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 (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 real estate Joint Venture (JV) is a collaborative business arrangement where two or more parties combine resources, expertise, and capital for a specific real estate project, sharing both the risks and rewards.
A judgment lien is a legal claim placed on a debtor's property, typically real estate, as a result of a court-ordered money judgment, securing the creditor's right to collect the debt.
A jumbo loan is a mortgage that exceeds the conforming loan limits set by the FHFA, used for financing high-value properties beyond the scope of conventional loans.
A junior lien is a claim on a property that is subordinate in priority to another existing claim, typically a first mortgage. In a foreclosure, junior lienholders are paid only after all senior lienholders have been fully satisfied, exposing them to higher risk.
A land contract is a seller-financed real estate agreement where the buyer makes payments directly to the seller, who retains legal title until the full purchase price is paid.
A lease option is a contract giving a tenant the exclusive right to purchase a property at a set price within a specific timeframe, without the obligation to buy.
A lender is an individual or financial institution that provides funds to a borrower for real estate acquisition or development, expecting repayment with interest. They are crucial for leveraging capital in real estate investment.
Lender risk assessment is the process financial institutions use to evaluate the potential for loss when extending credit for real estate investments, considering borrower, property, and market factors to determine loan approval and terms.
The lender spread is the difference between the interest rate charged on a loan and the lender's cost of funds, encompassing risk premium, operational costs, and profit margin. It directly impacts the total cost of financing for real estate investors.
Lender's interest refers to the financial stake a lender holds in a property or asset that serves as collateral for a loan, ensuring their investment is protected until the debt is fully repaid.
Length of credit history measures how long you've had credit accounts open and active, serving as a key indicator of your experience and reliability in managing debt for lenders.
Leverage in real estate is the use of borrowed capital, typically through mortgages, to finance property purchases and amplify potential investment returns.
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.