Hard Money Loan Questions & Answers
What is Hard Money?
Hard Money Loans are non-conforming loans, unlike the type of loans from
conventional bank financing. They are funded by private individuals like
us, and requirements vary from lender to lender, however most private hard
money lenders are much more concerned with the collateral and equity
protection, than credit scores. Rates are typically higher than
conventional financing, however funding times are usually much faster and the loan criteria
and repayment terms can be tailored to the individual situation.
Why use Hard Money?
Time is money! Hard Money Loans are best suited to capitalize on your time
critical real estate opportunities, when you need a loan quickly, or when
you can't get credit by normal conventional means. It is a great alternative
for fast short term financing. If you have A+ credit, can verify income and can wait 45 days
for the loan, go to a bank for a conventional loan.
How long does it take to fund a Hard Money Loan?
Typically it takes 5-10 days for us to fund a loan. Compare this to
typical bank funding times of 4-8 weeks. We can fund much faster because
our hard money loans are funded either directly with our own funds or by
other private investors, and because there is much less paperwork and red
tape involved in funding the loan and decisions are made quickly. There is
no loan review by committee.
What if I have bad credit, can I still get a loan?
Credit is not an issue, but having a plan on how you will repay the loan is
required, and it should make sense. Our funding criteria is based on
equity in the property, not credit. We also make loans to foreign
nationals and entities with no credit history.
Do I need to get an appraisal?
An appraisal may be necessary depending on the LTV (loan to value)
ratio, and the uniqueness of the property, however we can many times avoid
the time and expense of a full blown appraisal, by checking comparables,
especially if the LTV is low. If you already have an appraisal (even an
old appraisal), keep it handy, because it will allow us to get up to speed
on the features of your property faster.
Glossary of Real Estate and Mortgage Terms
- A clause in your mortgage which allows the
lender to demand payment of the outstanding loan balance for various
reasons. The most common reasons for accelerating a loan are if the
borrower defaults on the loan or transfers title to another individual
without informing the lender.
adjustable-rate mortgage (ARM)
- A mortgage in which the interest changes
periodically, according to corresponding fluctuations in an index. All
ARMs are tied to indexes.
- adjustment date
- The date the interest rate changes on an
- The loan payment consists of a portion which
will be applied to pay the accruing interest on a loan, with the
remainder being applied to the principal. Over time, the interest
portion decreases as the loan balance decreases, and the amount
applied to principal increases so that the loan is paid off
(amortized) in the specified time.
- A table which shows how much of each payment
will be applied toward principal and how much toward interest over the
life of the loan. It also shows the gradual decrease of the loan
balance until it reaches zero.
annual percentage rate (APR)
- This is not the note rate on your loan. It is
a value created according to a government formula intended to reflect
the true annual cost of borrowing, expressed as a percentage. It works
sort of like this, but not exactly, so only use this as a guideline:
deduct the closing costs from your loan amount, then using your actual
loan payment, calculate what the interest rate would be on this amount
instead of your actual loan amount. You will come up with a number
close to the APR. Because you are using the same payment on a smaller
amount, the APR is always higher than the actual note rate on your
- The form used to apply for a mortgage loan,
containing information about a borrower's income, savings, assets,
debts, and more.
- A written justification of the price paid for
a property, primarily based on an analysis of comparable sales of
similar homes nearby.
- appraised value
- An opinion of a property's fair market value,
based on an appraiser's knowledge, experience, and analysis of the
property. Since an appraisal is based primarily on comparable sales,
and the most recent sale is the one on the property in question, the
appraisal usually comes out at the purchase price.
- An individual qualified by education,
training, and experience to estimate the value of real property and
personal property. Although some appraisers work directly for mortgage
lenders, most are independent.
- The increase in the value of a property due to
changes in market conditions, inflation, or other causes.
- assessed value
- The valuation placed on property by a public
tax assessor for purposes of taxation.
- A public official who establishes the value of
a property for taxation purposes.
- Items of value owned by an individual. Assets
that can be quickly converted into cash are considered "liquid
assets." These include bank accounts, stocks, bonds, mutual funds, and
so on. Other assets include real estate, personal property, and debts
owed to an individual by others.
