Hard Money Glossary

Whether you’re sourcing a bridge loan, navigating private money lending, or comparing rehab‑loan terms, our Hard Money Glossary is your go‑to resource. We’ve distilled 25+ essential hard money loan terms—from loan‑to‑value (LTV) and interest reserves to origination fees and exit strategies—into concise, plain‑English definitions. Bookmark this page to unravel industry jargon, improve your deal analysis, and confidently structure your next investment in real estate financing.

Other Important Terms

Abstract of Judgment – A concise summary of a court’s final ruling that, when filed with the county recorder, creates a public lien on the debtor’s property. This document ensures the judgment can be enforced by notifying potential buyers or lenders of the claim.
Abstract of Title – A concise written record that compiles all official documents, legal filings, and proceedings affecting the ownership history and rights associated with a property.
Accrued Interest – The interest earned on a loan or investment between payment dates that has accumulated but remains unpaid until the next scheduled disbursement.
Addendum – A supplementary document appended to an existing agreement or record to introduce new provisions, clarify terms, or record modifications that become part of the binding understanding.
Adjustable Rate Mortgage (ARM) – A home financing arrangement with a variable interest rate that resets at scheduled intervals according to a benchmark index, adjusting payment amounts up or down throughout the term of the loan.
After Repair Value (ARV) – A forecast of a real estate asset’s market worth once all renovation work and improvements are complete, used to help investors assess potential return on investment.
Annual Percentage Rate (APR) – This rate reflects the total yearly cost of borrowing expressed as a percentage. It combines interest charges, fees, and points that must be disclosed under federal truth-in-lending requirements.
Appraisal – A process for assessing the value, relevance, and retention requirements of a digital asset to determine its appropriate lifecycle action. This evaluation helps teams decide whether to archive, repurpose, or dispose of files in line with organizational standards.
Appraised Value – An estimate of a property’s fair market value as determined by a licensed appraiser who follows established industry standards.
Arrears – Outstanding financial obligations that become due at the end of a billing cycle or contractual period. This status indicates the payment is overdue and may signal a default if not settled promptly.
Assessed Value – An estimate of a property’s market worth prepared by local tax authorities to establish the basis for calculating annual property taxes.
Assignee – A person or organization that acquires rights or interest in an asset or property through a legal transfer from its original holder.
Assignment – A contractual mechanism through which one party conveys its rights and responsibilities under an agreement to a second party, resulting in the transferee assuming liability for performance. For example, when lease interests move to a new tenant, the incoming party becomes responsible for ongoing rent payments and lease obligations.
Balloon Loan – A financing arrangement in which a borrower makes regular, typically lower, payments over a set period, followed by a significantly larger lump sum at the end to fully settle the outstanding balance.
Balloon Payment – A final installment significantly larger than previous ones, scheduled at the end of a loan, that clears the remaining debt. By concentrating principal repayment in this single lump sum, borrowers can maintain lower regular payments throughout the term.
Bankruptcy – A court-driven process enabling an insolvent individual or business to address unpaid financial obligations under legally structured terms. It offers a fresh start by discharging or reorganizing debts while providing creditors with an organized framework for repayment.
Beneficiary – A party entitled to receive proceeds, distributions or other benefits from a trust, estate, insurance policy or similar legal arrangement. They obtain assets or income as specified by the governing document or agreement.
Bridge Loan – A short-term funding solution that provides immediate capital to cover the gap between the end of one loan and the securing of long-term financing arrangements.
Broker Price Opinion (BPO) – An estimate of a property’s market value prepared by a licensed broker who analyzes recent comparable sales, local market trends and the home’s condition.
BRRR – A four-step investment strategy that uses a short‐term loan to acquire and renovate a property, leases it to tenants, then replaces the initial financing with a long‐term mortgage.
Buy Down – A financing arrangement where a borrower pays an upfront fee to lower the loan’s interest rate for an initial period, reducing monthly payments and overall borrowing costs.
Cap – A system-imposed limit that defines the highest permissible value for a measurable resource, such as storage space, asset count, or file size, in order to control usage and avoid unexpected charges. Administrators adjust these restrictions to align with organizational needs and budget constraints.
Capitalization – This valuation approach converts a property’s anticipated net income into present-day value by applying a chosen rate of return. By dividing income by that rate, it provides a standardized estimate of the asset’s current market worth based on its earnings potential.
