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Buydown Your Interest Rate

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Buydown Your Interest Rate

At the beginning of 2023, rates for 30-year fixed mortgages were well above the record low of 2.65% just two years prior, according to Freddie Mac. In response to this spike in interest rates and other inflationary pressures, many potential homebuyers postponed or abandoned their home searches. 

Thirty-year fixed mortgage rates went up from about 3 percent to around 7 percent this year, according to economists, as the Federal Reserve upped interest rates in a bid to slow inflation. While that has contributed to falling home prices, it has also made it tougher for people to buy homes — especially as families also deal with rising costs for food, gas and other necessities.

The Hill

There is a direct correlation between interest rates and mortgage activity. Mortgage activity increases when rates are low, and decreases when rates are high. Lenders understand this correlation and offer a range of alternative financing solutions for buyers. One such solution is called a buydown. The term “buydown” refers to a mortgage financing technique that allows the buyer to obtain a lower interest rate.

In order to secure the discounted rate, the borrower pays a fee known as mortgage or discount points.  Depending on the lender, points may be paid at closing or financed into the loan.  A buydown can be funded by several parties, including gift funds, the seller, the builder, and even the lender. It is not uncommon for buyers to negotiate a buydown with sellers.

Types of Buydowns

Buydowns are either permanent or temporary in nature. A permanent buydown lowers the rate for the life of the loan, while temporary buydowns lower the rate for the first few years of the loan. In the case of a temporary buydown, a 1-0, 2-1 or a 3-2-1 ratio can be used. 

  • 1-0 buydown reduces the interest rate by 1% for the first year.
  • 2-1 buydown reduces the interest rate by 2% in the first year and 1% in the second year of the loan.
  • 3-2-1 buydown reduces the interest rate by 3% in year 1, 2% in year 2, and 1% in year 3 of the loan.

How it Works

Permanent Buydown Fee

One point reduces the interest rate by 0.25% (+/- depending on the lender) and will cost 1% of the loan amount.

To calculate the fee:

  1. determined desired interest rate
  2. actual rate – desired rate = difference
  3. difference ÷ 0.25 = total points
  4. total points × 1% =  multiplier
  5. multiplier × loan amount = buydown cost

Temporary Buydown Fee

The temporary buydown fee is based on the savings the borrower will receive during the discount period. 

To calculate the fee:

  1. actual payment – discount payment = monthly savings
  2. monthly savings  ×  # of months in discounted year = annual savings
  3. repeat steps 1 and 2 for each year
  4. sum annual savings for each year to calculate buydown cost, i.e. Y1+Y2

Let’s take a look at a few examples.

Permanent Buydown

Before Buydown

Fixed-Rate Mortgage: $250,000

Term: 30 years

Interest Rate: 6%

Principal & Interest: $1,498.88

After Buydown

Interest Rate: 5%

Principal & Interest: $1,342.05

Buydown Fee

  1. Desired Rate: 5%
  2. 6% – 5% = 1%
  3. 1% × 0.25% = 4 points
  4.  4 × 1% = 4%
  5. 4% × 250,000 =

$10,000 paid at closing

1-0 Temporary Buydown

Before Buydown

Fixed-Rate Mortgage: $250,000

Term: 30 years

Interest Rate: 6%

Principal & Interest: $1,498.88

Monthly Principal & Interest Payment

Buydown Period

Y1 @ 5% = $1,342.05

After Buydown Expires

Y2+ @ 6% = $1,498.88

Buydown Fee

Y1: $1,498.88 – $1,342.06 = $156.82 x 12 = $1,881.84

Paid at closing: $1,881.84

2-1  Temporary Buydown

Before Buydown

Fixed-Rate Mortgage: $250,000

Term: 30 years

Interest Rate: 6%

Principal & Interest: $1,498.88

Monthly Principal & Interest Payment

Buydown Period

Y1 @ 4% = $1,193.54

Y2 @ 5% = $1,342.05

After Buydown Expires

Y3+ @ 6% = $1,498.88

Buydown Fee

Y1: $1,498.88 – $1,193.54 = $305.34 × 12 = $3,664.08

Y2: $1,498.88 – $1,342.06 = $156.82 × 12 = $1,881.84

Paid at closing: $3,664.08 + $1,881.84 = $5,545.92

3-2-1  Temporary Buydown

Before Buydown

Fixed-Rate Mortgage: $250,000

Term: 30 years

Interest Rate: 6%

Principal & Interest: $1,498.88

Monthly Principal & Interest Payment

Buydown Period

Y1 @ 3% = $1,054.01

Y2 @ 4% = $1,193.54

Y3 @ 5% = $1,342.05

After Buydown Expires

Y4+ @ 6% = $1,498.88

Buydown Fee

Y1: $1,498.88 – $1,054.01 = $444.87 × 12 = $5,338.44

Y2: $1,498.88 – $1,193.54 = $305.34 × 12 = $3,664.08

Y3: $1,498.88 – $1,342.05 = $156.83 × 12 = $1,881.96

Paid at closing: $3,664.08 + $1,881.84 + $1,881.84 = $10,884.48

Weighing the Pros and Cons

Buydowns can be an effective strategy for some borrowers. However, it is wise to weigh the pros and cons carefully before making a decision. The following are a few things to keep in mind.

PROs

  • Buydowns lower the interest rate.
  • A lower rate can increase your purchasing power.
  • Depending on the type of buydown, a lower interest rate can temporarily or permanently reduce your monthly mortgage payment.
  • Depending on the type of buydown, you can save money over the life of the loan or during the discount period.
  • A buydown may be funded by the seller, the builder, the lender, or in certain instances rolled into the loan.
  • Points paid by the borrower are considered prepaid interest and may be tax deductible.

