Below are definitions for terms that may be used throughout the site.

Appraisal
An appraisal indicates a property's market value. An appraisal is done by an expert and is based on property features, market conditions, and comparable properties.

Bridge Loan
A bridge loan is a short term loan that is utilized while a business or individual is waiting on a permanent loan to be finalized. These loans usually require real estate as collateral.

Broker
A broker is an intermediary who assists a borrower by finding them a loan, negotiating with the lender on loan terms, handling the loan application and paperwork, and ensuring that the loan process goes smoothly.

Closing
The process of finalizing the sale or refinance of property that includes the transfer of title, execution of loan documents and funding of the loan.

Collateral
Collateral secures repayment of a loan. In most cases, real estate is used as collateral to ensure that borrower's repay the loan. In the event a borrower does not repay a loan, the lender will have something of value to replace the unpaid funds.

Commercial Lender
A Commercial Lender provides collateralized loans for commercial property. A commercial lender will set the terms for the loan as well as who will qualify for their loan products.

Due Diligence
An investigative process a lender undertakes to determine the value and legal status of the borrower's stated assets.

Equity
The difference in the market value of a property and the liens or mortgages held against it. How much of the property belongs to the owner free and clear of encumbrances.

Fixed Installment
The regular monthly payments due on a mortgage loan. This payment includes both principal and interest.

Government Sponsored Enterprises (GSE) Lenders
GSE lenders who lend only on properties owned by the government for programs. This includes senior homes, group homes, etc.

Guarantor
A guarantor pledges security for the debt of another or who guarantees that another person will perform a contractual obligation.

Hard Money
Hard money is money lent using real estate as the collateral. The loan is based on the quick resale value of the property. This money is usually lent by private investors and is usually similar to a bridge loan that is short term until conventional financing can be obtained.

Hard Money Lender
Typically a private individual who loans money based on the resale value of a parcel of real estate that is used by the borrower as collateral.

Letter of Intent
A letter of intent is a non-binding agreement that is the precursor to a contact. It indicates the willingness or interest of both parties to move forward on a project or negotiation.

LIBOR
The London Interbank Offered rate (LIBOR) is the most widely used standard or reference rate for interest rates. It indicates the interest rate for banks to borrow from other banks on the London market.

Lien
A lien is an ownership right in property until a debt is paid off by the debtor or discharged by the creditor.

Loan Origination Fee
A loan origination fee is charged by the broker. This fee is charged for finding the loan and assisting in the preparation of the documents required by the lender.

Loan to Value Ratio (LTV)
The loan to value ration is the relationship between the amount of the loan and the appraised value of the property, expressed as a percentage.

Marketable Title
Marketable title enables an owner to sell their property free and clear from any liens and mortgages. This is also known as merchantable title.

Non-Conforming Loan
A non-conforming loan is one that does not meet traditional bank standards for lending. A loan can be non-conforming because of the use of the funds, the collateral, or the amount of the loan. Non-conforming loans are traditionally handled by hard money or private lenders.

Prepayment Penalty
A prepayment penalty states that there will be a charge (usually a percentage of the loan amount) that will be charged if the loan is paid off early. These are charged so that a lender can have a return on their investment in the form of interest payments.

Title
Title is the ownership rights to property.

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