A Consumer Reporting Agency (CRA), also known as a Credit Rating Service, collects, maintains, and provides consumer credit information to third parties to assist in evaluating creditworthiness.
In the context of real estate, a debtor is a person or entity obligated to repay a debt. The debtor obtains a loan or other form of credit, typically used to purchase property, and is legally responsible for repaying the borrowed amount according to the agreed terms. The opposite of a debtor is a creditor, who provides the loan or credit.
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.
A Dry Mortgage, also known as a Nonrecourse Mortgage, is a type of financing where the borrower is not personally liable beyond the collateral securing the loan. In these agreements, the lender can seize the property used as collateral to satisfy the loan, but cannot pursue the borrower for any remaining balance if the collateral does not cover the full liability.
The face interest rate is the percentage interest specified on the loan documents, representing the nominal annual interest rate before accounting for additional fees or compounding periods. This term is often compared with the Annual Percentage Rate (APR) and the Effective Rate.
A firm commitment is an irrevocable agreement in which one party commits to performing a specific act, typically in the context of lending, ensuring that financing will be provided under predefined terms.
Form 1098 is a form that lenders are required by the Internal Revenue Service to send to mortgage borrowers, showing the amount of interest paid during the past year.
The amount owed on a debt, whether it is the original face amount or the remaining unpaid debt on a loan that has been partially amortized.
A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date.
Recourse refers to the legal right of a lender to claim money from a borrower in the event of default, in addition to repossessing the property pledged as collateral.
Secondary financing refers to an additional loan that is secured by a property that already has a primary loan (first mortgage) attached to it. This type of financing is often used to bridge financial gaps when purchasing or refinancing property.
A Secured Loan is a loan that is backed by an asset or collateral, reducing the risk for the lender and often resulting in lower interest rates for the borrower. Examples include mortgages and auto loans.
A commitment made by a lender to make a sum of money available at specified terms for a specified period, subject to the payment of a standby fee by the borrower.
An unsecured loan is a debt not protected by any collateral or security, meaning the lender relies solely on the borrower's creditworthiness and promise to repay.