- When ownership of your mortgage is transferred
from one company or individual to another, it is called an assignment.
- A mortgage that can be assumed by the buyer
when a home is sold. Usually, the borrower must "qualify" in order to
assume the loan.
- balloon mortgage
- A mortgage loan that requires the remaining
principal balance be paid at a specific point in time. For example, a
loan may be amortized as if it would be paid over a thirty year
period, but requires that at the end of the tenth year the entire
remaining balance must be paid.
- balloon payment
- The final lump sum payment that is due at the
termination of a balloon mortgage.
- By filing in federal bankruptcy court, an
individual or individuals can restructure or relieve themselves of
debts and liabilities. Bankruptcies are of various types, but the most
common for an individual seem to be a "Chapter 7 No Asset" bankruptcy
which relieves the borrower of most types of unsecured debts. A
borrower cannot usually qualify for an "A" paper loan for a period of
two years after the bankruptcy has been discharged and requires the
re-establishment of an ability to repay debt.
- bridge loan
- Short term loan, used to bridge the gap. For
example a loan used to buy a property until a permanent loan can be
- Adjustable Rate Mortgages have fluctuating
interest rates, but those fluctuations are usually limited to a
certain amount. Those limitations may apply to how much the loan may
adjust over a six month period, an annual period, and over the life of
the loan, and are referred to as "caps." Some ARMs, although they may
have a life cap, allow the interest rate to fluctuate freely, but
require a certain minimum payment which can change once a year. There
is a limit on how much that payment can change each year, and that
limit is also referred to as a cap.
- When a borrower refinances his mortgage at a
higher amount than the current loan balance with the intention of
pulling out money for personal use, it is referred to as a "cash out
- chain of title
- An analysis of the transfers of title to a
piece of property over the years.
- clear title
- A title that is free of liens or legal
questions as to ownership of the property.
- This has different meanings in different
states. In some states a real estate transaction is not consider
"closed" until the documents record at the local recorders office. In
others, the "closing" is a meeting where all of the documents are
signed and money changes hands.
- cloud on title
- Any conditions revealed by a title search that
adversely affect the title to real estate. Usually clouds on title
cannot be removed except by deed, release, or court action.
- An additional individual who is both obligated
on the loan and is on title to the property.
- In a home loan, the property is the
collateral. The borrower risks losing the property if the loan is not
repaid according to the terms of the mortgage or deed of trust.
- In some states, especially the southwest,
property acquired by a married couple during their marriage is
considered to be owned jointly, except under special circumstances.
This is an outgrowth of the Spanish and Mexican heritage of the area.
- comparable sales
- Recent sales of similar properties in nearby
areas and used to help determine the market value of a property. Also
referred to as "comps."
- A type of ownership in real property where all
of the owners own the property, common areas and buildings together,
with the exception of the interior of the unit to which they have
title. Often mistakenly referred to as a type of construction or
development, it actually refers to the type of ownership.
- A short-term, interim loan for financing the
cost of construction. The lender makes payments to the builder at
periodic intervals as the work progresses.
- A condition that must be met before a contract
is legally binding. For example, home purchasers often include a
contingency that specifies that the contract is not binding until the
purchaser obtains a satisfactory home inspection report from a
qualified home inspector.
- Refers to home loans other than government
loans (VA and FHA).
- convertible ARM
- An adjustable-rate mortgage that allows the
borrower to change the ARM to a fixed-rate mortgage within a specific
- cooperative (co-op)
- A type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns
the property, giving each resident the right to occupy a specific
apartment or unit.
- credit history
- A record of an individual's repayment of debt. Credit histories
are reviewed my mortgage lenders as one of the underwriting criteria
in determining credit risk.
- A person to whom money is owed.
- credit report
- A report of an individual's credit history prepared by a credit
bureau and used by a lender in determining a loan applicant's
- The legal document conveying title to a property. Example: Grant
Deed, Waranty Deed, Quitclaim Deed.
- Short for "deed in lieu of foreclosure," this conveys title to the
lender when the borrower is in default and wants to avoid foreclosure.
