Abstract of Judgment
The summary of a court judgment that creates a lien against a property when files with the county recorder.
Abstract of Title
Historical summary of all of the recorded instruments and proceedings that affect title to a property.
Interest that has been earned but not paid.
Something added as an attachment to a contract.
Adjustable Rate Mortgage (ARM)
A mortgage loan that allows the interest rate to be changed at specific intervals over the maturity of the loan, based on a monitored index.
The amount of time between interest rate adjustments in an adjustable-rate mortgage.
A mortgage requiring periodic payments that include both interest and principal.
Annual Percentage Rate (APR)
Effective rate of interest rate for a loan per year including fees & points, disclosure of which is required by the Truth-in-Lending Law.
A “defensible” & carefully documented opinion of value commonly derived using recent sales of comparable properties by a licensed professional appraiser.
The estimated fair market value of a property as developed by a licensed certified appraiser following accepted appraisal principles.
A payment made at the end of a term. Sometimes used to signify default or a payment overdue.
Without guaranteed as to condition.
The value of a property according to jurisdictional tax assessment.
The one to whom a property or interest in a property have been transferred. Also known as Assigns.
A written transfer from one party to another of an estate or right therein or of the contractual rights of possession and use or in action.
A loan that has a series of monthly payments with the remaining balance due in a large lump sum payment at the end.
An installment payment on a note usually the final one for discharging the debt which is significantly larger than the other installment payments provided under the terms of the note.
A party entitled to the benefits of a trust, who receives profit from an estate the title of which is vested as trustee, whom an insurance policy is payable, and the lender on the security of a note & trust deed.
Blanket Loan / Mortgage
A loan that covers two or more properties that are pledged or conveyed as security for the debt & which permits the borrower to obtain a partial reconveyance when a parcel is sold.
A written instrument given by a corporation or government entity as evidence of a debt and also meaning a guarantee of performance.
The mortgage financing that falls in between the termination of one loan and the beginning of another loan.
An individual who acts to arrange & negotiate loan amounts, interest rates & loan terms between borrowers & lenders.
Broker Price Opinion (BPO)
Real Estate Broker provides an estimated value of a property.
A financing technique in which the interest rate has been reduced over the first few years of the loan due to the lender receiving an initial payment to reduce the rate or in effect a discount.
A process of reflecting future income in present value & used to determine the value of property by considering its net income & a percentage of reasonable return on the investment.
The rate of interest made up on the interest rate (return on the investment) plus the recapture rate (return of the original investment) which is considered a reasonable return on the investment.
The net income generated by a property before depreciation and other non-cash expenses.
Cash Out Refinance
The excess of a refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage & any secondary mortgages or liens, together with closing costs & points for the new loan. Often used for debt consolidation, home improvement, or any other purpose.
Certificate of Insurance
A document issued by an insurance company to verify the existence of coverage.
Certificate of Occupancy
A document issued by a local government which permits a structure to be occupied by the general public & generally indicates that the building is in compliance with public health & building codes.
Chain of Title
A history of all conveyances & encumbrances affecting the title from the time the original patent was granted or as far back as records are available & identifies how title came to be vested in current owner.
The formal meeting where loan documents are signed & funds disbursed.
The expenses which borrowers incur to complete the loan transaction. These costs may include title searches, title insurance, closing fees, recording fees, processing fees, & other charges.
The date on which the buyer pays for the property & the seller delivers the deed.
An accounting of funds from a real estate transaction, also known as a HUD-1.
Property pledged as a security for a debt.
Combined Loan-to-Value (CLTV)
The total of all loans relative to the value of the property.
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location, & amenities to a subject property who’s value is being determined.
Conditions, Covenants, & Restrictions (CCR’s)
Promises written into deeds and other instruments agreeing to performance or nonperformance of certain acts, or requiring or prohibiting certain uses of the property.
A loan which has underwriting criteria consistent with the strict guidelines of Fannie Mae, Freddie Mac, FHA, or VA. Typically with lowest interest rates loans & very good terms.
A condition that must be met before a contract is legally binding.
An agreement between competent parties to do or not do certain things.
Contract For Deed
A real estate installment selling arrangement whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller until all of a specified part of the sale price has been paid (same as land contract)
A loan that is customarily made by a bank or savings & loan association or other financial institution that is without governmental underwriting such as FHA insurance or a VA guarantee & conform to the lender’s own standards.
A response to an offer to enter into a contract which acts as a rejection of the original offer and introduces a new offer or one with different terms & conditions.
A loan that allows revolving use of the credit; that is, after funds have been borrowed and repaid they may be borrowed again without applying for a new loan.
Also known as debt to income. The ratio of the total of minimum monthly debt payments to gross monthly income.
The annual amount paid by a debtor to repay borrowed money.
Written document, properly signed and delivered, that conveys title or an ownership interest on real property.
Deed in Lieu of Foreclosure
The act of giving property back to the lender without foreclosure.
Deed of Trust (DOT)
Similar to mortgages, they serve as security for a loan by encumbering real estate. Usually involves three parties (borrower, Lender, & Trustee). The Trustee holds the property in trust as security for the payment of the debt & can sell the property if the borrower defaults.
