From a Trusted Oregon Hard Money Lender
If you invest in real estate – or are thinking about it – you’ve probably heard of hard money loans.
Investors who need fast financing and don’t want to deal with the requirements and paperwork of a conventional lender turn to private money lenders. Asset-based hard money loans are a great hassle-free option for house flippers and rental property investors.
This handy list of loan industry terms is a great reference tool when requesting private financing.
Glossary of 20 Common Hard Money Loan Phrases & Terms
- Hard Money Loan: A loan made by a private lender secured by collateral and used for real estate investment transactions.
- After Repair Value: A property’s estimated value after all repairs and improvements have been made. Calculated based on average sale price or sale price per square foot.
- Appraisal: The statement of a property’s current value assessed by a licensed, credentialed appraiser and determined by property evaluation and surrounding comparable properties.
- Escrow: A neutral third party that oversees the loan transaction to ensure all parties are fairly represented and manages and disperses good faith funds.
- Equity: The value of a property less the debt or balance owed by the owner. Available equity or collateral is the primary consideration in a hard money loan arrangement.
- Fair Market Value: The price a buyer is willing to pay for a property to a willing seller. Appraisals and comparable properties assist in setting the estimated FMV.
- Balloon Payment: A large one-time balance due payment at the end of a loan term. Some hard money loans require interest-only monthly payments with balloon payment at end.
- Investment Property: A non-owner occupied real estate property purchased with the intention of earning a return through rental income and/or resale.
- Lien: The legal right of a lender to claim interest in a property provided as collateral by an owner until a loan is paid off.
- Points: Charges assessed by the lender and paid at closing to cover the cost of making a loan. One point (or origination fee) is equal to 1% of the total loan amount.
- Refinance: The act of replacing an existing loan or mortgage with a new one, typically with a new balance and more favorable terms.
- Late Fees: Charges assessed and paid by a borrower if a loan payment due under contract is not made on time.
- Loan to Value Ratio: Used by lenders to determine the risk they are taking on a loan. Divide the amount borrowed on a property by its fair market value and express as a percentage.
- Loan Agreement: The written and signed contract that defines the loan terms set by the lender and agreed to by the borrower.
- Maturity Date: The contracted date on which the final loan payment and all interest and fees are fully due per the loan agreement.
- Mortgage: A loan agreement provided by a lender to finance the purchase of real estate property. Mortgages may be conveyed by banks or private lenders.
- Payoff: The act of paying off the amount owed to satisfy a loan in full, including the outstanding principal and all interest and fees.
- Principal Balance: The outstanding portion of the original loan amount that remains unpaid, not including accrued interest or fees.
- Title Company: Enlisted to verify the authenticity of a property’s title and the legal authority and rights to ownership of the seller and buyer.
- Underwriting: Process used by lenders to evaluate a borrower’s credit worthiness and assess the risk of a loan.
Have Questions About Hard Money Loans? Talk to Our Team of Experts
We know a lot about Oregon real estate and investment financing. Gregory M. Russell has been a trusted hard money lender for over three decades and we can help you meet your investment goals quickly and easily. Call 1-888-477-0444 to learn about our private money loan services or complete our simple online loan request form. We make financing easy to understand and get cash in your hand fast. We’re here to help!