The lender may or may not cease foreclosure activities if a borrower
asks to provide a deed-in-lieu. Regardless of whether the lender
accepts the deed-in-lieu, the avoidance and non-repayment of debt will
most likely show on a credit history. What a deed-in-lieu may prevent
is having the documents preparatory to a foreclosure being recorded
and become a matter of public record.
- deed of trust
- Some states, like California, do not record mortgages. Instead,
they record a deed of trust which is essentially the same thing.
- Failure to make the mortgage payment within a specified period of
time. For first mortgages or first trust deeds, if a payment has still
not been made within 30 days of the due date, the loan is considered
to be in default.
- A decline in the value of property; the opposite of appreciation.
Depreciation is also an accounting term which shows the declining
monetary value of an asset and is used as an expense to reduce taxable
income. Since this is not a true expense where money is actually paid,
lenders will add back depreciation expense for self-employed borrowers
and count it as income.
- down payment
- The part of the purchase price of a property that the buyer pays
in cash and does not finance with a mortgage.
- due-on-sale provision
- A provision in a mortgage that allows the lender to demand
repayment in full if the borrower sells the property that serves as
security for the mortgage.
- A right of way giving persons other than the owner access to or
over a property.
- eminent domain
- The right of a government to take private property for public use
upon payment of its fair market value. Eminent domain is the basis for
- An improvement that intrudes illegally on another's property.
- Anything that affects or limits the fee simple title to a
property, such as mortgages, leases, easements, or restrictions.
- Equal Credit
Opportunity Act (ECOA)
- A federal law that requires lenders and other creditors to make
credit equally available without discrimination based on race, color,
religion, national origin, age, sex, marital status, or receipt of
income from public assistance programs.
- A homeowner's financial interest in a property. Equity is the
difference between the fair market value of the property and the
amount still owed on its mortgage and other liens.
- An item of value, money, or documents deposited with a third party
to be delivered upon the fulfillment of a condition. For example, the
earnest money deposit is put into escrow until delivered to the seller
when the transaction is closed.
- escrow account
- Once you close your purchase transaction, you may have an escrow
account or impound account with your lender. This means the amount you
pay each month includes an amount above what would be required if you
were only paying your principal and interest. The extra money is held
in your impound account (escrow account) for the payment of items like
property taxes and homeowner's insurance when they come due. The
lender pays them with your money instead of you paying them yourself.
- The lawful expulsion of an occupant from real property.
- exclusive listing
- A written contract that gives a licensed real estate agent the
exclusive right to sell a property for a specified time.
- A person named in a will to administer an estate. The court will
appoint an administrator if no executor is named. "Executrix" is the
- Fair Credit Reporting Act
- A consumer protection law that regulates the disclosure of
consumer credit reports by consumer/credit reporting agencies and
establishes procedures for correcting mistakes on one's credit record.
- fair market value
- The highest price that a buyer, willing but not compelled to buy,
would pay, and the lowest a seller, willing but not compelled to sell,
- Fannie Mae (FNMA)
- The Federal National Mortgage Association, which is a
congressionally chartered, shareholder-owned company that is the
nation's largest supplier of home mortgage funds. For a discussion of
the roles of Fannie Mae, Freddie Mac (FHLMC), and Ginnie Mae (GNMA),
see the Library.
- Federal Housing
- An agency of the U.S. Department of Housing and Urban Development
(HUD). Its main activity is the insuring of residential mortgage loans
made by private lenders. The FHA sets standards for construction and
underwriting but does not lend money or plan or construct housing.
- fee simple
- The greatest possible interest a person can have in real estate.
- fee simple estate
- An unconditional, unlimited estate of inheritance that represents
the greatest estate and most extensive interest in land that can be
enjoyed. It is of perpetual duration. When the real estate is in a
condominium project, the unit owner is the exclusive owner only of the
air space within his or her portion of the building (the unit) and is
an owner in common with respect to the land and other common portions
of the property.
