Credit scores, debt consolidation, loan management, credit repair, and debt payoff strategies.
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Foundation terms you need to know first (20 terms)
Consumer debt is money owed by individuals for personal goods and services, such as credit card balances, auto loans, and student loans, which directly impacts an investor's financial health and borrowing capacity for real estate.
A credit bureau is a company that collects and maintains financial information about individuals, compiling it into credit reports used by lenders to assess creditworthiness.
A credit inquiry is a request by a lender or other authorized party to view your credit report, which can be either a hard inquiry (impacting your score) or a soft inquiry (no impact).
Mortgage debt is the total outstanding amount of money a borrower owes to a lender for a loan secured by real estate. It typically includes the remaining principal balance and any accrued interest, paid over a set period.
Debt considered beneficial because it helps acquire assets that appreciate in value or generate income, ultimately improving financial health.
Complex strategies and professional concepts (1 terms)
A credit report is a detailed record of an individual's credit history, including borrowing and repayment activities, used by lenders to assess creditworthiness.
Credit utilization is the percentage of your available revolving credit that you are currently using, calculated by dividing your total credit card balances by your total credit limits. It's a key factor in your credit score.
The Debt Avalanche is a debt repayment strategy focused on paying off debts with the highest interest rates first, while making minimum payments on all other debts, to minimize total interest paid and accelerate debt elimination.
Debt consolidation is a financial strategy where multiple debts, often with varying interest rates and terms, are combined into a single, new loan, typically with a lower interest rate or more favorable payment structure.
Debt management in real estate investing involves strategically handling financial obligations to optimize cash flow, reduce risk, and maximize returns from investment properties. It encompasses various strategies for acquiring, servicing, and restructuring debt.
Debt paydown is the process of reducing the outstanding principal balance of a loan, such as a mortgage, over time. This gradual reduction builds equity and increases an investor's ownership stake in a property.
Debt reduction is the strategic process of paying down outstanding loan balances, particularly mortgages, faster than scheduled to minimize interest expenses, increase equity, and improve an investor's financial position.
The Debt-to-Income (DTI) Ratio is a financial metric used by lenders to assess a borrower's ability to manage monthly payments and repay debts, calculated by dividing total monthly debt payments by gross monthly income.
A derogatory mark is a negative entry on a credit report that indicates a borrower has failed to meet their financial obligations, signaling higher risk to lenders and impacting loan eligibility and interest rates.
A FICO Score is a three-digit number that summarizes your credit risk, used by lenders to determine your creditworthiness for loans, including mortgages.
Financial habits are the routine behaviors and decisions individuals make regarding their money, influencing their financial well-being and ability to achieve investment goals. These habits are crucial for building capital, managing debt, and securing favorable financing for real estate ventures.
A financial profile is a comprehensive summary of an individual's or entity's financial health, encompassing income, expenses, assets, liabilities, and credit history, crucial for assessing creditworthiness and investment capacity.
Explore complementary areas that build on credit & debt management concepts
Personal budgeting, expense tracking, cash flow management, emergency funds, and savings strategies.
Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
Wills, trusts, estate taxes, succession planning, beneficiary planning, and wealth preservation.
Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.