Archives: Glossary Terms

A general or relative term denoting the hazard involved in the insuring of property. The premium or cost of insurance is determined by the relative risk or hazard considered to be involved.

A mortgage in which a party other than the borrower, in return for the payment of a premium, assures payment in the event of default by a mortgagor such as FHA-insured mortgages, PMI (private mortgage insurance).

A property such as goodwill that cannot be touched..

The elements of property in an enterprise that are represented in the established organization doing business, goodwill and other rights incident to the enterprise as distinguished from the physical items comprising the plant facilities and working capital..

An asset’s worth which is not immediately available in dollars but may be of significant value such as “goodwill” of an established business.

1. The cost in dollars for the use of money for a period of time or “rent” paid for the use of money. 2. The type and extent or having a portion, share or right in the ownership of something. Example: Lenders require payment of interest at a specified rate, to compensate for risk. deferment of benefits, inflation. and administrative burdens. Example: One may hold either a partial or fee simple interest in a property That interest entitles one to specific ownership rights..

A loan in which a fixed amount of principal is repaid in installments along with interest accrued each period on the amount of the then outstanding principal only.

The percentage of a sum of money charged for its use and like rent paid for use of the money. It is expressed as a percentage – usually annually, but can also be monthly or daily – of the sum borrowed.

The risk of loss due to changes in the interest rate. Earnings or the value of a property that may be affected as a result of changes in prevailing interest rates in the money market. When interest rates go up capitalization rates are generally lower rates and property values go down.

A temporary or short-term loan that is also called an interim financing that is secured by a mortgage which is used until permanent financing is available and then paid off from the proceeds of permanent financing. See Construction loan..