Capitalization Rate – A ratio that relates a property’s net operating income to its market value, indicating its expected income yield and recovery of initial outlay. This measure helps investors assess and compare the performance of real estate assets.
Cash Flow – The net movement of money into and out of a company over a specified period, reflecting funds generated by operations, investments and financing activities. It reveals the organization’s liquidity, ability to sustain activities and fulfill financial obligations.
Cash Out Refinance – When a homeowner replaces their current mortgage with a larger loan, any amount borrowed above the remaining balance and associated fees is disbursed in cash to the borrower. These proceeds are commonly used for debt consolidation, home improvements, or other personal expenses.
CDOM – Cumulative Days on Market tracks the total number of calendar days a property remains active on the MLS, from its initial listing date until the sale closes. Real estate professionals use this measure to gauge market demand and benchmark listing performance.
Certificate of Insurance – A document issued by an insurance provider that verifies an insured party’s coverage details, including policy type, effective dates, coverage limits, and covered risks, to demonstrate protection for interested parties.
Chain of Title – This record shows the chronological history of all transfers, liens, and ownership interests affecting a property or asset, tracing how current ownership was established from the original grant or the earliest available record.
Closing – The final stage of a real estate transaction in which all required documents are signed, funds are disbursed, and legal ownership of the property is formally transferred to the buyer.
Closing Costs – Expenses a borrower pays to complete a loan transaction, including charges for title searches, title insurance, document recording, lender services, and other administrative or legal requirements.
Closing Date – The scheduled date when a transaction is finalized, the buyer remits payment, and legal ownership of the property or asset officially transfers to the purchaser.
Closing Statement – This document provides a detailed breakdown of all financial transactions in a property sale, including charges, credits, and disbursements for buyers, sellers, and related parties. It ensures transparency by showing the exact amounts each party owes or receives at the close of escrow.
Collateral – Supporting materials such as brochures, presentations, digital images, and videos that help sales and marketing teams communicate product value, maintain brand consistency, and engage customers across various channels.
Commercial Use – The deployment of a work, file, or resource in business or revenue-generating contexts—such as advertising, marketing, or product development—rather than personal or non-commercial settings.
Comparable Sales – Sales of recently sold properties that share similar size, condition, location, and amenities with a subject property, helping appraisers establish its market value.
Comparative market analysis (CMA) – This evaluation examines recent sales of similar properties and key attributes—such as location, size, and condition—to estimate a residence’s market value. Professionals commonly use this analysis to determine an appropriate listing price.
Conditions, Covenants, & Restrictions (CCR’s) – Provisions added to deeds or similar legal documents that create binding obligations or restrictions for property owners, governing aspects such as permitted uses, maintenance responsibilities, and behavior.
Conforming Loan – It adheres to the borrowing limits, credit criteria, and documentation requirements set by government-sponsored enterprises and federal agencies such as Fannie Mae, Freddie Mac, FHA, and VA, enabling access to more competitive interest rates and loan terms.
Contingency – A specified condition within an agreement that must be satisfied before the contract becomes legally binding. Typical examples include obtaining financing approval or securing regulatory consent.
Contract – A legally binding agreement between two or more parties that outlines their rights, duties, and expectations for a specific transaction or relationship. By clearly defining obligations and remedies, this arrangement protects all participants and promotes accountability.
Contract For Deed – In this real estate arrangement, the buyer occupies and uses the property while making agreed-upon installment payments, and the seller retains legal title until the full purchase price has been paid.
Conventional Loan – This mortgage product is issued by private lenders without federal insurance or guarantees, requiring borrowers to satisfy specific credit, income, and down payment criteria; it typically conforms to purchase price and loan limits set by agencies such as Fannie Mae and Freddie Mac.
Counteroffer – A mechanism by which a party rejects an existing contract proposal and introduces alternative terms or conditions, effectively creating a new offer for negotiation.
Credit Line – This financing arrangement allows borrowers to draw funds up to a set limit, repay all or part of the balance, and then access available funds again without submitting a new application.
Credit score – A numerical value reflecting how reliably an individual or organization manages borrowed money, based on factors like payment history, outstanding debts, and credit usage. Lenders and creditors use it to estimate the likelihood of timely loan repayment.
Debt Ratio – A financial measure that divides an individual’s total required monthly debt payments by their gross monthly income. It indicates the portion of earnings allocated to servicing outstanding obligations.
