Loan types, lending terms, mortgage products, hard money lending, and financing strategies for real estate.
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Foundation terms you need to know first (57 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 (38 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 financing strategy is a comprehensive plan detailing how a real estate investor will fund property acquisitions, manage capital, and structure deals to achieve investment objectives while controlling risk.
A first-time homebuyer is an individual who has not owned a primary residence in the last three years, making them eligible for special loan programs and financial assistance designed to facilitate homeownership.
Government-backed and private initiatives designed to help individuals purchase their first home by offering financial assistance, favorable loan terms, and educational resources.
A specialized short-term real estate loan designed for investors to purchase, renovate, and quickly resell distressed properties for profit, typically covering both acquisition and rehabilitation costs.
A fixed-rate mortgage is a home loan with an interest rate that remains unchanged for the entire loan term, providing stable and predictable monthly payments.
Foreclosure is the legal process by which a lender takes possession of a property when the borrower fails to make mortgage payments, leading to the sale of the property to recover the outstanding debt.
The foreclosure process is the legal procedure by which a lender repossesses a property from a borrower who has defaulted on their mortgage, typically leading to a public sale to recover the outstanding debt.
The process of providing capital for a real estate investment or project, typically involving a mix of debt and equity to acquire, develop, or refinance properties.
Gift funds are money provided by an eligible donor, typically a family member, to a homebuyer to help cover a down payment or closing costs. These funds are not expected to be repaid.
Debt considered beneficial because it helps acquire assets that appreciate in value or generate income, ultimately improving financial health.
Government securities are debt instruments issued by a national government to finance its spending, representing a low-risk investment for lenders and serving as a benchmark for other interest rates in the economy.
Grant programs provide non-repayable financial assistance from government, non-profit, or private sources for specific real estate purposes, such as homeownership, rehabilitation, or community development, reducing an investor's out-of-pocket expenses.
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