Deferred financing cost

Hey kiddo, have you heard about the concept of borrowing money? It's when someone needs money but doesn't have it, so they ask someone else for it and promise to pay it back later.

Well, sometimes when you borrow money, you need to pay some extra fees that are not actually for the money you borrowed, but for the people who lent you the money to cover their own costs. These fees are called deferred financing costs.

Think of it like this: if you borrow $10 from your friend, they may ask for an extra $1 as a fee for lending you the money. This is kind of like the deferred financing cost. And just like how you promised your friend to give them back the $10 plus the extra $1, when you borrow money from a bank or a company, you promise to pay back not only the money you borrowed but also these extra fees.

These deferred financing costs can include things like loan origination fees, legal fees, and underwriting fees. And sometimes, instead of paying them all at once, you can spread them out over time and include them in your loan payments.

So, when you hear someone talking about deferred financing costs, just remember that it's an extra fee you might need to pay when you borrow money, and it helps the lender cover their own costs for lending you that money.