Debt Service – The total amount a borrower pays annually toward interest and principal on outstanding loans or bonds. This figure helps organizations plan cash flow and meet their repayment obligations.
Debt‑to‑income ratio (DTI) – A measure that divides total monthly debt obligations by gross monthly earnings to show how much of pre-tax income goes toward covering recurring debt payments.
Deed – A written instrument, executed and delivered according to legal requirements, that transfers legal title or an ownership interest in real estate from one party to another.
Deed in Lieu of Foreclosure – A legal arrangement allowing a borrower in mortgage default to transfer ownership of their property directly to the lender, resolving the debt without initiating a formal foreclosure proceeding.
Default – Failure to fulfill agreed-upon obligations under a contract, such as missing scheduled payments or neglecting specified duties. This breach typically entitles the non-breaching party to pursue remedies like accelerating outstanding balances, imposing penalties, or initiating recovery actions.
Delinquent loan – When a borrower misses one or more scheduled payments under the terms of the loan agreement by the due date, this status indicates a breach of the agreed repayment schedule. It may lead to additional fees, damaged credit scores, and potential legal action if left unresolved.
Distressed – This status applies to a property exhibiting visible signs of deterioration or neglect, often requiring repairs or maintenance to restore safety, functionality, and aesthetic quality.
Document Preparation – This fee covers the costs of assembling, formatting and finalizing the legal paperwork signed at closing, such as the mortgage, promissory note and truth-in-lending disclosure.
DOM – A programming interface that represents an HTML or XML document as a hierarchical tree of elements, attributes, and text nodes. It lets scripts and styles access, modify, and reorganize page components on the fly to create interactive and dynamic web content.
Down Payment – An initial payment made by the buyer from their own funds at the time of purchase, rather than through lender financing.
Draw Schedule – A timetable detailing disbursement milestones for construction financing, outlining when each payment is released and how funds will be allocated to inform lending decisions.
Earnest Money – A good faith deposit submitted with a purchase offer and held in escrow to demonstrate commitment. It is applied toward closing costs or returned if agreed contingencies are not satisfied.
Easement – A legal right granted to an individual or organization to access or use another party’s land for a specific purpose without transferring ownership or possession.
Equal Credit Opportunity Act (ECOA) – A US federal law prohibits lenders from discriminating in credit transactions based on factors such as race, color, religion, national origin, sex, marital status, age, or public assistance status. It ensures that credit decisions are made fairly and solely on objective financial criteria.
Escrow Account – Funds are held in a secure account by a neutral third party until agreed conditions are met, then released to cover expenses such as property purchases, repair costs, loan repayments or security deposits.
Estoppel – This legal doctrine prevents a party from contradicting facts or promises they previously affirmed. It applies when others have reasonably relied on those statements in good faith.
Fix & Flip – An investment strategy in which an investor acquires a property in need of repairs or updates, performs renovations to enhance its value, and then resells it at a higher price to realize a profit.
Fixed Rate Mortgage – A home loan with an interest rate that remains unchanged over the entire repayment schedule, featuring level payments that fully amortize the balance by the loan’s end.
Forbearance – An arrangement in which a lender permits a borrower to temporarily reduce or suspend loan payments in response to financial hardship, postponing foreclosure or legal action as long as the borrower follows modified repayment terms.
Foreclosure – When a borrower fails to meet mortgage obligations, the lender may seek to take ownership of the secured property through a court-supervised or nonjudicial sale process, with specific procedures and timelines varying by jurisdiction.
Funding – Financial resources provided by investors, lenders, or institutions that supply the capital necessary for a company, project, or initiative to launch, expand, and sustain operations.
Grace period – An additional timeframe after a payment deadline during which late fees do not apply and account privileges remain intact.
Grantee – An individual or organization that receives ownership rights or benefits in property or assets granted under a legal instrument.
Grantor – An individual or organization that transfers asset ownership or assigns specific rights to another party. In digital asset management, this is the user who authorizes access or usage permissions for files and media.
Guarantor – A person or institution that commits to repay a loan on behalf of the borrower if they are unable to meet their repayment obligations.
Hard Costs – Direct, easily quantifiable expenses cover the purchase of materials, labor fees, subcontractor charges, equipment rentals, and permit costs required for physical improvements or repairs. They exclude indirect fees such as design, financing, or administrative charges.
