The following terms are applicable to a conventional bank as well as to a bridge loan company and a commercial hard money lender
. Terms that are specifically relevant to a bridge loan or a hard money commercial loan
are noted as such.
A lender’s demand for full and immediate repayment of a loan. Loans are accelerated upon default
The gradual repayment of a mortgage through monthly installments of principal
and interest based on a multiyear schedule. Bridge loan products are usually interest only, and thus include no amortization.
A mortgage request form containing necessary information for the processing of a loan.
A property value analysis prepared by a certified appraiser.
A lump sum payment due at the end of a mortgage term
. Bridge mortgage loans usually require payments of interest only, and a balloon payment by maturity.
A short-term mortgage that is placed temporarily on a property until permanent financing can be put in place. If a bridge loan involves a difficult situation it is also referred to as a hard money loan. Bridge loans and hard money loans are usually made for a year or less. For more information, look at How Does A Bridge Loan Work.
A borrower’s agent who arranges financing for the borrower for a fee. The fee is disbursed from the proceeds at closing. The fee is based on a brokerage agreement signed by the borrower, and it is usually a percentage of the loan.
Cash proceeds in refinance that a borrower receives after any existing mortgage(s)
, etc. are paid off and after closing costs are covered.
The settlement meeting at which the parties to a transaction meet together with their respective attorneys and a representative from a title company. During this meeting documents are signed, the transaction officially takes effect, and funds are advanced.
Combined Loan To Value Ratio. This is the ratio between the total debt on a property and the value of the property. The total debt includes all the outstanding mortgage balances on a property.
Real property and/or other assets securing a loan. Examples of collateral can be found at our Criteria
Commercial Bridge Loan and Hard Money Commercial Loan
Loans that are made on commercial - as opposed to owner-occupied residential - properties. A commercial bridge loan is acquired when time constraints are involved. A hard money commercial loan is acquired when poor quality of credit or collateral is at issue.
Commercial Hard Money Lender
A lender who makes loans on commercial properties where either the borrower has credit problems or the property is difficult to finance, or both. A commercial hard money lender typically charges interest rates that are commensurate with the risk involved, that is, rates that are higher than those of a conventional bank.
The broker’s fee, paid at closing based on a signed agreement between the broker and the borrower.
An official letter from a lender to a borrower, constituting an offer to lend and specifying the terms of the loan.
A loan on new construction, involving submission of permits, plans, budgets, and more. Funding for construction is usually in installments, and is done after each stage has been inspected and certified by a lender’s agent.
Also known as FICO score. A numeric value indicating the quality of a borrower’s payment history. Scores range from 350 to 850, with a value of more than 720 being very good, 620-720 OK, 520-620 poor, and anything lower – seriously faulty. For people with bad credit mortgage loans are hard to obtain.