Failure to meet all of the commitments & obligations specified in the mortgage or deed of trust. This usually gives the lender the right to accelerate payments and start foreclosure.
An amount of money where one point equals one percent of the original principal loan amount which a borrower or a seller must pay to a lender in order to get a loan at a stated lower interest rate.
A fee that covers the expenses associated with this process of preparing some of the legal documents that will be signed at the time of closing, such as the mortgage, note, and truth-in-lending statement.
The portion of the purchase price paid by a buyer to a seller from sources of funds outside of those provided by a lender.
The act of carefully reviewing, checking, and verifying all of the facts & issues before proceeding. In lending it is, among other things, verification of employment, income & savings, review of appraisal, etc.
A sum of money or other consideration tendered by a prospective purchaser as evidence of good faith in conjunction with an offer to purchase rights in real property.
A non-possessory right to enter or use someone else’s land for a specified purpose.
Any right to or interest in land that affects its value, including mortgage loans, unpaid taxes, easements, junior liens, or deed restrictions.
Equal Credit Opportunity Act (ECOA)
A federal law that prohibits discrimination in the extension of credit due to race, color, religion, national origin, sex, age, or marital status.
The value of the unencumbered interest in real estate as determined by subtracting the total of the unpaid mortgage balances plus the sum of any current liens against the property from the property’s fair market value.
An agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
A doctrine of law that stops one from later denying facts which that person once acknowledged were true and others accepted on good faith.
Fixed Rate Mortgage
A loan with two distinct features: (1) The interest rate remains fixed for the life of the loan. (2) The payments remain level for the life of the loan & are structured to repay the debt completely at the end of the loan term.
A course of action a lender may pursue to delay foreclosure or legal action against a delinquent borrower.
The process by which the mortgagor’s (borrower’s) right to a property are terminated. While the general process is similar from state to state, the actual procedures tend to vary greatly.
The party to whom title to real property is conveyed.
The party who gives the deed.
Hard Money Loan
A debt that is taken on in exchange for cash. A loan made based primarily upon the collateral’s equity rather than the creditworthiness of the borrower.
Insurance to provide compensation if the improvements are damaged or destroyed. It is almost always a requirement of loans.
Home Equity Loan
A loan sometimes called a “line of credit” where an owner uses the residence as collateral for a loan which permits the draw of funds up to a preset amount.
Homeowner Association (HOA)
An organization of homeowners in a particular neighborhood or development formed to facilitate the maintenance of common areas and to enforce any building restrictions or covenants.
A special insurance policy that covers certain home repairs for a specified amount of time.
A trust-type account established by lenders for the accumulation of borrowers funds to meet periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums required to protect their security.
The taking on of liability by one party by agreeing to compensate another party for any hurt, loss, or damage suffered by them. An insurance against possible loss or damage such as a title insurance policy.
The published cost of money that serves as the minimum basis for determining the interest rate for an adjustable rate mortgage.
The percentage of the loan amount charged for borrowing money; i.e., the cost of the money expressed as a percentage.
Ownership of realty by two or more persons, each of whom has an undivided interest.
A decree of a court stating that one individual is indebted to another and fixing the amount of the indebtedness.
The claim upon the property of a debtor resulting from recording a judgment.
A contract in which, for a rent payment, the one entitled to the possession of the real property (lessor) transfers those rights to another (lessee) for a specified period of time.
A lease combined with an option agreement that gives the lessee (tenant) to purchase the property under specified conditions.
Legally acceptable identification of real estate by government survey, metes and bounds, or recorded plat.
A person to whom property is rented under a lease.
One who rents property to another under a lease.
Letter of Intent
Written expression of desire to enter into a contract without actually doing so.
A claim on a property of another as security for money owed. Examples of types of liens would include judgments, mechanic’s liens, mortgages, and unpaid taxes.
Loan Origination Fee
A fee charged to the borrower by the lender for the administrative costs of processing and creating a mortgage loan which is usually computed as a percentage of the loan amount and is often expressed in points.
The relationship between the dollar amount of the loan and the value of the property.
In an adjustable-rate loan, the amount added to the index rate that represents the lender’s cost of doing business (includes cost, profits, risk of loss of loan). Generally the margin stays constant during the life of the loan.
The price a property would bring, if freely offered on the open market, with both a willing buyer and a willing seller. Also called an objective value.
Monthly Payment (P&I)
This is the monthly mortgage payment on a home loan, this includes principal & interest, but excludes any amounts that are applied to taxes and insurance.
A lien against real property given by a borrower to a lender as security for money borrowed.
A property that contains individual units for several households but carries only one mortgage.
A loan that does not meet the standards of or is too large to be purchased by FNMA or FHLMC and where the interest rate is at least one half a percentage point higher than a conforming loan.
A fee charged for the work involved in the evaluation, preparation, and submission of a proposed mortgage loan.
A charge made by a lender that’s part of the borrower’s cost of obtaining a loan. Each point equals one percent (1%) of the loan amount. Points increase the effective yield on the loan above the nominal interest rate being charged.