Holdback – Funds withheld by a lender until a specified project milestone is reached, ensuring that agreed conditions are met before the remaining loan proceeds are released. This mechanism protects lenders by tying disbursement to performance.
Holding Costs – Ongoing expenses incurred simply by owning an asset, such as insurance premiums, property taxes, utility bills, and routine maintenance. These costs factor into the total ownership outlay and directly affect long-term investment returns.
Home Equity Loan – A secured financing option that lets a homeowner borrow a fixed sum by using their residence as collateral, based on the difference between its market value and the outstanding mortgage balance. Funds are disbursed in a lump sum and repaid over a set period, typically at a fixed interest rate.
Homeowner Association (HOA) – A private group formed by property owners in a specific neighborhood or development to oversee maintenance of shared facilities, enforce community rules, and collect dues for common‐area upkeep.
Homeowners’ Warranty – A service contract offering financial protection for repairing or replacing key household systems and appliances within a predetermined time frame and coverage limit.
HUD-1 – This settlement statement, used in real estate transactions, lists all financial charges and credits exchanged among the buyer, seller, and lender, providing a clear, itemized view of closing costs.
Indemnify – A contractual promise under which one party agrees to cover and reimburse another for financial losses, damages, or liabilities that arise from specified events or claims.
Index – A structured collection of asset metadata that enables fast search and retrieval by mapping keywords, categories, or attributes to their corresponding digital files. It underlies efficient navigation within the storage system by maintaining organized references to each item’s location, type and relevant tags.
Interest – This periodic fee compensates a lender for providing borrowed funds and is calculated as a percentage of the amount owed, paid at agreed intervals.
Interest Rate – A percentage that represents the cost a borrower pays for using another party’s funds, calculated on the amount received over a specified period.
Interest‑only payment – Under this arrangement, the borrower covers only the cost of borrowing each period without reducing the principal. The entire principal balance becomes due as a lump sum at the end of the loan term or upon sale of the property, with the first payment usually due thirty days after closing.
Investment property – Real estate acquired to generate rental income or capital appreciation rather than for personal use. These holdings are maintained by one or more investors and remain unoccupied by the purchaser.
Joint Tenancy – This is a form of real estate ownership in which two or more individuals each hold equal, undivided shares and benefit from rights of survivorship, so that when one owner dies, their interest automatically passes to the remaining owners. This structure ensures seamless transfer of ownership without probate.
Joint Venture – A formal agreement among two or more organizations to combine resources, share risks, and pursue a specific project together. Commonly used for one-time undertakings—such as real estate developments or product launches—it enables collaboration without forming a permanent business entity.
Judgment – A formal decision issued by a court establishing that one party owes a specific sum to another, and setting the precise amount of that obligation for enforcement or collection.
Judgment Lien – A court-ordered encumbrance on a debtor’s real or personal property that ensures a creditor can secure repayment of a judgment debt. Once recorded, it allows the creditor to enforce collection through the seizure or sale of the property if the debt remains unpaid.
Late fees – A penalty imposed when a scheduled payment is not received within the agreed-upon grace period. It compensates the lender or service provider for additional administrative expenses and encourages timely payments.
Lease – An agreement by which the owner of real property grants a tenant the right to use and occupy that property for a specified duration in exchange for regular rent payments.
Lease Option – An arrangement combining a rental contract with the right to acquire ownership of the property at an agreed price within a specified timeframe. It enables occupants to build equity toward a future purchase while paying regular rental fees.
Legal Description – A precise written statement that uniquely identifies a parcel of land by citing government survey coordinates, recorded plats, or metes and bounds measurements. It provides a standardized, legally recognized account of property boundaries for deeds, titles, and official records.
Lessee – An individual or organization granted temporary rights to occupy or utilize property in exchange for agreed-upon payments, bound to the conditions and duration set forth in the lease agreement.
Lessor – An entity that provides another party the right to use property or assets for a specified period in return for agreed rental payments.
Letter of Intent – This document outlines a party’s preliminary commitment to negotiate or enter a formal agreement, summarizing key terms and intentions. It serves to guide future discussions and clarify expectations without creating a legally binding contract.
Liquidity – The ease with which assets can be converted into cash on short notice without a significant loss in value, reflecting a business’s capacity to meet immediate financial obligations.
