An advance in real estate is a form of loan disbursement given to real estate developers or builders. This is sometimes referred to as a 'draw,' where funds are released based on the completion of certain stages within a real estate project.
An advance commitment is a promise to take specific action at a future date with predefined terms. It's commonly used in real estate to secure financing for projects, often before completion. Understanding different types of advance commitments can be crucial for developers and investors.
Construction lenders specialize in providing construction loans, which are short-term loans used to finance the building or renovation of real estate projects. They differ from permanent lenders who provide long-term financing solutions once a project is completed.
A draw refers to the periodic advancement of funds from a construction lender to a developer according to a pre-arranged schedule, either at regular intervals during construction or after the completion of specific segments of the project.
In real estate and finance, 'FLOAT' refers to the period between a transaction (such as a deposit or withdrawal) and the time it's credited or deducted, the difference between a variable interest rate and its pegged index, and the act of incurring a debt through loans or bonds.
A floor loan is the minimum amount of money that a lender is willing to advance to a borrower during the initial stage of a financing agreement. It is commonly used in real estate development contexts for construction loans to manage risks until certain conditions are met.
In real estate, a guaranty involves an assurance provided by one party to compel another party's performance under a contract, often involving a co-signer to ensure obligations are met.
Interim Financing is a short-term loan used when a property owner is unable or unwilling to arrange permanent financing. It often includes a CONSTRUCTION LOAN and is typically arranged for less than three years, allowing time for financial or market conditions to improve.
Market analysis involves studying supply and demand conditions in a specific area for a specific type of property or service. It aids developers in deciding project types and securing financing for proposed developments.
A mortgage commitment is an agreement between a lender and a borrower to lend money at a future date, subject to the conditions described in the agreement. It is a critical step in the home-buying or construction process, which signifies the lender's intention to offer financing upon meeting specific requirements.
Mortgage Out refers to the practice of obtaining financing in excess of the cost to construct a project. During periods of relaxed monetary policy, developers could mortgage out by securing a permanent loan commitment based on a higher percentage of a project's completed value, allowing them to borrow more than the development costs.
A Mortgage Real Estate Investment Trust (mREIT) is a company that specializes in investing in mortgage obligations, typically providing financing for income-producing real estate by purchasing or originating mortgage loans and mortgage-backed securities.
The prime rate is the lowest commercial interest rate charged by banks on short-term loans to their most creditworthy customers. It significantly influences other rates, including those for mortgages and consumer loans.
Progress payments are partial payments made to a contractor or builder as specific stages of a construction project are completed. These payments are contingent on the fulfillment of predefined milestones, ensuring that the contractor receives payment for the work completed to date without having to wait until the entire project is finished.
Takedown refers to the instance when a borrower actually accepts money from a lender under a line of credit or loan commitment, often structured in stages to align with project milestones.
Takeout financing is a type of long-term loan that replaces short-term interim financing, allowing project developers to refinance debt incurred during the construction phase. This helps bridge the gap between the completion of a project and its permanent financing, ensuring liquidity and financial stability.
A strong track record can significantly influence a developer's ability to secure financing and attract investors for new projects, ensuring successful and timely project completion.
