Shared Appreciation Mortgage (SAM)
Definition of "Shared Appreciation Mortgage (SAM)"
A type of equity participation loan where, in exchange for charging a below-market interest rate, the lender receives a predetermined percentage of a any increase in value of the property over a specified period of time. To illustrate, a lender who would otherwise charge 10% interest, might agree to take &% interest plus one-third of the appreciation of the property. For the lender, the money received from the appreciation of the property increases the effective yield on the investment. The borrower, by agreeing to share appreciation in property value gets a lower interest rate, which in turn reduces the monthly mortgage payment. A SAM is normally written so that at the end of the shared appreciation period, the property will be appraised and the amount due to the lender through appreciation is due at that time.
Popular Real Estate Terms
Significant elevation of land. Narrow upward strip. Connection of edges between different sloping surfaces. ...
Gentrification is an urban development phenomenon wherein a specific area changes its population profile by way of an economic appreciation of its real estate. The best way to understand ...
Designing a home with a Spanish cultural flavor. ...
Brick wall where a space or cavity is left between the inner and outer walls and is usually filled with insulation. ...
A statistical procedure using a body of measurable independent variables to compute an equation that successfully measures and forecasts the variance in another variable, the dependent ...
Net return rate earned on an equity investment in real estate after deducing any interest costs and taxes. ...
Contractual provision allowing an individual or business to renege on a commitment in certain cases without being penalized. ...
Insurance or maintenance policy taken out by a buyer of real or personal property. ...
Use of other people's money (OPM) in an attempt to maximize the return but at high risk. The use of leverage in real estate investing is a way to maximize yield on a small down payment. ...
Have a question or comment?
We're here to help.