Loan Officer – A professional at a bank or lending institution who reviews applicant financial profiles, evaluates credit risk, and decides whether to approve or decline financing requests.
Loan Points – Fees paid to a lender at closing, charged in one-percent increments of the total principal borrowed.
Loan to Cost (LTC) – This metric shows the percentage of total project costs that a lender is willing to finance, based on the combined purchase price and repair or renovation expenses of a commercial property.
Margin – In an adjustable-rate loan, lenders apply a fixed percentage above a chosen benchmark rate to set your interest charge. This additional spread stays the same over the life of the loan and covers lender operating expenses, expected profit, and credit risk.
Market Value – It reflects the price a buyer is willing to pay and a seller is willing to accept under normal conditions, determined by factors such as location, property features, and prevailing supply and demand.
Maturity – The point at which a digital asset completes its creation and review processes and is authorized for organization-wide use. This status ensures all quality and brand standards have been satisfied.
Maturity date – The specific date on which the outstanding principal and any accrued interest on a loan or bond become payable in full.
Mixed-Use – A development featuring both residential living spaces and commercial or retail areas within the same building or complex, such as storefronts beneath apartments.
MLS – A centralized repository used by real estate professionals to share and search up-to-date property sale listings, fostering standardized information and broad market visibility.
Monthly Payment (P&I) – Each month, this amount covers repayment of the loan’s outstanding balance and the interest charged by the lender, without including taxes, insurance premiums or escrow fees.
Mortgage – A long-term loan secured by real estate, with the purchased property serving as collateral. Repayments typically combine principal and interest in regular installments over an agreed term.
Multi-Family – Residential developments containing two or more separate living quarters within a single structure or interconnected buildings, each equipped for independent household occupancy.
Mutli-Dwelling Property – A single real estate asset financed by one mortgage that contains multiple separate living units, commonly found in apartment buildings, condominium complexes, or townhome developments.
New construction loans – Financing designed to fund the construction or substantial renovation of structures ranging from single-family homes and small multi-unit properties to mixed-use developments and commercial or industrial buildings.
Non-Conforming Loan – Such mortgages fall outside the purchasing guidelines of Fannie Mae or Freddie Mac—often due to loan size, borrower qualifications, or documentation—and generally carry an interest rate at least half a percentage point above one that meets those standards.
Note – A written agreement outlining a borrower’s obligation to repay funds under specific conditions, including the interest rate, principal amount, and repayment schedule. It serves as a legally binding contract that clarifies each party’s rights and responsibilities regarding repayment.
Origination – The process by which a lender reviews and verifies an applicant’s financial information, approves the credit request, and formalizes the loan agreement. This stage culminates in the disbursement of funds and establishment of repayment terms.
Partially complete construction loans – Short-term credit designed to cover outstanding building costs when original budgets are exhausted, ensuring projects can reach completion. These loans bridge the funding gap until permanent financing or additional capital becomes available.
Payoff – Complete settlement of an outstanding loan by remitting all remaining principal, accrued interest, and any applicable fees, thereby satisfying the borrower’s repayment obligations.
Personal guarantee – An agreement in which a person promises to cover a company’s debt or loan if the business cannot pay. Should the company default, the individual becomes liable for repaying the outstanding principal, interest and any associated fees.
Points – These credits are purchased in advance and applied toward asset-related tasks such as file conversions, downloads, and storage operations. Each credit corresponds to one standard unit of work within the platform.
Position – The specific placement of an asset within a sequence or layout that determines its visual order, layering, and display priority across designs and interfaces.
Pre-Qualification – This initial review assesses whether a digital asset meets basic technical and metadata requirements before it is imported into the management system. It checks file formats, resolution, naming conventions, and required metadata to maintain consistency, streamline workflows, and minimize downstream errors.
Pre‑payment penalty – Some loan agreements impose a fee when a borrower settles the outstanding balance before the scheduled payoff date. This charge compensates the lender for interest income that would otherwise be lost.
Preliminary title report (PTR) – This document specifies the conditions and exclusions an insurer applies before issuing coverage, confirms legal ownership of the real estate, and discloses any existing liens or other claims that will remain unprotected.
Prepayment Penalty – A fee charged under a loan agreement when a borrower settles the outstanding principal before its scheduled maturity date, designed to compensate the lender for interest income lost through early repayment.
Principal Balance – The remaining amount of the original funds borrowed under a loan, excluding any interest or fees that have accrued.
