The words on a creative file.

30 terms

Acceleration

When a lender declares the whole loan balance due at once instead of on the normal schedule. A due-on-sale clause gives the lender the option to accelerate after a transfer.

Due-on-sale clause

Addendum

A page added to a contract that changes or adds terms. On creative deals, attorneys often draft a custom wrap or subject-to addendum rather than relying on a standard form alone.

Amortization

The schedule that splits each payment between interest and principal so the loan pays down over its term. A loan that does not fully amortize ends with a balloon.

Arrears

Payments that are past due on the existing loan. On a subject-to file the buyer and seller agree who brings the loan current and how, and the title company accounts for it at closing.

Assignment of contract

Handing your rights under a purchase contract to another buyer, usually for a fee. Common in wholesaling. A novation is a different tool with a similar goal.

Novation vs assignment

Authorization to release information

A form the borrower signs so the lender or servicer will talk to a named third party about the loan. Usually one of the first documents requested on a subject-to or wrap file.

Balloon payment

A large lump sum due at the end of a loan that did not fully amortize. Balloon terms on seller-financed loans carry federal rules; your attorney checks them.

Seller financing explainer

Closing attorney

An attorney who conducts the closing instead of, or alongside, a title company. In Texas a wrap must close at a title company or an attorney's office.

Closing packet

The set of signed and recorded documents, the final settlement statement and the servicing confirmation, sent to you after closing so the file is complete in one place.

Deed of trust

The recorded document that pledges the property as security for a loan. In many states, including Texas, it does the job a mortgage does elsewhere. The due-on-sale clause lives here.

Double close

Two closings on the same property, back to back: the wholesaler buys from the seller and immediately sells to the end buyer.

Due-on-sale clause

The paragraph in a deed of trust that lets the lender call the loan due if the property is transferred without its consent. It is an option the lender holds, not an automatic event.

Due-on-sale explainer

Earnest money

A deposit the buyer puts with the title company after signing the contract to show the offer is serious. It is credited to the buyer at closing.

Entry fee

Investor shorthand for the cash a buyer brings to a creative deal: down payment, arrears, closing costs and any cash to the seller, added together.

Escrow

Money held by a neutral third party until conditions are met. Also the account a servicer keeps for property taxes and insurance when those are collected with the payment.

Hybrid

A deal that combines subject-to on the existing loan with seller financing on the rest of the price. Two sets of documents, one closing.

Hybrid deal page

Lease option

A lease now with the right, not the obligation, to buy the property later at agreed terms. Treated differently from a sale in many states, so the documents matter.

Lease option explainer

Lien

A legal claim against a property that secures a debt. A deed of trust creates a lien; so can unpaid taxes or a judgment. Title work finds them.

Novation

An agreement where a new party steps into a contract and the original party steps out. In investing, the buyer takes over the seller's position and sells to an end buyer.

Novation explainer

PITI

Principal, interest, taxes and insurance: the four parts of a full monthly housing payment. The number to confirm on the existing loan before a subject-to closes.

Promissory note

The written promise to repay a loan: amount, interest rate, payment and term. The deed of trust secures it with the property. On a creative deal, your attorney drafts it.

Recording

Filing the deed and deed of trust with the county so they become public record. The title company handles it after funding.

RMLO

Residential mortgage loan originator, a licensed person. Federal and Texas rules say when a seller-financed or wrap loan needs one involved. That is a question for the seller-lender and their attorney.

Seller financing

The seller acts as the lender: the buyer signs a note to the seller and a deed of trust secures it. Also called owner financing or a seller carry.

Seller financing explainer

Servicer

A company that collects the monthly payment, pays the underlying lender and any escrow items, and keeps the records. Using a third-party servicer is common on wraps and subject-to deals.

Settlement statement

The title company's line-by-line accounting of the closing: price, credits, payoffs, fees, and who pays what. Kristen checks it against the contract before signing.

Subject-to

Buying a property subject to the existing loan: the buyer takes title, the seller's loan stays in place and keeps getting paid, and the seller stays on the loan.

Subject-to explainer

Title commitment

The title company's report of who owns the property, what liens and exceptions exist, and what it will insure once those are handled.

Transaction coordinator

The person who runs the paperwork and the people between contract and closing: checklist, documents, deadlines, follow-up. Not an attorney, lender or title company.

What a transaction coordinator does

Wrap (wraparound mortgage)

Seller financing where the seller's existing loan stays in place and the buyer's new, larger note wraps around it. The buyer pays the seller or a servicer, who pays the underlying lender.

Wrap explainer

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