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
An Option Listing agreement is one of the many specificities of a Listing Agreement. Here’s what happens when the house seller signs an Option Listing: he gives someone (a home buyer, ...
A roof forming a triangle from the eaves to the ridge of the roof. ...
Conversion of a rental apartment house to individual condominium ownership of a portion of the minimum ownership of a portion of the building. Often, the tenant is given an opportunity to ...
Lender (such as a bank) that has the property of the borrower as collateral (security, lien). If the mortgage is not paid, the property may be sold to make payment on the outstanding ...
Geographic location where a court action and trial takes place. The legal proceedings should occur in the place where jurisdiction applies. A "change of venue" may occur in a criminal ...
Timber wood situated on the exteriors of a loading deck to safeguard it from damage resulting when trucks unload and load. ...
A recorded plat defines a subdivision map that you have to file in the county recorder’s office. It will show the location and boundaries of your parcels of land. Knowing this, we can ...
In real estate, Attractive Nuisance is how insurance companies classify something that is inherently dangerous and particularly enticing to children. A hazard located within a property that ...
Interest rate on a mortgage that moves up or down based on some variable such as an index of lender's cost of funds, inflation rate, or prime rate. ...
Have a question or comment?
We're here to help.