify if a buyer chooses to finance an IO option for a refinancing a property.
- IO Term in Months for Refinancing: IO in real estate stands for interest-only, which is a type of loan where the borrower only pays interest for a set period of time. This is the period measured in months for refinancing a property
- IO Terms in Months: IO in real estate stands for interest-only, which is a type of loan where the borrower only pays interest for a set period of time. This is the period measured in months for purchasing a property
- Initial Gross Cap: The initial gross cap rate is a metric that estimates the potential return on investment for a property following its purchase. It's calculated by dividing the property's estimated gross income (annual rent) by its current market value at the time of purchase.
- Inspection: An inspection refers to a professional evaluation of a property's condition, typically conducted by a licensed home inspector. The inspection is a crucial step in the home-buying or selling process, as it provides a detailed assessment of the property's physical condition and identifies potential issues that may require repair or further attention.
- Interest Rate: If you are borrowing money, the interest rate (or lending rate) is the amount you are charged for doing so – shown as a percentage of the total amount of the loan
L
- Lender Credits: A lender credit is a way borrowers can get help from their lender for closing costs. In exchange, the borrower accepts a higher interest rate. Although they are paying less upfront, due to the higher interest rate, they typically have a higher monthly mortgage payment
- Lender's Title Insurance: Lender's title insurance is a type of insurance that protects a lender's investment in a property. It's typically required by lenders when a borrower takes out a mortgage.
- Levered Annual Net Cash Flow: Levered Annual Net cash flow measures the amount of cash an investment property produces after operating expenses such as taxes, insurance, repair/maintenance and debt service (financing expenses)
- Liability Insurance: Liability insurance in real estate is a type of coverage that protects property owners from financial responsibility if someone is injured or their property is damaged while on the insured property. It is often included as part of a homeowners insurance policy or a landlord insurance policy and is an essential safeguard against legal and financial risks.
- Lifetime Rate Cap: A lifetime rate cap is a limit on the highest interest rate that can be charged on an adjustable-rate mortgage (ARM) over the life of the loan. It's expressed as a percentage above the initial interest rate
- Lifetime Rate Floor: "Lifetime Rate Floor" generally refers to the minimum interest rate that can be applied over the life of an adjustable-rate mortgage (ARM) or a similar loan
- Listing: A real estate listing is a contract between a property owner and a real estate agent that allows the real estate agent to market and sell the property. The listing agreement is the basis for the information that appears in the listing.
- Loan Amount: The loan amount is the money you borrow to buy the home
M
- MLS: MLS stands for Multiple Listing Service, which is a database of properties for sale in a specific area. It's used by real estate brokers to: Find cooperative brokers, Exchange information about properties and appraisals, Establish contractual offers of cooperation and compensation, and Share information about properties with other brokers
- Misc Origination Fees: Loan Origination Fee covers the lender's administrative costs in processing the loan. It is a one-time fee, often expressed as a percentage of the loan. The origination fee is typically 1% of the loan, but remember, you can obtain a loan with no origination fee and a slightly higher interest rate
- Monthly Principal & Interest: In real estate, monthly principal and interest (P&I) is the amount of money paid toward the principal of a loan and the interest on that loan each month. It's the main component of a monthly mortgage payment
- Mortgage Insurance: Mortgage insurance is an insurance product that protects the lender if a borrower can't repay their loan. It's also known as private mortgage insurance (PMI).
- Mortgage Points: Mortgage points, also known as discount points, are fees a homebuyer pays directly to the lender (usually a bank) in exchange for a reduced interest rate on the buyer's home loan. This is also called “buying down the rate.
N
- NOI: Net operating income (NOI) is a key metric used to assess the profitability of a real estate property. It's calculated by subtracting a property's operating expenses from its total revenue
O
- Origination Fee: An origination fee is a charge a lender makes to a borrower for processing a mortgage loan. The fee compensates the lender for the costs of processing the application, underwriting, and funding the loan
P
- Pay off Amount: Payoff amount refers to the exact total sum of money needed to completely settle a mortgage loan on a property, including the remaining principal balance, accrued interest, and any outstanding fees, effectively making the loan fully paid off; it's the amount you would need to pay to your lender to completely clear the debt on your home
- Pay off First Mortgage Loan: Pay off First Mortgage Loan refers to completely settling the balance of the primary mortgage loan secured against a property.The first mortgage is the main loan taken out to purchase a property. It has the first lien position, meaning it has priority over other loans or liens on the property in case of default or foreclosure.Paying off the first mortgage means fully repaying the remaining balance, including any principal, interest, and fees, to the lender.