- FHA mortgage
- A mortgage that is insured by the Federal Housing Administration
(FHA). Along with VA loans, an FHA loan will often be referred to as a
- firm commitment
- A lender's agreement to make a loan to a specific borrower on a
- first mortgage
- The mortgage that is in first place among any loans recorded
against a property. Usually refers to the date in which loans are
recorded, but there are exceptions.
- fixed-rate mortgage
- A mortgage in which the interest rate does not change during the
entire term of the loan.
- Personal property that becomes real property when attached in a
permanent manner to real estate.
- flood insurance
- Insurance that compensates for physical property damage resulting
from flooding. It is required for properties located in federally
designated flood areas.
- The legal process by which a borrower in default under a mortgage
is deprived of his or her interest in the mortgaged property. This
usually involves a forced sale of the property at public auction with
the proceeds of the sale being applied to the mortgage debt.
Government National Mortgage Association (Ginnie Mae)
- A government-owned corporation within the U.S. Department of
Housing and Urban Development (HUD). Created by Congress on September
1, 1968, GNMA performs the same role as Fannie Mae and Freddie Mac in
providing funds to lenders for making home loans. The difference is
that Ginnie Mae provides funds for government loans (FHA and VA)
- The person to whom an interest in real property is conveyed.
- The person conveying an interest in real property.
- hazard insurance
- Insurance coverage that in the event of
physical damage to a property from fire, wind, vandalism, or other
equity line of credit
- A mortgage loan, usually in second position,
that allows the borrower to obtain cash drawn against the equity of
his home, up to a predetermined amount.
- home inspection
- A thorough inspection by a professional that
evaluates the structural and mechanical condition of a property. A
satisfactory home inspection is often included as a contingency by the
- A nonprofit association that manages the
common areas of a planned unit development (PUD) or condominium
project. In a condominium project, it has no ownership interest in the
common elements. In a PUD project, it holds title to the common
- An insurance policy that combines personal
liability insurance and hazard insurance coverage for a dwelling and
- A type of insurance often purchased by
homebuyers that will cover repairs to certain items, such as heating
or air conditioning, should they break down within the coverage
period. The buyer often requests the seller to pay for this coverage
as a condition of the sale, but either party can pay.
- A document that provides an itemized listing
of the funds that were paid at closing. Items that appear on the
statement include real estate commissions, loan fees, points, and
initial escrow (impound) amounts. Each type of expense goes on a
specific numbered line on the sheet. The totals at the bottom of the
HUD-1 statement define the seller's net proceeds and the buyer's net
payment at closing. It is called a HUD1 because the form is printed by
the Department of Housing and Urban Development (HUD). The HUD1
statement is also known as the "closing statement" or "settlement
- joint tenancy
- A form of ownership or taking title to
property which means each party owns the whole property and that
ownership is not separate. In the event of the death of one party, the
survivor owns the property in its entirety.
- A decision made by a court of law. In
judgments that require the repayment of a debt, the court may place a
lien against the debtor's real property as collateral for the
- A type of foreclosure proceeding used in some
states that is handled as a civil lawsuit and conducted entirely under
the auspices of a court. Other states use non-judicial foreclosure.
- jumbo loan
- A loan that exceeds Fannie Mae's and Freddie
Mac's loan limits, currently at $417,000. Also called a nonconforming
loan. Freddie Mac and Fannie Mae loans are referred to as conforming
- late charge
- The penalty a borrower must pay when a payment
is made a stated number of days. On a first trust deed or mortgage,
this is usually fifteen days.
- A written agreement between the property owner
and a tenant that stipulates the payment and conditions under which
the tenant may possess the real estate for a specified period of time.
- leasehold estate
- A way of holding title to a property wherein
the mortgagor does not actually own the property but rather has a
recorded long-term lease on it.
- lease option
- An alternative financing option that allows
home buyers to lease a home with an option to buy. Each month's rent
payment may consist of not only the rent, but an additional amount
which can be applied toward the down payment on an already specified
- A property description, recognized by law,
that is sufficient to locate and identify the property without oral
- A term which can refer to the institution
making the loan or to the individual representing the firm. For
example, loan officers are often referred to as "lenders."
- A person's financial obligations. Liabilities
include long-term and short-term debt, as well as any other amounts
that are owed to others.