CONs

  • Buydowns require an upfront fee.
  • Buydowns will increase overall closing costs.
  • Once the temporary buydown period expires, the borrower must be ready to transition back to a much higher regular mortgage payment.
  • Buydowns are not available for all property and loan types. Some loans may also restrict the types of buydowns and payors allowed, as well as the amount of points that can be financed.

More Considerations

  •  Would it be possible to use the extra funds more effectively elsewhere? For example:
  • PMI is excluded from loans with a 20% downpayment, which also results in monthly savings. Does the savings receive from making a larger downpayment outweigh the savings from the buydown?
  • In the event you plan to resell your home in the near future, the funds might be put toward home improvements that increase its value.
  • If you are paying the points, it is worth considering the time it will take to break-even. Buydowns may be an attractive option for those who plan to remain in their homes beyond the break-even period or who intend to refinance or sell their homes before the temporary buydown period expires.
  • According to the CFPB, “When considering a temporary buydown, consumers should compare the costs for loans with and without the temporary reduced rate to determine the best product for their needs over time. The annual percentage rate (APR) can help provide information as to which loan is cheaper over the life of the loan.”
  • Assuming income will increase before the discount period expires can be risky for both the borrower and lender. Those seeking temporary buydowns still need to be able to afford regular mortgage payments.

In closing, remember to shop around and compare loan estimates from multiple lenders so that you get the best mortgage deal.

In this article:

Types of Buydowns

How it Works

Buydown Examples

Weighing the Pros and Cons

Sources:

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Glossary of
Common Terms

Source 1: Wikipedia: Reusing Wikipedia Content. This work is released under CC BY-SA. Source 2: Farlex Financial Dictionary 

