In commerce and business, margin as a general term is defined as by the difference between the amount of money spent on a product and the selling price of it. The margin usually appears as a percentage of net sales revenues. For example, a retail store pays $5 for supplier goods and sells them for $10. This means that the margin of sales is 50% on these products.
Margin in financial accounting has a slightly different meaning. In accounting, there are three income statements that appear as a percentage of sales revenue. Gross margin, net profit margins, operating margin used by companies to measure earning performances.
Margin as far as investment goes is a measurement that indicated a change between the purchase price and the selling price of an asset. This creates leverage which means that the investor has gain or loss margins based on the value of the asset at the time of selling compared to the time of buying.
Margin in real estate
Let’s explain the meaning of margin In real estate, the term margin is tied to adjustable-rate mortgages(ARM). The ARM allows borrowers to pay a fixed interest rate for a determined period of time, after which it changes. At the time of the loan approval, a margin is set. As explained before it is a percentage and it determines the maximum interest rate that the borrower can set for the entire duration of the loan.
This means that the interest rate cannot be higher than the index of interest rates plus the margin. The index of interest rates is like a benchmark or a guide for lenders that helps them set interest rates. For example, if the margin is set at 3 percent, it means that your interest rate charges for your loan can only go as high as 3 percent above the index of interest rates.
Popular Real Estate Terms
income statement destroyed by a casualty such as a fire. This requires the reconstruction of the income statement based on source records, information, and documents. Income statement ...
Marketable title that is free of encumbrances and disputed interests. Clear title is essential in order to convey a general warranty deed in a transaction. ...
Process of simultaneously appraising several pieces of property. Normally, occurs when a local government conducts a reassessment. ...
Lienholder's statement as to the unpaid balance on a trust deed note. ...
Written document by an official granting agency and signed by an empowered official certifying that some specific act including the fulfillment of certain requirements has occurred on a ...
Opinion of a judge having no direct legal or binding effect on the outcome of a pending judicial decision. An obiter dictum is considered to be an incidental judicial remark about some ...
Loan in which two or more lenders participate in the total financing of a single mortgage. The lenders in a piggyback loan do not necessarily have equal shares. ...
Judicial order prohibiting a person or business from doing something. The court may issue this dictate when unlawful conduct or activity is occurring. ...
See annuity due. ...

Comments for Margin
can you explain the definition f margin in a much more simpler way
Mar 08, 2020 11:56:56Hello Jared,
Thank you for reaching out to us. At your notification, we have updated the glossary term. Feel free to read the new changes and get informed.
Mar 26, 2020 14:04:37Have a question or comment?
We're here to help.