Glossary

Loan-to-Value (LTV):
A lending risk ratio calculated by dividing the total amount for the mortgage or loan by the appraised value of the property. Ex.) Holding a mortgage for $70,000 on a home appraised at $100,000 would be a 70% LTV.

After Repaired Value (ARV):
The worth of a property after all identified repairs have been completed.

Promissory Note:
A document signed by a borrower promising to repay a loan under agreed-upon terms. This can also be referred to as a note.

Title Insurance:
Insurance to protect a lender or owner against loss in the event of a property ownership dispute.

Hazard Insurance:
Insurance that covers property damage caused by fire, wind, storms, and other similar risks. Sometimes earthquakes and floods are also covered, while other times they are not.

Mortgage:
A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.

Lien:
A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold. Liens can be structured in many different ways. In some cases, the creditor will have legal claim against an asset, but not actually hold it in possession, while in other cases the creditor will actually hold on to the asset until the debt
is paid off. The former is a more common arrangement when the asset is productive, since the creditor would prefer that the asset be used to produce a stream of income to pay off debt rather than just held in possession and not used. A claim can hold against an asset until all the obligations to the creditor are cleared (a general lien), or just until the obligations against that particular assets are cleared (a particular lien).

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