Fixed Interest Rates and Variable Interest Rates in Commercial Real Estate
Every loan agreement comes standard with a form of interest that must be paid. Interest rates can be negotiable but usually appear in one of two forms: Variable or Fixed. A Variable Interest Rate loan has an interest rate on the outstanding balance that rises or falls based on the current status of the market interest rate. On the other hand, a Fixed Interest Rate loan has an interest rate that remains constant for the duration of the agreed loan term.
Loan Origination Fees in Commercial Real Estate
An origination fee when referring to a loan is the sum of money charged by a lender upon entering a loan agreement for the cost of processing the loan.
Loan Guarantee Fees in Commercial Real Estate
Loan guarantee fees are the fees charged to lenders for services like bundling, selling, and reporting mortgage-backed securities (MBS) to applicable investors. The fee is charged to protect against losses due to credit related issues in the mortgage portfolio.
Debenture in Commercial Real Estate
A debenture is a type of bond or rather a loan certificate given by a company that is unsecured and is supported by credit rather than collateral or physical assets. Debentures rely solely on the creditworthiness of the issuer. Like other bonds, debentures are noted in an indenture.