  • Addendum – an additional document not included in the main part of the contract. Wikipedia
  • Adjustable Rate Mortgage (ARM) – a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. Wikipedia
  • Amortization – paying off an amount owed over time by making planned, incremental payments of principal and interest. Wikipedia
  • Annual Percentage Rate (APR) – the interest rate for a whole year (annualized). It is a finance charge expressed as an annual rate. Wikipedia
  • Appraisal – the process of developing an opinion of value for real property (usually market value). Wikipedia
  • Appraiser – a person that develops an opinion of the market value or other value of a product, most notably real estate. Wikipedia
  • As is – describing the sale of an asset in which the seller gives no guarantee on the quality of the asset and makes no repairs that may be necessary. An “as is” sale transfers all risk to the buyer. Farlex Financial Dictionary
  • Assignment – a legal term used in the context of the law of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. Wikipedia
  • Balloon Payment Mortgage – a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Wikipedia
  • Basis Points – a value equaling one one-hundredth of a percent (1/100 of 1%). One basis point is equal to 0.01%. Farlex Financial Dictionary
  • Blanket Mortgage – a type of loan used to fund the purchase of more than one piece of real property. Blanket loans are popular with builders and developers who buy large tracts of land, then subdivide them to create many individual parcels to be gradually sold one at a time. Wikipedia
  • Borrower – a person or company that has received money from another party with the agreement that the money will be repaid. Farlex Financial Dictionary
  • Break-even Ratio (BER) – estimates how vulnerable a property is to defaulting on its debt should rental income decline. Wikipedia
  • Bridge Loan – a short-term loan,usually from a bank,that “bridges”the period between the closing of a home purchase and the closing of a home sale. Farlex Financial Dictionary
  • Building Inspection – an inspection performed by a building inspector, a person who is employed by either a city, township or county and is usually certified in one or more disciplines qualifying them to make professional judgment about whether a building meets building code requirements. Wikipedia
  • Building Occupancy Classifications – refer to categorizing structures based on their usage and are primarily used for building and fire code enforcement. They are usually defined by model building codes, and vary, somewhat, among them. Often, many of them are subdivided. Wikipedia
  • Buyer Agency – the practice of real estate brokers and their agents representing a buyer in a real estate transaction. Wikipedia
  • Cancellation Clause – a clause in a contract or lease that allows one or either party to cancel it upon the happening of certain named events other than a default.  Farlax Financial Dictionary
  • Capitalization Rate (Cap Rate) – a real estate valuation measure used to compare different real estate investments. Although there are many variations, a cap rate is often calculated as the ratio between the net operating income produced by an asset and current market value. Wikipedia
  • Cash-on-Cash Return (CCR) – the ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage. Wikipedia
  • Certificate of Occupancy – a document issued by a local government certifying that a structure has passed all required inspections and is ready for occupancy. Farlex Financial Dictionary
  • Closing Costs – fees paid at the closing of a real estate transaction. Wikipedia
  • Co-borrower – one or more persons who have signed the note and are equally responsible for repaying the loan. Farlex Financial Dictionary
  • Commercial Real Estate – commercial property, also called commercial real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. Wikipedia
  • Commercial Mortgage – a mortgage loan secured by commercial property, such as an office building, shopping center, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property. Wikipedia
  • Commission – a form of payment to an agent for services rendered. Wikipedia
  • Common Area Maintenance – CAM for short, are one of the net charges billed to tenants in a commercial triple net (NNN) lease, and are paid by tenants to the landlord of a commercial property. A CAM charge is an additional rent, charged on top of base rent, and is mainly composed of maintenance fees for work performed on the common area of a property. Wikipedia
  • Compound interest – the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Wikipedia
  • Conforming Mortgage – a loan eligible for purchase by the two major federal agencies that buy mortgages, Fannie Mae and Freddie Mac. Farlex Financial Dictionary
  • Contingency Clause – a clause that allows cancellation of a contract without penalty if a certain described thing happens. Farlex Financial Dictionary
  • Contract – a contract between parties for the purchase and sale, exchange, or other conveyance of real estate. Wikipedia
  • Conventional Mortgage – a loan based on the credit of the borrower and on the collateral for the mortgage. Farlex Financial Dictionary
  • Credit History – a record of a borrower’s responsible repayment of debts. Wikipedia
  • Credit Report – a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. Wikipedia
  • Credit Score – a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. Wikipedia
  • Debt Service Coverage Ratio (DSCR) – the ratio of operating income available to debt servicing for interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity’s (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. Wikipedia
  • Debt Ratio – a financial ratio that indicates the percentage of a company’s assets that are provided via debt. It is the ratio of total debt (long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as ‘goodwill’). Wikipedia
  • Debt-to-Income Ratio (DTI) – the percentage of a consumer’s monthly gross income that goes toward paying debts. There are two main kinds of DTI: front-end ratio (indicates the percentage of income that goes toward housing costs) and back-end ratio (indicates the percentage of income that goes toward paying all recurring debt payments). Wikipedia
