Effective Annual Yield
Definition of "Effective annual yield"
Real rate of interest on a loan. It is the coupon rate divided by the net proceeds of the loan. Assume Sharon took out a $1,000,000, on year, 10% discounted loan to buy real estate. The effective interest rate equals: in this discount loan the proceeds received is only $900,000, which effectively increases the cost of the loan. The effective annual yield, also called the annual percentage yield (APY). Different kinds of investments have different compounding periods. For example, some banks pay interest quarterly. If an investor wants to compare investments with different compounding periods, she must place them on a common basis. It is used for this purpose and is computed as follows.
Popular Real Estate Terms
If you have ever participated in a tricky real estate transaction, you might have encountered the relatively unknown term "deed of confirmation" or "confirmation deed." Read this ...
Mortgage guaranteed up to 30 years by the Veterans Administration to veterans meeting minimum requirements. Originally established by the Servicemen's Readjustment Act of 1944, amended ...
partially factory-assembled units designed to be transported in parts to the site. The structure is completed on the actual site. ...
Method of construction where part of the structure is supported by a cantilever beam or truss. ...
An equity-to-value ratio is an excellent tool for those homebuyers that want to understand how profitable an investment is based on the amount of money invested and the actual value of the ...
Revised specifications requiring a modification in work. ...
An increase in the income tax basis of a property that is a result of a tax-free exchange. As a result of an inheritance, for example, the basis of the inherited property was stepped up to ...
People often need help understanding the difference between offeror vs offeree in real estate. A rhythm sets the stage from the first step in real estate transactions. It's the interaction ...
(1) Agreement where the broker and the seller agree to mutual performance. The broker agrees to advertise the property at the agreed sale terms with the intention of putting together buyer ...
Have a question or comment?
We're here to help.