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.
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.
Subject-To real estate is an advanced acquisition strategy where an investor takes title to a property with an existing mortgage, agreeing to make payments without formally assuming the loan, leaving the original financing in the seller's name.
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.
A Subscription Agreement is a legal contract between an investor and a private company (or syndicator) outlining the terms for purchasing shares or units in a private offering, commonly used in real estate syndications to formalize capital commitment and ensure regulatory compliance.
A surety bond is a three-party agreement guaranteeing that a principal will fulfill contractual obligations to an obligee, with the surety company backing the principal's performance. In real estate, they protect against financial loss due to contractor default or non-compliance.
A swap rate is the fixed interest rate exchanged for a floating interest rate in an interest rate swap, reflecting the market's expectation of future interest rates and credit risk. It is a critical benchmark for pricing and hedging various financial instruments, including commercial real estate loans.
Tax returns are official documents filed with tax authorities, such as the IRS, reporting an individual's or entity's income, expenses, and other financial information to determine tax liability, serving as a critical financial record for real estate investors.
A title commitment is a document issued by a title company that outlines the conditions under which it is willing to issue a title insurance policy for a property, detailing ownership, liens, and encumbrances.
A title company is an impartial third party that ensures clear legal ownership of a property, conducts title searches, issues title insurance, and facilitates the closing of real estate transactions.
A trade line is an entry on a credit report detailing a specific credit account, such as a mortgage, credit card, or loan, including its payment history and current status.
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.
Treasury yield is the return an investor receives on U.S. government debt securities, serving as a key benchmark for interest rates across the economy and significantly influencing real estate financing and valuations.
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