- Personal Property: Personal Property refers to items that are movable and not permanently attached to the land or a building. These items are distinct from real property, which includes land and anything affixed to it, like a house or other structures.
- Pre-Paid Homeowner's Insurance Premium: A pre-paid homeowner's insurance premium is a payment made in advance to cover the cost of homeowners insurance for the first year of ownership. It's a common prepaid cost when buying a home and is usually paid at closing
- Prepaid Interest Chares: Prepaid interest charges are charges due at closing for any daily interest that accrues on your loan between the date you close on your mortgage loan and the period covered by your first monthly mortgage payment.
- Prepaid Property Taxes: Prepaid Property Taxes refer to property taxes that have already been paid in advance by the current property owner for a period extending beyond the sale date of the property.During the closing process, prepaid property taxes are prorated between the seller and the buyer. The buyer reimburses the seller for the portion of taxes that apply to the time period after the sale (when the buyer owns the property).
- Prepayment Penalty: Prepayment Penalty is a fee charged by a lender if a borrower pays off their mortgage loan earlier than the agreed-upon term. This penalty compensates the lender for lost interest income that they would have earned over the full life of the loan.
- Projected Property Appreciation: Projected property appreciation means an estimated annual future increase rate in the market value of a property, based on current market trends and analysis, indicating how much a property is expected to appreciate in value over a specific period of time year over year.
- Projected Property Value: Projected Propert Value is “the estimated amount for which this property is expected to sell for at a future date.
- Property Insurance: Property insurance refers to a type of insurance policy that provides financial protection to property owners against damages or losses to their property due to covered risks. It is an essential part of homeownership and is often required by lenders as a condition of obtaining a mortgage. It protects the physical structure of the home (the dwelling) and, in some cases, other structures on the property, such as garages, fences, or sheds, from covered risks. It may cover the homeowner's personal items inside the home, like furniture, electronics, and clothing, in the event of theft, fire, or other covered perils.
- Property Management: Property management refers to the administration, operation, and oversight of a real estate property by a professional or a company. Property management services are typically used by property owners who do not have the time, expertise, or interest to handle the day-to-day operations of their real estate investments, such as rental properties.
R
- Rate Adjustment Frequency in Months: Rate adjustment frequency typically refers to the number of months between interest rate changes on an adjustable-rate mortgage (ARM), with the most common frequency being 12 months, meaning the rate adjusts once per year; however, some ARMs can adjust every 6 months, depending on the specific loan terms
- Rebates Or Credits Paid By The Seller: Rebates or Credits Paid by the Seller refer to financial concessions or incentives that the seller provides to the buyer as part of the transaction. These are commonly negotiated during the purchase process and are typically applied at closing.
- Recording Fees: Recording Fees refer to the costs charged by a local government (usually the county recorder's office) to officially document the transfer of ownership or other legal documents related to a property. These fees are typically paid at the time of closing during a real estate transaction.
- Refinancing Flag: Refinancing refers to the process of replacing an existing mortgage with a new one, typically with different terms. This can involve changing the loan amount, interest rate, loan term, or type of loan.Refinancing Flag is used to identify if a homeowner chooses to refinance a property or not.
- Rehab: Rehab refers to the process of renovating or improving a property to increase its value, make it livable, or prepare it for resale or rental. The term is short for "rehabilitation" and is commonly used in the context of real estate investing, house flipping, or fixing up distressed properties.
- Risk Spread: Risk Spread refers to the difference between the interest rate on a specific loan and a benchmark rate (such as a government bond yield or other low-risk investment). This spread reflects the additional compensation investors or lenders require for taking on higher levels of risk associated with
S
- Sale Price Of Property: Sale Price of Property refers to the total amount agreed upon by the buyer and seller for the purchase of a property. It is the final price the buyer pays to acquire ownership, as stated in the purchase agreement.
- Scope: Scope refers to the parameters and areas that are considered when evaluating a property or project. This includes the individual works involved in a renovation project along with an estimated costs
- Subsequent Adjusted Interest Rate Cap: The Subsequent Adjusted Interest Rate Cap refers to the maximum limit on how much the interest rate of an adjustable-rate mortgage (ARM) can change after the initial adjustment period during the purchase of a property. It applies to the adjustments made during the life of the loan after the initial rate adjustment.
