The following terms are applicable to conventional bank loans as well as to bridge loans and hard money loans
. Terms that are specifically relevant to bridge loan companies or hard money lenders
are noted as such.
A contractual personal assurance provided by a principal of a borrowing entity that a loan taken by the entity will be repaid. In the event that the sale of collateral
is insufficient to repay a loan, a personal guarantor has to personally come up with the funds to repay the deficiency. A loan with a personal guarantee is called a Full-Recourse Loan. A loan without it is called a Non-Recourse Loan
One point is 1% of the amount of a mortgage. It is usually a fee paid to a lender upon origination
. A payment to a broker is also denominated in points. Hard money loans tend to involve more points than conventional loans where the risk is lower.
Credit of individuals with FICO scores in the 500s or lower, indicating difficulties in the repayment of loans. These individuals typically have to resort to services such as real estate Hard Money
or Car finance for bad credit
A fee charged by a lender if a loan is paid off before maturity
or before a predetermined lock-in period
. Hard money lenders include prepayment penalties as a means to deter payoffs and thus hold onto their high-yielding loans. Conventional banks include prepayment penalties because they securitize their loans and need to maintain the future cash flows mandated by the loan documents.
1. The outstanding capital amount owed on a loan.
2. A chief officer of a company, often an owner.
Private Hard Money Lenders
Providers of hard money loans, also known as direct mortgage lenders, commercial hard money lenders, real estate private lenders, and private bad credit lenders. Private hard money lenders tend to incur higher risks and charge higher rates than conventional banks.
A legal document in which a borrower contractually undertakes to repay a loan to a lender. In the case of a mortgage, it is called Mortgage Note
Repaying an existing mortgage loan by borrowing another.
A loan provided by a seller to a buyer. Conventional banks prohibit such financing behind their loans. Bridge loan companies and hard money lenders may allow it, depending on the circumstances.
The collection of payments on a mortgage and the handling of other mortgage-related issues, such as taxes, insurance, etc.
A document issued by a title agency, evidencing all liens, taxes, mortgages, conveyances, easements, and other ownership-related items that are filed on a property.
. The duration of a loan. The time between origination
– when a loan is active.2
. Terms (in plural) refer to loan conditions in their entirety, i.e., the interest rate, points
, term, etc.
A lien filed on movable objects that are attached to or come with real property (Chattels). A UCC (Uniform Commercial Code) lien appears on title
and can thus provide a mezzanine
lender with publicly searchable security.