Compensating factors are criteria used to enhance a borrower’s creditworthiness by considering elements beyond the standard qualifying ratios. These factors help lenders make informed decisions when traditional metrics don't tell the whole story.
Credit (Mortgage) Scoring entails evaluating and rating a loan applicant based on their creditworthiness, impacting eligibility for standard or sub-prime mortgage terms.
The Debt Coverage Ratio (DCR) is a key metric used in real estate to assess the ability of an income-producing property to cover its annual debt payments. It helps lenders and investors evaluate the risk associated with a property loan.
Due diligence is the process by which an individual or organization makes a reasonable effort to gather and provide accurate, complete information before executing a financial transaction or agreement. It often precedes the purchase of property and includes a careful examination of physical, financial, legal, and environmental characteristics.
Investment bankers play a crucial role in helping organizations raise capital by bringing new securities such as stocks or bonds to the market, guiding clients through the complexities of financial regulation, pricing, and issuing.
Origination, specifically loan origination, refers to the process in which a borrower applies for a new loan and a lender processes that application. This includes various steps such as evaluating the borrower's creditworthiness, completing the application, underwriting, and funding the loan.
Piggybacking is a strategy used by individuals with poor credit histories to improve their credit scores by being added as an authorized user on the credit account of someone with a good credit rating. While it can temporarily boost a credit score, the practice is of dubious legality and may defraud lenders.