  • Deed – any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property.  Wikipedia
  • Deed Restriction – A provision placed in a deed restricting or limiting the use of the property in some manner. Farlex Financial Dictionary
  • Discount Point – one percentage point of the principal of a mortgage loan that some lenders require borrowers to pay immediately as a condition of making the loan. Farlex Financial Dictionary
  • Down Payment – the amount, usually stated as a percentage, of the total cost of a property that you pay in cash as part of a real estate transaction. Farlex Financial Dictionary
  • Due Diligence – the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. Wikipedia
  • Earnest money – a small amount of money that a seller requires a potential buyer to deposit before a transaction is completed. Earnest money ensures that the potential buyer is serious about the transaction and will be likely to complete it when the time comes. Farlex Financial Dictionary
  • Easement – a nonpossessory right to use and/or enter onto the real property of another without possessing it. Wikipedia
  • Escrow – a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties. Wikipedia
  • Environmental Assessment – a study of land to determine if there are any factors such as would possibly give rise to concerns about hazardous materials, protected species, historic remains, or other such factors. Farlex Financial Dictionary
  • Equal Credit Opportunity Act – designed to ensure that all qualified people have access to credit. It forbids lenders from rejecting credit applicants on the basis of race, gender, marital status, age, or national origin and requires lenders to consider public assistance in the same light as other forms of income. Farlex Financial Dictionary
  • Equity – the market value of a homeowner’s unencumbered interest in their real property, that is, the difference between the home’s fair market value and the outstanding balance of all liens on the property. Wikipedia
  • Escalation clause – a clause in any of a wide variety of contractual or real property arrangements that allows one party to increase the price upon the happening of certain specified events. Farlex Financial Dictionary
  • Fannie Mae – Federal National Mortgage Association (FNMA). A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. Farlex Financial Dictionary
  • Federal Housing Administration (FHA) – An agency of the United States federal government responsible for encouraging homeownership. It does this primarily by providing insurance to private mortgage lenders. It finances its activities by buying mortgages from the lender, repackaging them as mortgage-backed securities, and re-selling them. Farlex Financial Dictionary
  • Finance charge – any fee representing the cost of credit, or the cost of borrowing. Wikipedia
  • Fixed-Rate Mortgage – a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan. Wikipedia
  • Freddie Mac – Federal Home Loan Mortgage Corporation (FHLMC). A Congressionally chartered corporation that purchases residential mortgages in the secondary market from S&Ls, banks, and mortgage bankers and securities for sale in the capital markets. Farlex Financial Dictionary
  • Ginnie Mae – Government National Mortgage Association (GNMA). A United States government-owned enterprise that buys mortgages from banks and pools them, selling the pools as mortgage-backed securities. Ginnie Mae securities are backed by the full faith and credit of the United States and as such are consider risk-free investments. Farlex Financial Dictionary
  • Government-backed Loan – a loan subsidized by the government, also known as a Federal Direct Loan, which protects lenders against defaults on payments, thus making it a lot easier for lenders to offer potential borrowers lower interest rates. Its primary aim is to make home ownership affordable to lower income households and first-time buyers. Wikipedia
  • Grantee – a person or entity receiving the property. Wikipedia
  • Grantor – a person or other entity giving the property. Wikipedia
  • Gross Rent Multiplier (GRM) – the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities; GRM is the number of years the property would take to pay for itself in gross received rent.  Wikipedia
  • Hard Money Loan – a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan. Wikipedia
  • Home Equity Line of Credit (HELOC) – a line of credit in which one borrows against the value of one’s home. That is, the collateral on a home equity line of credit is one’s house. Farlex Financial Dictionary
  • Home Equity Loan – a loan in which the one borrows against the value of one’s home. That is, the collateral of a home-equity loan is one’s house. Farlex Financial Dictionary
  • Home Inspection – a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. Wikipedia
  • Homeowner Association (HOA) – a private association often formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision. Wikipedia
  • Homeowner’s Insurance – An insurance policy protecting a homeowner against damage or loss to property. Farlex Financial Dictionary
  • Income Property – Property intended to produce income for its owners, especially from rent. Farlex Financial Dictionary
  • Interest Only Loan – a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. At the end of the interest-only term the borrower must renegotiate another interest-only mortgage, pay the principal, or, if previously agreed, convert the loan to a principal-and-interest payment (amortized) loan at the borrower’s option. Wikipedia
  • Interest Rate – the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. Wikipedia
  • Joint Tenants in Common – a way for two or more persons to own property together. Joint tenants in common may own equal or unequal shares of the property (but shares are usually equal), and there are no rights of survivorship. That is, when one of the co-owners dies, his/her share of the property becomes part of his/her estate and passes on to heirs. Farlex Financial Dictionary
  • Jumbo Loan – . A mortgage loan that exceeds the limits for securitization by U.S. government mortgage banks. As such, a jumbo loan cannot be guaranteed or securitized by Freddie Mac or Fannie Mae. Farlex Financial Dictionary

No terms to share.