Principal, Interest, Taxes, Insurance (PITI) – A mortgage borrower’s total monthly outlay that combines repayment of the loan balance and its financing charges with escrowed contributions for property taxes and homeowners insurance, ensuring funds are set aside each period to cover those obligations.
Private Lender – An independent funding source operating outside regulated banking systems. These lenders encompass short-term hard money firms, individual investors, or private individuals—such as friends and family—who provide loans under flexible terms without the oversight of traditional financial institutions.
Private money lender – Non-bank individuals or organizations providing loans secured by real estate or other assets, relying on collateral value instead of traditional credit criteria. Loan amounts and interest rates are determined by the assessed worth of the pledged property.
Promissory Note – A written commitment by one party to pay a defined sum to another, specifying the amount, repayment schedule, due date, and any applicable interest or conditions.
Proof of Funds – A statement from a bank or brokerage confirming that an individual or organization has sufficient liquid assets available to complete a purchase or investment.
Qualifying Ratio – This metric compares a borrower’s monthly debt payments with their gross income, helping lenders assess the maximum amount of credit a buyer can sustain.
Quitclaim Deed – This legal instrument transfers any ownership interest a grantor holds in real property, without guaranteeing clear title or providing warranties about the nature of those rights.
Rate – A percentage-based fee charged by a borrower to a lender at set intervals, typically quoted on an annual basis, which fluctuates with economic conditions and credit risk; most first-position loans from Source Capital Funding, Inc. carry charges between 9 % and 11 % per annum.
Rate Cap – A maximum ceiling on the interest rate increase for a loan with a variable rate, ensuring the rate cannot exceed a specified threshold during any single adjustment period.
Raw Land – Unimproved property lacking basic infrastructure like access roads, utility connections, drainage systems or landscaping. It must undergo site development before any construction or utility services can be established.
Real Estate Agent – A licensed professional who assists clients with buying, selling, or leasing residential and commercial properties. They conduct market research, advise on pricing strategies, manage negotiations and inspections, and oversee necessary paperwork to ensure smooth, compliant transactions.
Real Estate Broker – An individual licensed to guide buyers and sellers through property purchases and sales. They offer market analysis, negotiate terms, and coordinate financing and closing procedures.
Real Estate Owned (REO) – Residential or commercial properties that a lender holds after repossessing them from a borrower who failed to keep up mortgage payments. These assets remain on the lender’s balance sheet until they are sold.
Realtor® – A licensed real estate agent or broker who holds membership in the National Association of Realtors, entitled to use the trademarked title and bound by the organization’s code of ethics.
Recission Period – A federally mandated timeframe allows borrowers to revoke certain mortgage agreements on owner-occupied homes within three business days of loan closing, beginning the next business day, without penalties. It does not cover loans used for purchasing homes or securing non-owner-occupied properties.
Recourse – A lender’s right to seek reimbursement from a borrower’s personal assets or through legal proceedings when the value of pledged collateral is insufficient to cover the outstanding debt.
Redemption Period – A legally defined timeframe after a foreclosure during which the former owner may reclaim ownership by fulfilling all outstanding debts, fees, and penalties before the sale is finalized.
Refinance – A process in which a borrower secures new financing to retire an existing loan, typically to benefit from lower interest rates or a revised repayment schedule.
Rehab loans – These lending options combine funds for purchasing and renovating residential, multi-family, or commercial real estate, supporting property improvements prior to resale or long-term ownership. Borrowers can consolidate acquisition and repair expenses into a single credit facility, simplifying project financing and repayment.
Residential – A zoning classification for land or buildings designated for housing individuals or families, where living spaces rather than commercial or industrial uses are the primary purpose.
ROI – A metric that measures the profit generated by an initiative relative to the resources committed, typically expressed as a percentage to evaluate efficiency.
Scope of Work – An outline of project tasks, deliverables, timelines, and associated costs agreed upon by client and provider. It defines each party’s responsibilities and milestones, ensuring clarity on what will be delivered, when, and at what price.
Seasoning – A loan that has demonstrated consistent repayment behavior over a set timeframe—commonly six to twelve months—resulting in a verified payment record that supports more favorable refinancing terms or sale in secondary markets.
Second Mortgage – A loan secured by property that is recorded after an existing mortgage and carries repayment priority below the original lien. Borrowers frequently use this arrangement to access home equity without refinancing their primary loan.
