Rates & InterestAPR
Annual Percentage Rate (APR)
The true annualized cost of borrowing, reflecting the nominal interest rate plus lender origination fees, points, and closing costs.
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Financial Industry Glossary & Underwriting Guide
Master essential home mortgage, auto financing, interest rate, and underwriting terminology with interactive calculators, mathematical formulas, and practical lending guidelines.
Terms Starting With "R"
Showing 11 definitionsRates & InterestAPY
Annual Percentage Yield (APY)
The real rate of return earned on a deposit or investment over one year, taking into account the power of compound interest.
Rates & Interest
Prime Rate
The benchmark interest rate that commercial banks charge their most creditworthy corporate borrowers.
Rates & InterestSOFR
Secured Overnight Financing Rate (SOFR)
A benchmark interest rate based on the cost of borrowing cash overnight collateralized by US Treasury securities, replacing LIBOR.
Rates & InterestBPS
Basis Points (BPS)
A standard unit of measurement for interest rates and financial percentages equal to 1/100th of 1% (0.01%).
Rates & Interest
Balloon Payment
A significantly large, lump-sum payment due at the end of a short-term or partially amortizing loan.
Rates & Interest
Capitalization Rate (Cap Rate)
A real estate valuation metric that expresses a property’s unleveraged annual rate of return by dividing its Net Operating Income (NOI) by its current market value.
Rates & InterestCoC
Cash-on-Cash Return (CoC)
A leveraged real estate return metric that measures the annual pre-tax cash flow generated by a property as a percentage of the actual out-of-pocket cash invested.
Rates & Interest
Prepayment Penalty (Step-Down & Hard/Soft)
A contractual fee clause in commercial, DSCR investor, and non-QM loans that charges the borrower a percentage fee if the loan is paid off or refinanced within an initial lock-out window.
Rates & Interest
Mortgage Constant (Loan Constant)
The total annual debt service (principal plus interest) of an amortizing loan expressed as a percentage of the original loan principal, used by investors to test for positive or negative leverage.
Rates & Interest
Yield Maintenance Prepayment Defeasance
A commercial mortgage prepayment provision designed to make the lender financially whole for lost interest spread if a loan is paid off when current U.S. Treasury yields are lower than the original note rate.