- Subsequent Adjusted Interest Rate Cap for Refinancing: The Subsequent Adjusted Interest Rate Cap refers to the maximum limit on how much the interest rate of an adjustable-rate mortgage (ARM) can change after the initial adjustment period during the refinancing of a property. It applies to the adjustments made during the life of the loan after the initial rate adjustment.
T
- Tax: Real estate taxes are the same as real property taxes. They are levied on most properties in America and paid to state and local governments. Please note that Propbee is using base tax amounts in its model calculations which means no credits or discounts are not applied to the model calculations.. Property taxes can be vary significantly based on various factors such as its location, jurisdiction, property size, market value and owner details (company vs individual), use purpose (owner occupied vs rental) etc.
- Tenant Chargeback: Tenant Chargeback refers to costs or expenses charged to a tenant by the landlord, typically for damages, repairs, or other obligations beyond what the tenant's security deposit or regular rent covers. These charges are often associated with lease violations, excess wear and tear, or unfulfilled tenant responsibilities.
- Title Insurance Binder: Title Insurance Binder is a temporary agreement or document issued by a title insurance company that provides interim coverage and serves as a commitment to issue a formal title insurance policy once the transaction is complete. It is commonly used during real estate transactions, especially in purchases and refinances, to protect the parties involved until the final title policy is issued.
- Title Search Fees: Title search fee refers to the cost associated with researching the property's title history to ensure that it is clear of any legal issues. This includes confirming that the seller has the legal right to transfer ownership and that there are no outstanding claims, liens, or disputes on the property. The title search checks for any past owners, mortgages, judgments, unpaid taxes, or other encumbrances that could affect the sale.The title search is typically conducted by a title company or attorney before closing a real estate transaction. The fee is paid by the buyer (though sometimes the seller or both parties share the cost), and it helps ensure a smooth transfer of ownership.
- Total Operating Expense After Leasing Adjustment: The Total Operating Expense After Leasing Adjustment in real estate finance refers to the total expenses incurred for operating a property, adjusted to account for costs associated with leasing activities. This metric provides a more comprehensive understanding of the actual operating costs after factoring in leasing-related expenses
- Transfer Taxes: Transfer taxes (also known as real estate transfer taxes or property transfer taxes) are taxes imposed by state, county, or local governments when a property is sold or transferred from one party to another. These taxes are typically based on the sale price of the property, and the responsibility for paying them can vary depending on the location and the terms of the sale.The transfer tax is typically paid at the time of closing and is often calculated as a percentage of the sale price. The rate can differ by jurisdiction, and sometimes the buyer and seller will negotiate who will cover the cost. In some areas, there may be additional taxes for certain types of properties, like commercial or luxury real estate.
U
- Underwriting Fee: Underwriting fee in real estate refers to a fee charged by a lender (such as a bank or mortgage company) for the process of evaluating a borrower's application for a loan. The underwriting process involves assessing the borrower's creditworthiness, financial stability, and ability to repay the loan. This includes reviewing documents like income statements, credit reports, debt-to-income ratios, and the property's appraisal.
- Unlevered Annual Cash Flow: Unlevered Annual Net cash flow measures the amount of cash an investment property produces after operating expenses such as taxes, insurance, repair/maintenance without taking into account the debt service (financing expenses)
- Unlevered Annualized Return-IRR: Unlevered IRR analyzes the expected rate of return on an annualized basis for this particular real estate investment where leverage is not a part of the transaction structure.
- Up-Front Mortgage Insurance Premium: Up-front mortgage insurance premium (UFMIP) is a one-time fee that is typically required by government-backed mortgage programs, such as FHA (Federal Housing Administration) loans or VA (Veterans Affairs) loans, to insure the lender against the risk of borrower default. This premium is paid at the beginning of the loan, usually at the time of closing, and is separate from ongoing monthly mortgage insurance premiums.
V
- VA Mortgage: A VA loan is a mortgage loan program specifically designed for eligible veterans, active military members, and certain members of the National Guard, Reserves, and their families. It is backed by the U.S. Department of Veterans Affairs (VA), which guarantees a portion of the loan, allowing lenders to offer more favorable terms to borrowers.