- Insurance coverage that offers protection
against claims alleging that a property owner's negligence or
inappropriate action resulted in bodily injury or property damage to
another party. It is usually part of a homeowner's insurance policy.
- A legal claim against a property that must be
paid off when the property is sold. A mortgage or first trust deed is
considered a lien.
- line of credit
- An agreement by a commercial bank or other
financial institution to extend credit up to a certain amount for a
certain time to a specified borrower.
- liquid asset
- A cash asset or an asset that is easily
converted into cash.
- A sum of borrowed money (principal) that is
generally repaid with interest.
- loan officer
- Also referred to by a variety of other terms,
such as lender, loan representative, loan "rep," account executive,
and others. The loan officer serves several functions and has various
responsibilities: they solicit loans, they are the representative of
the lending institution, and they represent the borrower to the
- loan origination
- How a lender refers to the process of
obtaining new loans.
- loan servicing
- After you obtain a loan, the company you make
the payments to is "servicing" your loan. They process payments, send
statements, manage the escrow/impound account, provide collection
efforts on delinquent loans, ensure that insurance and property taxes
are made on the property, handle pay-offs and assumptions, and provide
a variety of other services.
- The percentage relationship between the amount
of the loan and the appraised value or sales price (whichever is
- The date on which the principal balance of a
loan, bond, or other financial instrument becomes due and payable.
- merged credit report
- A credit report which reports the raw data pulled from two or more
of the major credit repositories. Contrast with a Residential Mortgage
Credit Report (RMCR) or a standard factual credit report.
- Occasionally, a lender will agree to modify the terms of your
mortgage without requiring you to refinance. If any changes are made,
it is called a modification.
- A legal document that pledges a property to the lender as security
for payment of a debt. Instead of mortgages, some states use Trust
- mortgage broker
- A mortgage company that originates loans, then places those loans
with a variety of other lending institutions with whom they usually
have pre-established relationships.
- The lender in a mortgage agreement.
- mortgage insurance (MI)
- Insurance that covers the lender against some of the losses
incurred as a result of a default on a home loan. Often mistakenly
referred to as PMI, which is actually the name of one of the larger
mortgage insurers. Mortgage insurance is usually required in one form
or another on all loans that have a loan-to-value higher than eighty
percent. Mortgages above 80% LTV that call themselves "No MI" are
usually a made at a higher interest rate. Instead of the borrower
paying the mortgage insurance premiums directly, they pay a higher
interest rate to the lender, which then pays the mortgage insurance
themselves. Also, FHA loans and certain first-time homebuyer programs
require mortgage insurance regardless of the loan-to-value.
- mortgage insurance
- The amount paid by a mortgagor for mortgage insurance, either to a
government agency such as the Federal Housing Administration (FHA) or
to a private mortgage insurance (MI) company.
- The borrower in a mortgage agreement.
- multi-dwelling units
- Properties that provide separate housing units for more than one
family, although they secure only a single mortgage.
- negative amortization
- Some adjustable rate mortgages allow the interest rate to
fluctuate independently of a required minimum payment. If a borrower
makes the minimum payment it may not cover all of the interest that
would normally be due at the current interest rate. In essence, the
borrower is deferring the interest payment, which is why this is
called "deferred interest." The deferred interest is added to the
balance of the loan and the loan balance grows larger instead of
smaller, which is called negative amortization.
- no cash-out refinance
- A refinance transaction which is not intended to put cash in the
hand of the borrower. Instead, the new balance is caculated to cover
the balance due on the current loan and any costs associated with
obtaining the new mortgage. Often referred to as a "rate and term
- no-cost loan
- Many lenders offer loans that you can obtain at "no cost." You
should inquire whether this means there are no "lender" costs
associated with the loan, or if it also covers the other costs you
would normally have in a purchase or refinance transactions, such as
title insurance, escrow fees, settlement fees, appraisal, recording
fees, notary fees, and others. These are fees and costs which may be
associated with buying a home or obtaining a loan, but not charged
directly by the lender. Keep in mind that, like a "no-point" loan, the
interest rate will be higher than if you obtain a loan that has costs
associated with it.