The charge payable under the terms of a loan agreement to a lender by a borrower if the outstanding principal balance of the loan is paid off prior to its maturity.
Outstanding dollar amount owed on a loan exclusive of accrued interest.
Principal, Interest, Taxes, Insurance (PITI)
Monthly payments required by an amortizing loan that includes escrow deposits for taxes and insurance in addition to the principal & interest.
The process of establishing the validity of a will before a duly authorized court or person. Once validity is confirmed, the probate court then administers the sale of property as directed by the will or as authorized by the court to settle any financial obligations.
Promise to pay a specified sum to a specified person under specified terms.
A ratio calculated by a lender to determine how much a potential buyer can borrow.
A deed that conveys only the grantor’s rights or interest in a property, without stating the nature of the rights or interest and with no warranties of ownership.
The maximum interest rate charge allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.
A parcel of land that has had no improvements made to it such as street utilities, drainage, landscaping, or structures.
Real Estate Owned (REO)
A term used for property acquired through lender foreclosure which is currently held in inventory.
A federally mandated period of three business days (beginning on the day after a loan closes) during which the borrower may cancel the new loan. Applies to loans which are to be secured by a mortgage on an owner-occupied property. Does not apply for purchase loans & non-owner occupied loans.
Ability of lender to make claims against borrower personally in addition to the collateral.
Period during which a former owner can reclaim foreclosed property.
Loan which has been in force for a period of time thus establishing the borrower’s payment history, loans are typically deemed to be seasoned after either six months or one year.
Mortgage recorded after another mortgage has already been recorded and not yet released. A subordinated lien.
Also known as the Closing Statement or HUD-1; a document that details who has paid what to whom.
A type of pre-foreclosure sale in which the mortgagee agrees to let you sell the property for less than the full amount due and accept the proceeds as payment in full.
A clause or document that permits a mortgage recorded at a later date to take priority over an existing lien.
An encumbrance placed upon a property as a claim for payment of a tax liability. May be imposed for failure to pay city, county, estate, income, payroll, property, sales, or school taxes.
Evidence of ownership & of lawful possession.
An arrangement whereby property is transferred to a trusted third party trustee by a grantor/trustor, trustee holds the property for the benefit of the beneficiary.
Conveyance of real estate to a third party to be held for the benefit of another, commonly used in some states in place of mortgages that conditionally convey title to the lender, same as Deed of Trust.
One who holds property in trust for another to secure performance of an obligation, the neutral party in a trust deed transaction.
U.S. Department of Housing & Urban Development (HUD)
A federal agency that oversees the Federal Housing Administration and a variety of housing and community development programs.
The act of applying formal guidelines that provide qualitative or quantitative standards for determining whether or not a loan should be approved.
Real Estate that is owned free and clear.
Instrument that transfers title from one party (grantor) to another party (grantee) without providing public notice of the change in ownership.
The right to use property -or income from property that is owned by another.
The estimated worth or price. The act of valuation by appraisal.
Deed that contains a covenant that the grantor will protect the grantee against any and all claims; usually contains covenants ensuring good title, freedom from encumbrances, and quiet enjoyment.
Legal mechanism for local governments to regulate the use of privately owned real estate to prevent conflicting land uses and promote orderly development.
Hard Money Loan Types:
– Hard Money Mortgage Loans
– Commercial Hard Money Loans
– Rehab Hard Money Loans
– Residential Hard Money Loans
– Hard Money Construction Loans
GENERAL Hard Money Loans
– Fund in less than 7-10 days
– No or Bad Credit Okay
– No income doc
– Bridge loans construction to perm OK
– Flipper friendly
– Business Purpose Mortgage
– 75% CLTV OK / 25% Down payment
– Flexible prepay
– Negotiable Fees
What is “hard money?
Hard money is a term used to describe any financing option which is an alternative to commercial bank lending. For reasons of timing, deal complication, or risk, hard money lenders can step in to provide funds where conventional lenders cannot.
Why use a hard money lender?
It is important to use hard money correctly. Hard money rates and fees are typically higher than conventional lenders Hard money is meant to be short term financing. Typical loan term of 1 – 5 years.
What are the advantages of using hard money
There are many advantages to using hard money, including some listed below:
1. Fast Underwriting – We can analyze a transaction and issue a loan commitment in a matter of days, instead of several weeks with a conventional lender.
2. Flexible programs – You can use the equity that you have built up in other real estate to help you purchase and renovate your next project, instead of having to use large amounts of your own cash.
3. Experienced Real Estate lending professionals – We have been in the California lending field for over 10 years. We can help guide you through the process and avoid many of the normal pitfalls.
4. Access to capital – Conventional banks have tightened up on their lending, making it difficult or impossible to come up with the extra funding you need to get your deal done. We are asset-based lenders who are focused on the real estate and the viability of your project as opposed to credit score or the collapse of the sub-prime market.
5. Industry contacts – As long-time investors in California, we have many industry contacts to help you along the way. We have pre-approved general contractors, relationships with conventional lenders to help you re-finance, and recommended real estate agents to help you maximize the value of your investment and avoid painful pitfalls along the way.