Vocab Flashcards
What is profit
The result of selling something for more than what it cost you to purchase it
What is loss
The result of selling something for less than what it cost you to purchase it
What is profit margin
The percentage of the selling price that turns into profit
What is interest
For a buyer it is the amount paid in return for the use of money. For a lender it is the money earned or received from a loan investment
What is simple interest
Money that is paid only for the amount of principal the borrower still owes
What is add-on interest
Interest calculated as a percentage of the original loan (principal) rather than on the balance due before each payment
What is compound interest
Interest computed on the principal amount plus accrued interset
What are points
A one-time service charged by the lender to the borrower for making the loan. They can potential losses when selling the loan
What is an LTV
Loan-to-value ratio, the relationship b/t a property’s purchase price and its loan amount
What is income ratio
Ratio of monthly mortgage payment as portion of monthly income.
What does income ratio do?
It establishes the borrower’s capacity to pay the loan by limiting the percent of gross income they spend on housing costs
What is debt to income ratio
Ratio of the monthly debt payments as a portion of monthly income
What is debt to income ratio used for
Used to determine the borrower’s capacity to repay the money they borrow
What is front foot
The measure of a property’s frontage on the road or highway or across the front of the property
What is an acre
Measurement for 43,560 square feet