- A legal document that obligates a borrower to repay a mortgage
loan at a stated interest rate during a specified period of time.
- note rate
- The interest rate stated on a mortgage note.
- notice of default
- A formal written notice to a borrower that a default has occurred
and that legal action may be taken.
- The total amount of principal owed on a mortgage
before any payments are made.
- origination fee
- On a government loan the loan origination fee is
one percent of the loan amount, but additional points may be charged
which are called "discount points." One point equals one percent of the
loan amount. On a conventional loan, the loan origination fee refers to
the total number of points a borrower pays.
- owner financing
- A property purchase transaction in which the
property seller provides all or part of the financing.
- partial payment
- A payment that is not sufficient to cover the
scheduled monthly payment on a mortgage loan. Normally, a lender will
not accept a partial payment, but in times of hardship you can make this
request of the loan servicing collection department.
- payment change
- The date when a new monthly payment amount takes
effect on an adjustable-rate mortgage (ARM) or a graduated-payment
mortgage (GPM). Generally, the payment change date occurs in the month
immediately after the interest rate adjustment date.
- personal property
- Any property that is not real property.
- This stands for principal, interest, taxes and
insurance. If you have an "impounded" loan, then your monthly payment to
the lender includes all of these and probably includes mortgage
insurance as well. If you do not have an impounded account, then the
lender still calculates this amount and uses it as part of determining
your debt-to-income ratio.
planned unit development (PUD)
- A type of ownership where individuals actually
own the building or unit they live in, but common areas are owned
jointly with the other members of the development or association.
Contrast with condominium, where an individual actually owns the
airspace of his unit, but the buildings and common areas are owned
jointly with the others in the development or association.
- A point is 1 percent of the amount of the
- power of attorney
- A legal document that authorizes another person
to act on one's behalf. A power of attorney can grant complete authority
or can be limited to certain acts and/or certain periods of time.
- A loosely used term which is generally taken to
mean that a borrower has completed a loan application and provided debt,
income, and savings documentation which an underwriter has reviewed and
approved. A pre-approval is usually done at a certain loan amount and
making assumptions about what the interest rate will actually be at the
time the loan is actually made, as well as estimates for the amount that
will be paid for property taxes, insurance and others. A pre-approval
applies only to the borrower. Once a property is chosen, it must also
meet the underwriting guidelines of the lender. Contrast with
- Any amount paid to reduce the principal balance
of a loan before the due date. Payment in full on a mortgage that may
result from a sale of the property, the owner's decision to pay off the
loan in full, or a foreclosure. In each case, prepayment means payment
occurs before the loan has been fully amortized.
- A fee that may be charged to a borrower who pays
off a loan before it is due.
- This usually refers to the loan officer's
written opinion of the ability of a borrower to qualify for a home loan,
after the loan officer has made inquiries about debt, income, and
savings. The information provided to the loan officer may have been
presented verbally or in the form of documentation, and the loan officer
may or may not have reviewed a credit report on the borrower.
- prime rate
- The interest rate that banks charge to their
preferred customers. Changes in the prime rate are widely publicized in
the news media and are used as the indexes in some adjustable rate
mortgages, especially home equity lines of credit. Changes in the prime
rate do not directly affect other types of mortgages, but the same
factors that influence the prime rate also affect the interest rates of
- The amount borrowed or remaining unpaid. The
part of the monthly payment that reduces the remaining balance of a
- principal balance
- The outstanding balance of principal on a
mortgage. The principal balance does not include interest or any other
charges. See remaining balance.
principal, interest, taxes, and insurance (PITI)
- The four components of a monthly mortgage
payment on impounded loans. Principal refers to the part of the monthly
payment that reduces the remaining balance of the mortgage. Interest is
the fee charged for borrowing money. Taxes and insurance refer to the
amounts that are paid into an escrow account each month for property
taxes and mortgage and hazard insurance.
- promissory note
- A written promise to repay a specified amount
over a specified period of time.
Planned Unit Development (PUD)
- A project or subdivision that includes common
property that is owned and maintained by a homeowners' association for
the benefit and use of the individual PUD unit owners.