  • Land Lease (Ground Lease) – a long-term lease of land in which the tenant will erect improvements at its own expense. Farlex Financial Dictionary
  • Listing Agent – the real estate agent who obtained a listing contract from a property owner, authorizing the broker for whom the agent works to market and solicit offers to buy the owner’s property on specified terms and conditions. Farlex Financial Dictionary
  • Low Income Housing Tax Credits (LIHTC) – a dollar-for-dollar reduction in one’s tax liability due to an investment in a housing complex for low and moderate income persons. Farlex Financial Dictionary
  • Mortgage Insurance – an insurance policy that provides coverage to a lender in the event that a borrower defaults on a mortgage. This ensures that the lender does not incur a loss if the borrower is unable to repay the loan. While the lender pays the premium, it generally passes on payment to the borrower (and may roll it into the monthly mortgage payment). Farlex Financial Dictionary
  • Mortgage Note – a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. Wikipedia
  • Mortgage Protection Insurance (MPI) – an insurance policy that makes mortgage payments on behalf of the policyholder in the event of financial hardship. Farlex Financial Dictionary
  • Mortgage Servicer – a company to which some borrowers pay their mortgage loan payments and which performs other services in connection with mortgages and mortgage-backed securities. The mortgage servicer may be the entity that originated the mortgage, or it may have purchased the mortgage servicing rights from the original mortgage lender. Wikipedia
  • Mortgage Underwriting – the process a lender uses to determine if the risk of offering a mortgage loan to a particular borrower under certain parameters is acceptable. Wikipedia
  • Multi-family Residential – a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex. Units can be next to each other (side-by-side units), or stacked on top of each other (top and bottom units). Wikipedia
  • Negative Amortization –  a loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later. Farlex Financial Dictionary
  • Non-conforming Loan – a mortgage loan that fails to meet standards set by Fannie Mae or Freddie Mac
  • Occupancy Cost – costs related to occupying a space including; rent, real estate taxes, personal property taxes, insurance on building and contents, depreciation, and amortization expenses. Wikipedia
  • Opportunity Zone – a designation and investment program created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. Wikipedia
  • Option Period – in Texas, a short period of time during which a seller of real estate may not to sell to anyone other than the person or entity who placed a bid. This gives the potential buyer time to perform inspections without placing his/her earnest money at risk. The potential buyer pays a non-refundable option fee, which is distinct from earnest money, in order to take advantage of an option period. Farlex Financial Dictionary
  • Origination Fee -an upfront fee charged by some lenders, expressed as a percent of the loan amount. Farlex Financial Dictionary
  • Owner Financing (Seller Financing) – loan provided by the seller of a property or business to the purchaser. Wikipedia
  • Passive Income – income that requires minimal labor to earn and maintain. Wikipedia
  • Piggyback Second Mortgage – piggyback second mortgages are originated concurrently with the first mortgage to finance the purchase of a home in a single closing process. In a conventional mortgage arrangement, homebuyers are permitted to borrow 80 percent of the property’s value whilst placing a down payment of 20 percent. Wikipedia
  • PITI – an acronym for a mortgage payment that is the sum of monthly principal, interest, taxes, and insurance. Wikipedia
  • Preapproval – a commitment by a mortgage lender to provide a loan with a certain monthly payment to a borrower. Farlex Financial Dictionary
  • Prequalification – the act or process of determining the approximate amount a borrower will be able to borrow before he/she actually applies for a loan. Farlex Financial Dictionary
  • Prepaid interest – Interest on a loan that is paid before it is billed to the borrower. Farlex Financial Dictionary
  • Prepayment Penalty – a fee that a lender may assess if a borrower repays a loan before the scheduled maturity. Farlex Financial Dictionary
  • Principal – amount of money originally invested or loaned, on which basis interest and returns are calculated. Wikipedia
  • Promissory Note – a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms. Wikipedia 
  • Property Tax – an ad valorem tax on the value of a property. Wikipedia
  • Purchase Price – the contractually agreed upon price for a property, before credits, adjustments, or concessions. Farlex Financial Dictionary
  • Purchase and Sale Agreement – an agreement between a buyer and a seller of real estate property, company stock, or other assets. Wikipedia
  • Quitclaim Deed – a legal instrument that is used to transfer interest in real property. The entity transferring its interest is called the grantor, and when the quitclaim deed is properly completed and executed, it transfers any interest the grantor has in the property to a recipient, called the grantee.[1] The owner/grantor terminates (“quits”) any right and claim to the property, thereby allowing the right or claim to transfer to the recipient/grantee. Wikipedia
  • Qualifying Ratio – the maximum debt-to-income ratio for a mortgage. Farlex Financial Dictionary
  • Rate Lock – an agreement between a mortgage bank and a potential borrower promising that that the bank will not change the proposed interest rate on a loan that has not been concluded for a certain period of time. Farlex Financial Dictionary
  • Real Estate Agent – a person who facilitates the sale of real estate. Farlex Financial Dictionary
  • Real Estate Investment Trust (REIT) – a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate. Wikipedia
  • Real Estate Owned (REO) – a term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. Wikipedia
  • Real Property – Land and the improvements on it. Farlex Financial Dictionary
  • Realtor – a designation reserved for members of the National Association of Realtors, and encompasses both real-estate agents and real-estate brokers. Farlex Financial Dictionary
  • Residential Mortgage – A loan that one or more persons receive in order to buy a house or other residential property in which they will live. Farlex Financial Dictionary
  • Residential Property – any property that a municipality has designated for single family homes, apartments, co-operatives, townhouses, and any other place where people live. Farlex Financial Dictionary
  • Return on Investment (ROI) – the money that a person or company earns as a percentage of the total value of his/her/its assets that are invested (ROI = (Income – Cost) / Cost). Farlex Financial Dictionary
  • Reverse Mortgage – a loan borrowed against the value of one’s home. In this situation, the lender gives the borrower the amount of the loan and the borrower makes no payments and retains title to his/her home. Farlex Financial Dictionary
  • Right of First Refusal – the right of a person or organization to take advantage of a transaction before it is open to other parties. Farlex Financial Dictionary
  • Right of Rescission – the right to void a contract without any penalty within three days as provided in the Consumer Credit Protection Act of 1968. Farlex Financial Dictionary
  • Second Mortgage – a property lien that is subordinate to another mortgage on the same property. Farlex Financial Dictionary
  • Survey – The process by which land is located with reference to commonly agreed upon landmarks or other points of reference, and then measured out for all of its boundaries, including distances and direction-and-degree of turns. Farlex Financial Dictionary
  • Title Insurance – a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Wikipedia
  • Title Search – in real estate, research done to trace a title back to its original owner or back to some date dictated by statute. A title search is done before the sale of property to ensure that there are no competing claims for the same property. A title search protects the mortgage lender from the possibility that that a competing claim will be honored in court, resulting in a loss. Farlex Financial Dictionary
  • Truth in Lending Act -Title I of the Consumer Credit Protection Act. It is a federal law that requires lenders to make certain disclosures to potential borrowers within 3 days after receipt of a written loan application. A final disclosure statement is provided at the time of loan closing. Farlex Financial Dictionary 
  • U.S. Department of Agriculture (USDA) – the federal executive department responsible for developing and executing federal laws related to farming, forestry, rural economic development, and food. Wikipedia
  • U.S. Department of Housing & Urban Development (HUD) – a Cabinet department in the executive branch of the U.S. federal government that was founded to develop and execute policies on housing and metropolises. Wikipedia
  • U.S. Department of Veterans Affairs (VA) – a Cabinet-level executive branch department of the federal government charged with integrating life-long healthcare services to eligible military veterans at the 1700 VA medical centers and outpatient clinics located throughout the country. Non-healthcare benefits include disability compensation, vocational rehabilitation, education assistance, home loans, and life insurance; and provides burial and memorial benefits to eligible veterans and family members at 135 national cemeteries. Wikipedia
  • Valuation – the appraisal of land or buildings. Wikipedia
  • Waiver – a statement of the voluntary surrender of a right. Farlex Financial Dictionary

