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.
Leverage in real estate refers to the use of borrowed capital, typically mortgage loans, to finance a property purchase, aiming to amplify potential investment returns on the equity invested.
A lien is a legal claim or right against a property, granted to a creditor, which serves as security for a debt or obligation until it is satisfied.
A Line of Credit (LOC) is a flexible financing option that allows borrowers to draw funds as needed, up to a pre-approved limit, and only pay interest on the amount borrowed. It provides continuous access to capital, making it a versatile tool for real estate investors.
A loan application is a formal document submitted to a financial institution to request borrowed funds, providing detailed personal and financial information for credit assessment.
Loan approval is a lender's official decision to provide financing for a property purchase, based on a comprehensive evaluation of the borrower's financial stability and the property's value.
The systematic evaluation by a lender to determine a borrower's eligibility for a loan, assessing creditworthiness, financial stability, and the property's value.
Loan assumption allows a buyer to take over an existing mortgage from a seller, often retaining the original interest rate and terms, which can be advantageous in rising interest rate environments.
Loan covenants are legally binding conditions within a loan agreement that borrowers must adhere to, designed to protect the lender's interests by ensuring financial health and responsible asset management throughout the loan term.
Loan default is the failure of a borrower to fulfill the terms of a loan agreement, typically by missing required payments, which can lead to severe financial consequences like foreclosure and credit score damage.
The collection of legal agreements and disclosures that outline the terms, conditions, and obligations between a borrower and a lender for a real estate loan, formalizing the debt and collateral.
A loan draw is a disbursement of funds from a construction or rehabilitation loan, released in stages as specific project milestones are completed and verified by inspections.
A loan modification is a permanent adjustment to the terms of an existing mortgage or loan, typically made by the lender to help a borrower facing financial hardship avoid default and foreclosure.
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.