Loan types, lending terms, mortgage products, hard money lending, and financing strategies for real estate.
Master financing & mortgages with our progressive approach
Foundation terms you need to know first (55 terms)
A traditional bank mortgage is a conventional loan provided by a financial institution to purchase real estate, following guidelines from Fannie Mae and Freddie Mac, commonly used by investors to finance properties.
Principal paydown is the portion of your mortgage payment that reduces the outstanding loan balance, directly building equity in your real estate investment over time.
A repair credit is a financial concession from a seller to a buyer at closing, typically used to cover the cost of necessary repairs identified during a home inspection, reducing the buyer's upfront cash needed.
An owner-occupied property is real estate where the owner lives as their primary residence, often qualifying for favorable financing, lower down payments, and significant tax benefits.
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.
Complex strategies and professional concepts (37 terms)
Slow BRRRR is an advanced real estate investment strategy that extends the traditional BRRRR (Buy, Rehab, Rent, Refinance, Repeat) cycle over a longer period, often several years, to maximize equity appreciation and mitigate market risks.
A legally binding contract that alters the priority of liens on a property, allowing a senior lienholder to voluntarily place their claim in a junior position to another, typically to facilitate new financing or complex transactions.
Capital stacking is an advanced real estate financing strategy involving the layering of multiple debt and equity instruments to fund a property acquisition or development, optimizing the capital structure for specific risk-return profiles.
Premium financing is a sophisticated financial strategy where an investor borrows funds from a third-party lender to pay the premiums on a large insurance policy, typically a life insurance policy or substantial commercial property insurance, using the policy itself or other assets as collateral.
Subject-To investing is an advanced real estate strategy where an investor acquires a property by taking over payments on the seller's existing mortgage, without formally assuming the loan or notifying the lender.
A deficiency judgment is a court order holding a borrower personally responsible for the remaining balance on a loan after the collateral, such as real estate, sells for less than the outstanding debt, typically following a foreclosure or short sale.
The delinquency rate is the percentage of loans or payments that are past due, indicating the financial health of a loan portfolio or the broader real estate market. It's a key metric for assessing credit risk and market stability.
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.
Disbursement in real estate refers to the release or distribution of funds from an escrow account or a designated party to various recipients involved in a transaction or property operation, ensuring all financial obligations are met.
Discount points are an upfront fee paid to a lender at closing in exchange for a lower interest rate on a mortgage loan, effectively pre-paying some of the interest.
Dividend recapitalization is a corporate finance transaction where a company issues new debt to pay a large dividend to its shareholders, often used by private equity firms to extract value from an investment before a full exit.
A down payment is an initial upfront payment made when purchasing a property, representing a portion of the total purchase price and reducing the amount of money borrowed through a mortgage.
A draw schedule is a pre-determined plan for disbursing funds from a construction or rehabilitation loan in stages, linked to specific project milestones or work completion percentages.
A due-on-sale clause is a mortgage provision allowing the lender to demand immediate repayment of the entire loan balance if the property is sold or transferred without their consent, protecting against unauthorized loan assumptions.
Duration (Interest Rate) measures the sensitivity of a debt instrument's price to changes in interest rates, expressed in years. It is a critical metric for real estate investors managing fixed-income assets and liabilities, indicating the weighted average time until a bond's cash flows are received.
An Early Withdrawal Penalty is a fee charged by a lender if a borrower pays off a loan before its scheduled term or makes significant extra payments, often found in certain real estate loan agreements.
Earnest money is a deposit made by a buyer to a seller, held in escrow, demonstrating the buyer's serious intent to purchase a property and serving as security against buyer default.
Explore complementary areas that build on financing & mortgages concepts
Personal budgeting, expense tracking, cash flow management, emergency funds, and savings strategies.
Credit scores, debt consolidation, loan management, credit repair, and debt payoff strategies.
Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
Wills, trusts, estate taxes, succession planning, beneficiary planning, and wealth preservation.