No terms to share.

No terms to share.

  • Zoning – method of urban planning in which a municipality or other tier of government divides land into areas called zones, each of which has a set of regulations for new development that differs from other zones. Wikipedia
  • Addendum – an additional document not included in the main part of the contract. Wikipedia
  • Adjustable Rate Mortgage (ARM) – a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. Wikipedia
  • Amortization – paying off an amount owed over time by making planned, incremental payments of principal and interest. Wikipedia
  • Annual Percentage Rate (APR) – the interest rate for a whole year (annualized). It is a finance charge expressed as an annual rate. Wikipedia
  • Appraisal – the process of developing an opinion of value for real property (usually market value). Wikipedia
  • Appraiser – a person that develops an opinion of the market value or other value of a product, most notably real estate. Wikipedia
  • As is – describing the sale of an asset in which the seller gives no guarantee on the quality of the asset and makes no repairs that may be necessary. An “as is” sale transfers all risk to the buyer. Farlex Financial Dictionary
  • Assignment – a legal term used in the context of the law of contract and of property. In both instances, assignment is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. Wikipedia
  • Balloon Payment Mortgage – a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Wikipedia
  • Basis Points – a value equaling one one-hundredth of a percent (1/100 of 1%). One basis point is equal to 0.01%. Farlex Financial Dictionary
  • Blanket Mortgage – a type of loan used to fund the purchase of more than one piece of real property. Blanket loans are popular with builders and developers who buy large tracts of land, then subdivide them to create many individual parcels to be gradually sold one at a time. Wikipedia
  • Borrower – a person or company that has received money from another party with the agreement that the money will be repaid. Farlex Financial Dictionary
  • Break-even Ratio (BER) – estimates how vulnerable a property is to defaulting on its debt should rental income decline. Wikipedia
  • Bridge Loan – a short-term loan,usually from a bank,that “bridges”the period between the closing of a home purchase and the closing of a home sale. Farlex Financial Dictionary
  • Building Inspection – an inspection performed by a building inspector, a person who is employed by either a city, township or county and is usually certified in one or more disciplines qualifying them to make professional judgment about whether a building meets building code requirements. Wikipedia
  • Building Occupancy Classifications – refer to categorizing structures based on their usage and are primarily used for building and fire code enforcement. They are usually defined by model building codes, and vary, somewhat, among them. Often, many of them are subdivided. Wikipedia
  • Buyer Agency – the practice of real estate brokers and their agents representing a buyer in a real estate transaction. Wikipedia
  • Cancellation Clause – a clause in a contract or lease that allows one or either party to cancel it upon the happening of certain named events other than a default.  Farlax Financial Dictionary
  • Capitalization Rate (Cap Rate) – a real estate valuation measure used to compare different real estate investments. Although there are many variations, a cap rate is often calculated as the ratio between the net operating income produced by an asset and current market value. Wikipedia
  • Cash-on-Cash Return (CCR) – the ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage. Wikipedia
  • Certificate of Occupancy – a document issued by a local government certifying that a structure has passed all required inspections and is ready for occupancy. Farlex Financial Dictionary
  • Closing Costs – fees paid at the closing of a real estate transaction. Wikipedia
  • Co-borrower – one or more persons who have signed the note and are equally responsible for repaying the loan. Farlex Financial Dictionary
  • Commercial Real Estate – commercial property, also called commercial real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. Wikipedia
  • Commercial Mortgage – a mortgage loan secured by commercial property, such as an office building, shopping center, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property. Wikipedia
  • Commission – a form of payment to an agent for services rendered. Wikipedia
  • Common Area Maintenance – CAM for short, are one of the net charges billed to tenants in a commercial triple net (NNN) lease, and are paid by tenants to the landlord of a commercial property. A CAM charge is an additional rent, charged on top of base rent, and is mainly composed of maintenance fees for work performed on the common area of a property. Wikipedia
  • Compound interest – the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Wikipedia
  • Conforming Mortgage – a loan eligible for purchase by the two major federal agencies that buy mortgages, Fannie Mae and Freddie Mac. Farlex Financial Dictionary
  • Contingency Clause – a clause that allows cancellation of a contract without penalty if a certain described thing happens. Farlex Financial Dictionary
  • Contract – a contract between parties for the purchase and sale, exchange, or other conveyance of real estate. Wikipedia
  • Conventional Mortgage – a loan based on the credit of the borrower and on the collateral for the mortgage. Farlex Financial Dictionary
  • Credit History – a record of a borrower’s responsible repayment of debts. Wikipedia
  • Credit Report – a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. Wikipedia
  • Credit Score – a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. Wikipedia
  • Debt Service Coverage Ratio (DSCR) – the ratio of operating income available to debt servicing for interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity’s (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. Wikipedia
  • Debt Ratio – a financial ratio that indicates the percentage of a company’s assets that are provided via debt. It is the ratio of total debt (long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as ‘goodwill’). Wikipedia
  • Debt-to-Income Ratio (DTI) – the percentage of a consumer’s monthly gross income that goes toward paying debts. There are two main kinds of DTI: front-end ratio (indicates the percentage of income that goes toward housing costs) and back-end ratio (indicates the percentage of income that goes toward paying all recurring debt payments). Wikipedia
