Module 13 Vocab Flashcards
one of the two types of capital in real estate investments. It is the money that an individual or entity has borrowed.
debt
one of the two types of capital in real estate investments. The cash an individual or entity places into an investment.
equity
Note: In real estate, it is the dollar difference between what the property could be sold for and the debts against it. In a brokerage account, equity is the value of the account’s securities less any debit balance in a margin account
One of the two primary finance agencies in the US. The central bank of the US to provide the country with a safe, flexible, and stable monetary and financial system.
Federal Reserve
Notes: Comprised of 12 regional banks and a number of member banks and 7 members in the Board of Governors. It is independent of the president and congress.
Four general duties:
- carry out the nation’s monetary policy
- supervise and regulate banking institutions and protect the credit rights of consumers
- maintain the stability of the financial system
- provide certain financial services to the US government, the public, financial institutions, and foreign official institutions.
The Department of the Treasury is the other primary agency for US finance.
An erosion of the purchasing power of currency characterized by price escalation and an increase in the volume of money
inflation
These mortgages come behind the first mortgage in
lien priority. Because of the greater risk of their lien priority, they often carry a higher interest rate. Second and third mortgages fall under this type.
junior lien
One of the issues market investors considers in investing. How quickly you can convert the investment to cash.
liquidity
- A set of arrangements in which buyers and sellers are
brought together through the price mechanism; the aggregate of possible buyers and sellers and the transactions between them. - A gathering of people for the buying and selling of things; by extension, the people gathered for this purpose.
market
One of the 3 primary markets. The interaction of buyers and sellers trading long- or intermediate-term money instruments.
capital market
Two primary sources of this market:
- Equity
- Debt
Capital Market instruments:
- Bonds or debentures
- Stocks
- REITs
- Mortgages
- Deeds of trust/land contracts
One of the 3 primary markets. The interaction of buyers and sellers who trade short-term money instruments. When money is plentiful, the price of money declines. When money is scarce, the price rises (a function of the supply and demand of money). We express the price of money as an interest rate (the cost to borrow funds.)
money market
Note: The anticipated cost of short term money instruments is a key consideration for real estate developers
Short term money instruments:
- Federal Funds
- Treasury Notes
- CDs
- Commercial paper
- Municipal notes
- Eurodollars
1) A pledge of a described property interest as collateral
or security for the repayment of a loan under certain terms and conditions. 2) a loan secured by the
collateral of some specified real property, which obliges the borrower to make a predetermined series of payments.
mortgage
Note: Tiers of mortgages
- first mortgage
- second and third mortgage
- home equity loan
Types of Mortgages:
- guaranteed mortgage (VA loans)
- Insured mortgage (HUD FHA program, PMI for conventional)
- Conventional mortgage
- Energy-efficient mortgage (EEM) (may be conventional, FHA, or VA)
- Balloon Mortgage (not fully amortized at maturity and requires a lump sum payment)
One of the 3 primary markets. Buyers and sellers of particular real estate and the transactions that occur among them.
real estate market
One of the issues market investors considers in investing. ____ plays a significant role in how investments compete against each other. A situation involving exposure to danger, harm, or loss.
risk
Types:
- market ___
- financial ___
- capital market ___
- inflation ___
- liquidity ___
- environmental ___
- legislative ___
- management __
_____ investors participate in bonds and mortgages and receive fixed or variable interest on their investment through repayment of the principal upon maturity. Thus, these investors look for security in the form of a lien on the assets (of the investment) as their claim on investment earnings.
debt investors
____ investors are compensated by dividends (cash flows) and the potential appreciation in the value of their investments. ____ investors assume greater risk because their earnings are subordinate to operating expenses and debt service.
equity investors
One of the 2 financial agencies in the US. The ____ implements fiscal policy through decisions guided by the U.S. Congress regarding the federal budget, expenditures, and revenues. The ____ raises funds and pays bills. It generates currency, collects taxes, and borrows money. Their policies affect markets and the value of securities.
US Department of Treasury