- A written contract signed by the buyer and
seller stating the terms and conditions under which a property will be
- quitclaim deed
- A deed that transfers without warranty whatever
interest or title a grantor may have at the time the conveyance is made.
- real estate agent
- A person licensed to negotiate and transact the
sale of real estate.
Real Estate Settlement Procedures Act (RESPA)
- A consumer protection law that requires lenders
to give borrowers disclosures and notices of closing costs.
- real property
- Land and appurtenances, including anything of a
permanent nature such as structures, trees, minerals, and the interest,
benefits, and inherent rights thereof.
- A real estate agent, broker or an associate who
holds active membership in a local real estate board that is affiliated
with the National Association of Realtors.
- The public official who keeps records of
transactions that affect real property in the area. Sometimes known as a
"Registrar of Deeds" or "County Clerk."
- The noting in the registrar's office of the
details of a properly executed legal document, such as a deed, a
mortgage note, a satisfaction of mortgage, or an extension of mortgage,
thereby making it a part of the public record.
- The process of paying off one loan with the
proceeds from a new loan using the same property as security.
- remaining balance
- The amount of principal that has not yet been
repaid. See principal balance.
- right of first refusal
- A provision in an agreement that requires the owner of a property to
give another party the first opportunity to purchase or lease the
property before he or she offers it for sale or lease to others.
- right of ingress or egress
- The right to enter or leave designated premises.
- right of survivorship
- In joint tenancy, the right of survivors to acquire the interest of
a deceased joint tenant.
- A technique in which a seller deeds property to a buyer for a
consideration, and the buyer simultaneously leases the property back to
- second mortgage
- A mortgage that has a lien position subordinate to the first
- secured loan
- A loan that is backed by collateral.
- The property that will be pledged as collateral for a loan.
- seller carry-back
- An agreement in which the owner of a property provides financing,
often in combination with an assumable mortgage.
- An organization that collects principal and interest payments from
borrowers and manages borrowers' escrow accounts. The servicer often
services mortgages that have been purchased by an investor in the
secondary mortgage market.
- The collection of mortgage payments from borrowers and related
responsibilities of a loan servicer.
- settlement statement
- See HUD1 Settlement Statement
- A housing development that is created by dividing a tract of land
into individual lots for sale or lease.
- subordinate financing
- Any mortgage or other lien that has a priority that is lower than
that of the first mortgage.
- A drawing or map showing the precise legal boundaries of a property,
the location of improvements, easements, rights of way, encroachments,
and other physical features.
- sweat equity
- Contribution to the construction or rehabilitation of a property in
the form of labor or services rather than cash.
- tenancy in common
- As opposed to joint tenancy, when there are two or more individuals
on title to a piece of property, this type of ownership does not pass
ownership to the others in the event of death.
- title company
- A company that specializes in examining and insuring titles to real
- title insurance
- Insurance that protects the lender (lender's policy) or the buyer
(owner's policy) against loss arising from disputes over ownership of a
- title search
- A check of the title records to ensure that the seller is the legal
owner of the property and that there are no liens or other claims
- transfer of ownership
- Any means by which the ownership of a property changes hands.
Lenders consider all of the following situations to be a transfer of
ownership: the purchase of a property "subject to" the mortgage, the
assumption of the mortgage debt by the property purchaser, and any
exchange of possession of the property under a land sales contract or
any other land trust device.
- transfer tax
- State or local tax payable when title passes from one owner to
- A federal law that requires lenders to fully disclose, in writing,
the terms and conditions of a mortgage, including the annual percentage
rate (APR) and other charges.
- A fiduciary who holds or controls property for the benefit of
- VA mortgage
- A mortgage that is guaranteed by the Department of Veterans Affairs
- Veterans Administration
- An agency of the federal government that guarantees residential
mortgages made to eligible veterans of the military services. The
guarantee protects the lender against loss and thus encourages lenders
to make mortgages to veterans.
The Hard Money Pros
Private and Hard Money Lenders in California
PO Box 91472, San Diego, CA 92169
©Copyright 2006 JMAC Funding
Licensed by the California Department of Real Estate, DRE# 01440161