  • Deed – any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property.  Wikipedia
  • Deed Restriction – A provision placed in a deed restricting or limiting the use of the property in some manner. Farlex Financial Dictionary
  • Discount Point – one percentage point of the principal of a mortgage loan that some lenders require borrowers to pay immediately as a condition of making the loan. Farlex Financial Dictionary
  • Down Payment – the amount, usually stated as a percentage, of the total cost of a property that you pay in cash as part of a real estate transaction. Farlex Financial Dictionary
  • Due Diligence – the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. Wikipedia
  • Earnest money – a small amount of money that a seller requires a potential buyer to deposit before a transaction is completed. Earnest money ensures that the potential buyer is serious about the transaction and will be likely to complete it when the time comes. Farlex Financial Dictionary
  • Easement – a nonpossessory right to use and/or enter onto the real property of another without possessing it. Wikipedia
  • Escrow – a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties. Wikipedia
  • Environmental Assessment – a study of land to determine if there are any factors such as would possibly give rise to concerns about hazardous materials, protected species, historic remains, or other such factors. Farlex Financial Dictionary
  • Equal Credit Opportunity Act – designed to ensure that all qualified people have access to credit. It forbids lenders from rejecting credit applicants on the basis of race, gender, marital status, age, or national origin and requires lenders to consider public assistance in the same light as other forms of income. Farlex Financial Dictionary
  • Equity – the market value of a homeowner’s unencumbered interest in their real property, that is, the difference between the home’s fair market value and the outstanding balance of all liens on the property. Wikipedia
  • Escalation clause – a clause in any of a wide variety of contractual or real property arrangements that allows one party to increase the price upon the happening of certain specified events. Farlex Financial Dictionary
  • Fannie Mae – Federal National Mortgage Association (FNMA). A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. Farlex Financial Dictionary
  • Federal Housing Administration (FHA) – An agency of the United States federal government responsible for encouraging homeownership. It does this primarily by providing insurance to private mortgage lenders. It finances its activities by buying mortgages from the lender, repackaging them as mortgage-backed securities, and re-selling them. Farlex Financial Dictionary
  • Finance charge – any fee representing the cost of credit, or the cost of borrowing. Wikipedia
  • Fixed-Rate Mortgage – a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan. Wikipedia
  • Freddie Mac – Federal Home Loan Mortgage Corporation (FHLMC). A Congressionally chartered corporation that purchases residential mortgages in the secondary market from S&Ls, banks, and mortgage bankers and securities for sale in the capital markets. Farlex Financial Dictionary
  • Ginnie Mae – Government National Mortgage Association (GNMA). A United States government-owned enterprise that buys mortgages from banks and pools them, selling the pools as mortgage-backed securities. Ginnie Mae securities are backed by the full faith and credit of the United States and as such are consider risk-free investments. Farlex Financial Dictionary
  • Government-backed Loan – a loan subsidized by the government, also known as a Federal Direct Loan, which protects lenders against defaults on payments, thus making it a lot easier for lenders to offer potential borrowers lower interest rates. Its primary aim is to make home ownership affordable to lower income households and first-time buyers. Wikipedia
  • Grantee – a person or entity receiving the property. Wikipedia
  • Grantor – a person or other entity giving the property. Wikipedia
  • Gross Rent Multiplier (GRM) – the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities; GRM is the number of years the property would take to pay for itself in gross received rent.  Wikipedia
  • Hard Money Loan – a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan. Wikipedia
  • Home Equity Line of Credit (HELOC) – a line of credit in which one borrows against the value of one’s home. That is, the collateral on a home equity line of credit is one’s house. Farlex Financial Dictionary
  • Home Equity Loan – a loan in which the one borrows against the value of one’s home. That is, the collateral of a home-equity loan is one’s house. Farlex Financial Dictionary
  • Home Inspection – a limited, non-invasive examination of the condition of a home, often in connection with the sale of that home. Home inspections are usually conducted by a home inspector who has the training and certifications to perform such inspections. Wikipedia
  • Homeowner Association (HOA) – a private association often formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision. Wikipedia
  • Homeowner’s Insurance – An insurance policy protecting a homeowner against damage or loss to property. Farlex Financial Dictionary
  • Income Property – Property intended to produce income for its owners, especially from rent. Farlex Financial Dictionary
  • Interest Only Loan – a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. At the end of the interest-only term the borrower must renegotiate another interest-only mortgage, pay the principal, or, if previously agreed, convert the loan to a principal-and-interest payment (amortized) loan at the borrower’s option. Wikipedia
  • Interest Rate – the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. Wikipedia
  • Joint Tenants in Common – a way for two or more persons to own property together. Joint tenants in common may own equal or unequal shares of the property (but shares are usually equal), and there are no rights of survivorship. That is, when one of the co-owners dies, his/her share of the property becomes part of his/her estate and passes on to heirs. Farlex Financial Dictionary
  • Jumbo Loan – . A mortgage loan that exceeds the limits for securitization by U.S. government mortgage banks. As such, a jumbo loan cannot be guaranteed or securitized by Freddie Mac or Fannie Mae. Farlex Financial Dictionary

