Margin Of Security
Definition of "Margin of security"
Buffer amount between the value of the collateral and the principal balance of the obligation. For example, if the mortgage has a principal balance of $200,000 and the appraised value of the property is $250,000, the bank has a margin of security of $50,000 in the event of default. The greater the collateral value, the more protection the bank has. In troubled real estate markets because of adverse economic conditions, the market value of the property may fall substantially below the balance of the mortgage. Many homeowners in such a case have defaulted on the loan because of the decline in market values. For example, if the appraised value of a home has fallen to $60,000 while the mortgage balance is $100,000, it might be more financially prudent for the debtor to default on the mortgage.
Popular Real Estate Terms
Uncertainty in the price of real estate due to market, economic, political or other conditions. ...
Money payments to be delayed for a future date or extended over a period of time. ...
Expected selling price of property less costs to sell. It is the net amount received upon the sale of property. gross receivables less allowance for doubtful accounts, representing the ...
Recurring obligation or assurance given. ...
Methods of owning real estate. Ownership form has important consequences for income tax, estate tax, corporate income tax, and survivorship. Real estate may be owned by one or more persons. ...
A tender has several meanings in everyday discourse. Most generally, tender means a formal offer designed for acceptance with the anticipation of soliciting a response in return. Bidding ...
Individual: Adjusted gross income less itemized deductions and personal exemptions. After taxable income is computed, the tax to be paid can be determined by looking at the tax rate ...
Distance from the location of natural ground and water to the actual ground level. ...
Legal obligation to pay taxes associated with owning property or earning income. For example, a real estate owner must pay property taxes. ...
Have a question or comment?
We're here to help.