Delinquency Rate is a critical metric in real estate finance, used to gauge the risk of loan defaults within a portfolio. It measures the percentage of loans that are past due for a specified period, typically 90 days or more.
Exposure in a financial context refers to the amount of money that one might potentially lose on an investment or business operation. It represents the degree of risk associated with the unprotected portion of an investment or asset.
Financial risk refers to the increased potential for volatility in investment performance created by the use of borrowed money. This concept is closely tied to leverage and equity investment, impacting the overall financial stability of an investment.
Prepayment risk is the probability that a fixed-income security will be retired before its term ends, typically caused by a borrower's provision to prepay the loan balance at any time without penalty, impacting the expected returns for investors.
In real estate, risk refers to the potential for an investment to achieve lower or higher returns than expected. Effective risk management strategies, such as diversification and insurance, can mitigate associated uncertainties.