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  • Land Lease (Ground Lease) – a long-term lease of land in which the tenant will erect improvements at its own expense. Farlex Financial Dictionary
  • Listing Agent – the real estate agent who obtained a listing contract from a property owner, authorizing the broker for whom the agent works to market and solicit offers to buy the owner’s property on specified terms and conditions. Farlex Financial Dictionary
  • Low Income Housing Tax Credits (LIHTC) – a dollar-for-dollar reduction in one’s tax liability due to an investment in a housing complex for low and moderate income persons. Farlex Financial Dictionary
  • Mortgage Insurance – an insurance policy that provides coverage to a lender in the event that a borrower defaults on a mortgage. This ensures that the lender does not incur a loss if the borrower is unable to repay the loan. While the lender pays the premium, it generally passes on payment to the borrower (and may roll it into the monthly mortgage payment). Farlex Financial Dictionary
  • Mortgage Note – a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. Wikipedia
  • Mortgage Protection Insurance (MPI) – an insurance policy that makes mortgage payments on behalf of the policyholder in the event of financial hardship. Farlex Financial Dictionary
  • Mortgage Servicer – a company to which some borrowers pay their mortgage loan payments and which performs other services in connection with mortgages and mortgage-backed securities. The mortgage servicer may be the entity that originated the mortgage, or it may have purchased the mortgage servicing rights from the original mortgage lender. Wikipedia
  • Mortgage Underwriting – the process a lender uses to determine if the risk of offering a mortgage loan to a particular borrower under certain parameters is acceptable. Wikipedia
  • Multi-family Residential – a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex. Units can be next to each other (side-by-side units), or stacked on top of each other (top and bottom units). Wikipedia
  • Negative Amortization –  a loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later. Farlex Financial Dictionary
  • Non-conforming Loan – a loan that fails to meet bank criteria for funding. Wikipedia
  • Occupancy Cost – costs related to occupying a space including; rent, real estate taxes, personal property taxes, insurance on building and contents, depreciation, and amortization expenses. Wikipedia
  • Opportunity Zone – a designation and investment program created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. Wikipedia
  • Option Period – in Texas, a short period of time during which a seller of real estate may not to sell to anyone other than the person or entity who placed a bid. This gives the potential buyer time to perform inspections without placing his/her earnest money at risk. The potential buyer pays a non-refundable option fee, which is distinct from earnest money, in order to take advantage of an option period. Farlex Financial Dictionary
  • Origination Fee -an upfront fee charged by some lenders, expressed as a percent of the loan amount. Farlex Financial Dictionary
  • Owner Financing (Seller Financing) – loan provided by the seller of a property or business to the purchaser. Wikipedia
  • Passive Income – income that requires minimal labor to earn and maintain. Wikipedia
  • Piggyback Second Mortgage – piggyback second mortgages are originated concurrently with the first mortgage to finance the purchase of a home in a single closing process. In a conventional mortgage arrangement, homebuyers are permitted to borrow 80 percent of the property’s value whilst placing a down payment of 20 percent. Wikipedia
  • PITI – an acronym for a mortgage payment that is the sum of monthly principal, interest, taxes, and insurance. Wikipedia
  • Preapproval – a commitment by a mortgage lender to provide a loan with a certain monthly payment to a borrower. Farlex Financial Dictionary
  • Prequalification – the act or process of determining the approximate amount a borrower will be able to borrow before he/she actually applies for a loan. Farlex Financial Dictionary
  • Prepaid interest – Interest on a loan that is paid before it is billed to the borrower. Farlex Financial Dictionary
  • Prepayment Penalty – a fee that a lender may assess if a borrower repays a loan before the scheduled maturity. Farlex Financial Dictionary
  • Principal – amount of money originally invested or loaned, on which basis interest and returns are calculated. Wikipedia
  • Promissory Note – a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms. Wikipedia 
  • Property Tax – an ad valorem tax on the value of a property. Wikipedia
  • Purchase Price – the contractually agreed upon price for a property, before credits, adjustments, or concessions. Farlex Financial Dictionary
  • Purchase and Sale Agreement – an agreement between a buyer and a seller of real estate property, company stock, or other assets. Wikipedia
  • Quitclaim Deed – a legal instrument that is used to transfer interest in real property. The entity transferring its interest is called the grantor, and when the quitclaim deed is properly completed and executed, it transfers any interest the grantor has in the property to a recipient, called the grantee.[1] The owner/grantor terminates (“quits”) any right and claim to the property, thereby allowing the right or claim to transfer to the recipient/grantee. Wikipedia
  • Qualifying Ratio – the maximum debt-to-income ratio for a mortgage. Farlex Financial Dictionary
  • Rate Lock – an agreement between a mortgage bank and a potential borrower promising that that the bank will not change the proposed interest rate on a loan that has not been concluded for a certain period of time. Farlex Financial Dictionary
  • Real Estate Agent – a person who facilitates the sale of real estate. Farlex Financial Dictionary
  • Real Estate Investment Trust (REIT) – a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate. Wikipedia
  • Real Estate Owned (REO) – a term used in the United States to describe a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. Wikipedia
  • Real Property – Land and the improvements on it. Farlex Financial Dictionary
  • Realtor – a designation reserved for members of the National Association of Realtors, and encompasses both real-estate agents and real-estate brokers. Farlex Financial Dictionary
  • Residential Mortgage – A loan that one or more persons receive in order to buy a house or other residential property in which they will live. Farlex Financial Dictionary
  • Residential Property – any property that a municipality has designated for single family homes, apartments, co-operatives, townhouses, and any other place where people live. Farlex Financial Dictionary
  • Return on Investment (ROI) – the money that a person or company earns as a percentage of the total value of his/her/its assets that are invested (ROI = (Income – Cost) / Cost). Farlex Financial Dictionary
  • Reverse Mortgage – a loan borrowed against the value of one’s home. In this situation, the lender gives the borrower the amount of the loan and the borrower makes no payments and retains title to his/her home. Farlex Financial Dictionary
  • Right of First Refusal – the right of a person or organization to take advantage of a transaction before it is open to other parties. Farlex Financial Dictionary
  • Right of Rescission – the right to void a contract without any penalty within three days as provided in the Consumer Credit Protection Act of 1968. Farlex Financial Dictionary
  • Second Mortgage – a property lien that is subordinate to another mortgage on the same property. Farlex Financial Dictionary
  • Survey – The process by which land is located with reference to commonly agreed upon landmarks or other points of reference, and then measured out for all of its boundaries, including distances and direction-and-degree of turns. Farlex Financial Dictionary
  • Title Insurance – a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Wikipedia
  • Title Search – in real estate, research done to trace a title back to its original owner or back to some date dictated by statute. A title search is done before the sale of property to ensure that there are no competing claims for the same property. A title search protects the mortgage lender from the possibility that that a competing claim will be honored in court, resulting in a loss. Farlex Financial Dictionary
  • Truth in Lending Act -Title I of the Consumer Credit Protection Act. It is a federal law that requires lenders to make certain disclosures to potential borrowers within 3 days after receipt of a written loan application. A final disclosure statement is provided at the time of loan closing. Farlex Financial Dictionary 
  • U.S. Department of Agriculture (USDA) – the federal executive department responsible for developing and executing federal laws related to farming, forestry, rural economic development, and food. Wikipedia
  • U.S. Department of Housing & Urban Development (HUD) – a Cabinet department in the executive branch of the U.S. federal government that was founded to develop and execute policies on housing and metropolises. Wikipedia
  • U.S. Department of Veterans Affairs (VA) – a Cabinet-level executive branch department of the federal government charged with integrating life-long healthcare services to eligible military veterans at the 1700 VA medical centers and outpatient clinics located throughout the country. Non-healthcare benefits include disability compensation, vocational rehabilitation, education assistance, home loans, and life insurance; and provides burial and memorial benefits to eligible veterans and family members at 135 national cemeteries. Wikipedia
  • Valuation – the appraisal of land or buildings. Wikipedia
  • Waiver – a statement of the voluntary surrender of a right. Farlex Financial Dictionary

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  • Zoning – method of urban planning in which a municipality or other tier of government divides land into areas called zones, each of which has a set of regulations for new development that differs from other zones. Wikipedia

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