Ghana Real Estate Glossary Vol. 4

real estate terminologies

Your favorite real estate portal, Jumia House, continues from last week’s post on some key real estate terms and their meanings.

Carry-Cost Rule
The carry-cost rule is used by banks to evaluate borrowers for loans.  It gives the maximum percentage of a borrower’s income that the bank will find acceptable to carry the loan and related housing costs.  This rule is used in conjunction with the debt/equity ratio.

Certificate of Occupancy (C of O)
The Certificate of Occupancy is a certificate issued by a local governmental entity responsible for the use of land in the community where the property is located stating that the structures on the property or any improvements made to these structures comply with the codes, ordinances and regulations of that governmental entity and that they may be occupied.

Closing Costs
Closing costs are the expenses incurred in the purchase and sale of real property paid at the time of settlement or closing.  Some examples of closing costs are title insurance, attorney fees, appraisal fees, recording fees and taxes.

Closing Statement
A closing statement is an accounting of the funds received and distributed in a real estate transaction.

Damages
Damages is the amount of financial loss incurred as a result of another’s action.

Debt-to-Equity Ratio
The debt-to-equity ratio, also referred to as the loan-to-value ratio, is a rule used by banks requiring that a borrower invest a minimum amount of equity cash (usually 10% to 25% of the purchase price) as a condition to obtaining a mortgage.  The rule is used in conjunction with the carrying-cost rule to determine how much money a bank will lend.  A ratio of 1 means 100% leverage of a property, and higher than 1 means negative equity.

Debt-to-Equity Ratio
The debt-to-equity ratio, also referred to as the loan-to-value ratio, is a rule used by banks requiring that a borrower invest a minimum amount of equity cash (usually 10% to 25% of the purchase price) as a condition to obtaining a mortgage.  The rule is used in conjunction with the carrying-cost rule to determine how much money a bank will lend.  A ratio of 1 means 100% leverage of a property, and higher than 1 means negative equity.

Debt-to-Income Ratio or Debt-Service Ratio
The debt-to-income ratio is the relationship of a borrower’s monthly payment obligation on long-term debts divided by gross monthly income, expressed as a percentage.  It is also known as bottom ratio.

Deed
A deed is a written instrument transferring an interest in real property when delivered to the grantee.

Economic Depreciation
Economic depreciation is the physical deterioration of property caused by normal use, damage caused by natural or other hazards, and failure to adequately maintain property.

 

Credit: worklife.columbia.edu

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