Glossary
Private Money Loan Glossary
The terms Texas investors run into, with the definition and how we actually use it at Cedar Top.
- Hard money loan
- A short-term, asset-based loan secured by real estate, underwritten primarily on the property and the deal rather than the borrower's credit score. Our hard money rates start at 12% with 2 to 4 points, on Texas non-owner-occupied investment property. Learn more.
- Private money
- Financing from a private lender rather than a bank, often used by real estate investors for speed and flexibility. We are investors ourselves, so we read a deal the way you do.
- ARV (After-Repair Value)
- The estimated value of a property after planned renovations are complete, supported by comparable sales. On a fix and flip we lend up to 75% of ARV, so a realistic ARV drives how much you can borrow. Learn more.
- LTV (Loan-to-Value)
- The loan amount as a percentage of the property's current value. Bridge and commercial go up to 75% LTV; new construction up to 70% LTV.
- LTC (Loan-to-Cost)
- The loan amount as a percentage of the total project cost, purchase plus rehab or construction. On new construction we lend up to 90% of loan to cost. Learn more.
- Points
- An origination fee expressed as a percentage of the loan amount. One point equals 1% of the loan. We charge 2 to 4 points depending on the program and the deal. Learn more.
- Draw
- A release of rehab or construction funds, made as work is completed and inspected. Our draw fees start at $250, and we typically fund the day after the inspection report comes in. Learn more.
- Bridge loan
- Short-term financing that bridges a property between transactions, such as an acquisition before a refinance or sale.
- Transactional funding
- Very short-term funding for a same-day A-B-C double closing, used by wholesalers with an end buyer in place. Our fee is 1.5%, or a $1,500 minimum, paid at closing. No upfront fees, and nothing if the deal does not close. Learn more.
- Double close (A-B-C)
- Two back-to-back closings: the investor buys from the seller (A-B) and immediately resells to the end buyer (B-C).
- Exit strategy
- How the loan will be repaid, typically a sale or a refinance. We look at the exit on every deal.
- Qualified intermediary (QI)
- A third party that facilitates a 1031 exchange by holding exchange funds and preparing documentation. We act as the qualified intermediary on Texas 1031 exchanges. Learn more.
- 1031 exchange
- A transaction under IRC Section 1031 that may defer capital gains tax when investment property is exchanged for like-kind property. Consult your tax advisor.
- Non-owner-occupied
- Property that is not the borrower's primary residence, held for investment or business purposes. Every loan we make is on non-owner-occupied Texas investment property, to an entity rather than an individual.
- Loan servicing
- Ongoing administration of a loan: collecting payments, accounting, statements, escrow, and reporting. We service owner-finance notes, wrap loans, and private-lender loans across Texas. Learn more.