Real Estate Finance Terminology

A collection of flashcards summarizing important real estate finance terms and their definitions.

Incurable Depreciation

Any type of depreciation in which the amount of money spent on correcting the deficiency is greater than the resulting increase in value.

Effective Age

The apparent age of the property based on the condition of the property.

Economic Life

The period of time over which a property may be expected to be useful.

Sales Comparison Approach

A technique for estimating the value of property by comparing it to similar properties in the same area.

Income Approach

Estimates the present worth of a property's expected future income.

Gross Rent Multiplier

A rough estimate of the value of rental property based on gross rents; use monthly rent for residential, yearly for commercial.

Equitable Right of Redemption

Additional time within which to pay a debt, from the time of default to the actual foreclosure sale.

Statutory Redemption

A period of redemption after foreclosure.

Promissory Note

A promise to repay a debt.

Collateral

Property that is pledged as security for a debt.

Lien Theory

The lender holds a lien until the debt is paid.

Title Theory

The lender holds the title until the debt is paid.

Mortgage

An instrument that makes property security for the repayment of a debt.

Mortgagor

The borrower.

Mortgagee

The lender.

Acceleration Clause

Gives the lender the right to demand payment in full of the entire unpaid debt in the event of default, or non-payment.