Glossary
Private Money Loan Glossary
The terms you will run into as a Texas investor, 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.
Texas Private Money Lending From Cedar Top
Now that you know the terms, apply now or call us and we will walk your deal through with you.