Security – Protocols and measures that safeguard digital assets by controlling access, preventing unauthorized use, and ensuring confidentiality, integrity, and availability.
Security Interest – A legal claim granted to a creditor over specified assets, allowing the creditor to seize or sell those assets if the debtor fails to fulfill agreed payment obligations.
Settlement Statement – Also known as the closing statement or HUD-1, this document itemizes all funds exchanged between parties in a real estate transaction, detailing payments, fees, and adjustments to calculate each participant’s net amount due or receivable.
Short Sale – In a pre-foreclosure scenario, the lender approves sale of a home for less than the remaining mortgage balance and agrees to accept the proceeds as full repayment of the loan.
Single Family Home – A standalone dwelling designed as a private residence for one household, typically situated on its own lot with separate utilities.
Soft Costs – Non-physical expenditures required to support a project, including legal advisory fees, accounting services, insurance premiums, and administrative overhead.
Sweat Equity – Contributions of labor, time or expertise by an owner or contributor that enhance a project’s or property’s worth. Though no cash is invested, this added value can be reflected in increased ownership stakes or negotiated as part of the overall investment.
Tax Lien – A legal claim recorded by a government against real or personal property to secure payment of unpaid income, property, sales, payroll or other local taxes. This claim must be cleared before the asset can be sold, transferred or refinanced.
Terms – This defines the length of your loan agreement and its repayment schedule. Source Capital offers financing spanning one to seven years with interest-only installments, requiring the full borrowed amount to be paid at the conclusion of the period.
Title – A legal instrument confirming an individual’s or organization’s lawful claim to and right of use or transfer for a specific asset. It functions as formal proof of ownership, often including details like document date, identifying information, and any associated limitations.
Title company – An organization that researches historical property records to confirm the seller’s legal right to transfer ownership, manages escrow services, and issues insurance policies to protect buyers and lenders against defects in the title.
Trust – A fiduciary arrangement in which a grantor transfers ownership of assets to a designated custodian, who holds and safeguards those assets for the benefit of a specified beneficiary.
Turnaround Time (TAT) – The period between submission of a request and delivery of the completed asset. It indicates how long it takes for a design or file to move through the production process, helping teams set deadlines and manage workload.
U.S. Department of Housing & Urban Development (HUD) – A cabinet-level federal department responsible for national housing policy, community development programs and fair housing enforcement. It administers mortgage insurance, rental assistance and grants to support local redevelopment and urban revitalization efforts.
Underwriter – A financial specialist who assesses a borrower’s income, assets, debts, and property details to evaluate risk and ensure lending standards are met before approving a loan.
Unencumbered Property – Real estate without any liens, mortgages, or legal claims attached, allowing the owner to transfer, sell, or leverage the asset without restrictions.
Unrecorded Deed – A conveyance that transfers real property ownership between parties but remains absent from public records when not filed with the relevant government office.
Usufruct – A legal arrangement granting someone the right to use an asset they do not own and to collect any income it generates, provided the asset’s substance is maintained and returned to its owner.
Vacancy – This metric represents the proportion of units within a multi-family, commercial, or industrial property that are unoccupied compared to the total number of available units. It helps investors and property managers evaluate leasing performance and identify potential revenue shortfalls.
Valuation – An estimate of an asset’s or company’s market value based on an objective review of its financial performance, prevailing market conditions, and comparable recent transactions.
Value – A measure of an asset’s worth based on factors such as production cost, usage frequency, potential revenue impact, and strategic importance to the team.
Warranty Deed – A document used in real estate transactions where the seller promises to defend the buyer against title defects and guarantees clear ownership free from liens, encumbrances, or claims.
Waterfall – An agreement that defines the sequence for allocating incoming funds to stakeholders according to predetermined priority tiers.
Wholesaling – An investor secures the rights to buy a property at a below-market rate, then sells or assigns that purchase agreement to another buyer, earning a profit on the difference between the original contract price and the final sale price.
Yield – The annualized percentage return on an investment security, determined by dividing total interest or dividends by its purchase price. Factors such as payment frequency, original cost, time until maturity, and redemption value influence this rate.
Zoning – Local governments employ a regulatory framework dividing land into designated districts, each with specific permitted uses and development standards to minimize conflicts between activities and promote organized growth.

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Hard Money Glossary

Key Terms

Other Important Terms