Definition of "Margin"
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
Administrator of estate is a term used in common-law jurisdiction for a person assigned a particular responsibility. The administrator of estate definition describes a court-appointed ...
Amount the taxpayer gets back when he or she files the tax return at the end of the reporting year because taxes were overpaid for that year. The tax overpayment equals the tax payments ...
national trade association of people engaged in the mortgage banking business, dedicated to the betterment of the mortgage banking industry through education, legislation, and high ethical ...
The real estate arbitration definition is an alternative way to settle disputes when the parties involved want to avoid a trial. There are some significant differences between an ...
The rate at which a market can absorb additional units of supply without causing market saturation and severe price distortions. For example, during a recessionary period, many homeowners ...
An adversary hearing allows both parties to an issue to present their views. A public procedure performed by an administrative or legislative body to investigate certain matters and ...
Generally speaking, a moratorium covers a provisional or limited activity suspension. Temporary financial troubles or funding constraints can trigger issuing a lull. This postponement lasts ...
3D Printed Homes are basically homes that were printed via 3D Printers. Though semantically the phrase is pretty obvious and straightforward, there’s a lot we need to contextualize ...
Enclosed building that stores agricultural products (hay, livestock or farm equipment). ...
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.