A buy down involves paying extra upfront to a lender in exchange for a lower interest rate on a mortgage loan. This lower rate can apply to either the entire loan term or part of it.
Freddie Mac, officially known as the Federal Home Loan Mortgage Corporation (FHLMC), is a government-sponsored enterprise designed to expand the secondary market for mortgages in the United States.
A Graduated Payment Mortgage (GPM) is a mortgage that starts with lower payments in the initial years, which gradually increase in steps over time until the payments are sufficient to amortize the loan fully.
Net Operating Income (NOI) is a critical metric in the real estate industry that assesses the profitability and financial health of income-generating properties. By calculating NOI, investors can evaluate the operating performance of properties without considering financing, taxes, or capital expenditures.
A no-documentation loan (often referred to as a 'no doc' loan) is a mortgage loan for which the borrower is not required to provide proof of income, employment, or assets.
An obligation bond is a type of mortgage bond in which the face value is greater than the value of the underlying property. The difference compensates the lender for costs exceeding the mortgage value.
A piggyback loan is a financial arrangement involving two loans simultaneously to the same borrower, typically to eliminate private mortgage insurance (PMI) or to secure more favorable terms.
A prepayment clause is a provision in a bond or mortgage that allows the borrower to pay off the loan before its scheduled due date. In some cases, there may be penalties for prepayment, such as the waiver of interest that is not yet due.
A real estate transaction entails a sale or exchange of reportable real estate for money, indebtedness, or property other than money or services, regardless of whether the transaction is currently taxable.
The secondary mortgage market is a market for buying and selling mortgages that have already been issued or originated, providing significant liquidity to the mortgage market.
