Investors Capital - Definitions

Rates - Because interest rates can be dynamic, changing daily, or in the case of Treasury rates minute to minute, it's best to work with us through the process to first: get today's rate for analysis and comparison; then, secure competitive quotes to assure the best rate. We employ state of the art software in determining what loan amount the income stream will support and utilize our resources networking to identify the best source of funding for that specific borrowing requirement.

Index - The programs Lenders offer dictate the type of Index used and are tailored to fit their lending strategies. In terms of volatility, the following ranks the most common indices with the most volatile Index rates first: (to learn more, click on the links to see current rates and definitions)

Prime Rate	http://www.nfsn.com/library/prime.htm
LIBOR	http://www.bankrate.com/goocalj/ratehm.asp
12 MAT (or MTA)	http://www.nfsn.com/library/mta.htm
CMT	http://www.nfsn.com/library/cmt.htm
COFI (11th District)	http://www.nfsn.com/library/cofi.htm
Variable Rate	A mortgage with an interest rate that changes periodically, according to an index that is selected when the mortgage is issued. The initial interest rate is lower than that of fixed-rate mortgages, but monthly payments can increase or decrease as the rate is adjusted.
Fixed Rate	Typically a rate fixed for a period of time, set initially above the corresponding Treasury rate or other index. (i.e., 10Year Treasury for 10 year term - 5 Yr. Treasury for a fixed 5 year term)

Spread (Margin) - The spread is the fixed portion of the interest rate over the index used IE: 10 year Treasury rate of say 4.50% + a lenders spread of 1.40 = 5.90% Interest rate.

Amortization - The time period over which the payment schedule is calculated. Most Commercial loans are calculated over 15 to 30 years.

Term - The life of the loan; for example: a 25 year amortization due in 10 years means the payments are calculated over 25 years and the loan is all due and payable in 10 years.

LTV - Loan to Value ratio. If a property's value is calculated or appraised to be $1,000,000.00 and the Loan to Value is 75% then the loan amount will be $750,000.00.

Net Operating Income (Income vs. Expense Info.) Total income less operating expenses, adjustments, etc., but before mortgage payments, tenant improvements and leasing commissions.

DSC/DCR/DSCR - Debt Service Coverage(Ratio) is the ratio of Net Operating Income (NOI) to Debt Service. If the NOI is $30,000 per year and the yearly payments total $24,000, then the loan payments are covered by one and a quarter times by the Income (Debt Service Coverage).

Recourse Options Options that determine the type of mortgage loan in which the lender's remedies in the event of borrower default are either limited or unlimited, and may extend beyond the property to the borrower's personal assets. Typical options include: Recourse, Non-Recourse, or Partial Recourse. Recourse - A type of mortgage loan in which the lender's remedies in the event of borrower default are unlimited, extending beyond the property to the borrower's personal assets. Non-Recourse - A mortgage in which the lender will not pursue personal liability against the borrower. The lender's security is the real estate being financed. Usually subject to standard carve outs including fraud and misrepresentation. Partial Recourse - a combination of recourse and non-recourse conditions.

These are some of the basic terms that are the 'common language' of arrangers of financing. There are a myriad of other terms and conditions that govern a transaction but it's best to discuss the specifics with us directly. For current rates and programs availabilities please give us a call.