Friday, May 16th 2008
Loan Terms Glossary

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Term Definition
Bridge LoanIf a purchase arrangement involves the sale of one property and the purchase of another it will normally be most convenient if the two deals are concluded simultaneously. If this is not possible and the purchase of the second property is to be concluded before the sale of the first is completed then additional financing may be necessary. This is a 'bridging loan' & it bridges the gap between the two transactions.
 
Business LoanA loan arranged by a bank or commercial loann broker to fund a business venture. Typically, early business loans begin with personal or family loans, followed by SBA (Small Business Administration) or bank loans.
 
Buydown The process of paying additional points on a loan to reduce the monthly mortgage.
 
CapThe maximum to which an adjustable-rate mortgage (ARM)  may increase. An interest rate cap limits the amount the interest can change, while a payment cap limits the increase in monthly payment to a specific dollar amount.
 
Cap Rate  net yield set by an investor to determine the value of an income producing property.
 
CapitalMoney that is used to make money; for example, use Capital to buy rental property or a business.
 
Capital ExpendituresLine items on a profit and loss statement that would not be expensed on an annual basis. This category would include replacement of major building systems, such as roofs, driveways, etc.
 
Capital Granta grant to provide funding for buildings, construction, or equipment, rather than program or operating expenses.
 
Capitalization RateA methodology to estimate the value of a property based on the rate of return on investment (ROI).
 
Challenge Grantgrant that is made on the condition that other funding be secured, either on a matching basis or by some other formula, usually within a specified period of time, with the objective of encouraging expanded fundraising from additional sources.
 


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Glossary V1.9.2

 

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