Definition
Capitalization Rate
Net operating income divided by property value. Used to compare investment properties independent of financing.
Nearby terms
Buydown
Paying upfront to reduce the interest rate, either permanently (discount points) or temporarily (a 2-1 or 3-2-1 structure).
Cap
A limit on how much an ARM rate can change at first adjustment, at each subsequent adjustment, and over the life of the loan.
Cash-on-Cash Return
Annual pre-tax cash flow divided by total cash invested.
Cash-Out Refinance
Replacing an existing mortgage with a larger one and receiving the difference in cash.
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