Oscar Castillo
"Residential" Real Estate

Y

    - Glossary

 

 

Yield    the return on an investment (ROI)or the amount of profit, stated as a percentage of the amount invested; the rate of return. In real estate, yield refers to the effective annual amount of income that is being accrued on an investment. The yield on income property is the ratio of the annual net income from the property to the cost or market value of the property. The yield, or profit, to a lender is the spread or differential between the cost of acquiring the funds lent and the interest rate charged.

Yield Spread Premium (YSP) -  is a fee, commission or rebate paid (by the lender) to a mortgage broker (who brokers the loan) for giving a borrower a higher interest rate (above the market mortgage rate) on a loan in exchange for lower up-front loan costs such as lower loan origination fees, broker fees or discount points. This practice was originally intended as a way to avoid charging the borrower any out-of-pocket fees.  The mortgage brokers will earn their commission and cover closing costs with a YSP.  However, many feel the intentions have been misguided, the thought process here is that the yield spread premium ends up as just another fee the borrower gets stuck paying over time – the net/end result is the borrower is to have a higher interest rate thus having a higher monthly mortgage payment. The YSP must be disclosed in the HUD-1 or Good Faith Estimate prior to Close of Escrow.

Yupcap - A slang term for a young urban professional who cannot afford property (sometimes looked upon as being in a situation where they are "priced out" for the time being). Yupcaps are people in their late twenties or early thirties with post secondary (college or university) educations and have well-paying jobs who are unable to purchase property due to factors such as high real estate prices, limited personal savings and limited credit history, all of which can make it difficult to get approved for a mortgage.

 

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