Realized 1031 Glossary of Terms

Interest Rate Swap

Written by The Realized Team | Jun 22, 2022 3:06:00 PM

An interest rate swap is a forward contract between lender and borrower that trades one stream of future debt service payments with another based on a change in the interest rate on a specified principal amount. This change in interest rate is typically done as an exchange of a floating rate for a fixed rate, or vice versa, in order to reduce the risk of fluctuating short-term interest rates, or potentially pay lower interest payments.