What is margin? Margin refers to money borrowed to buy an investment, and the margin is the difference between the purchase price and the loan amount. When you buy stocks on margin, you’re essentially borrowing money from your brokerage firm to increase your purchasing power. It can be a great way to amplify your profits …
What is appreciation? Ever notice how some properties increase in value every single year? That’s called appreciation. When a property appreciates, investors like you make a bigger profit when selling it or renting it to tenants, which is one of the benefits of investing in real estate! If you have a home loan, an appreciated …
What is escrow? Escrow is a financial process where money is held by a third party to make sure everyone follows the terms of an agreement. It’s a way to reduce the risk of fraud and make sure both buyer’s and seller’s contractual obligations are met. When all conditions have been met, the funds are …
What is a 401(k)? A 401(k) plan is a type of qualified employer-sponsored retirement plan that allows employees to save for retirement on a tax-deferred basis. Created after World War II as a part of the Revenue Act of 1978, the 401(k) Plan was intended to attract workers and offer an added benefit to their …
What is the annual percentage rate? The annual percentage rate (APR) is the interest rate you would pay on a loan if you took out the loan over a given period. The APR includes both the nominal interest rate and any other fees or charges associated with the loan. This means that you can compare …
What is a cash-out refinance? Did you know you can replace an old mortgage with a new one, even if the new mortgage has a larger amount owed than your existing loan? It’s known as cash-out refinancing and it’s used to help borrowers use the equity in their home mortgages to get some cash. How …
What is securitization? Taking illiquid assets and transforming them into securities via financial engineering is known as securitization. Real estate securitization is the process of taking bank and other lender-issued mortgages and turning them into securities that investors can buy. Essentially, real estate securitization turns illiquid mortgages into liquid assets by “securitizing” them. This process …
