Finance
A 'hard money loan' in Alaska is typically characterized by:
AStrict underwriting standards and low interest rates
BAsset-based lending with high interest rates and short terms, often used by investors✓ Correct
CGovernment guarantees and subsidized rates
DFixed 30-year terms with conventional underwriting
Explanation
Hard money loans are asset-based (secured primarily by the property's value rather than borrower creditworthiness), carry higher interest rates and fees, and have short terms (1-3 years). They are commonly used by real estate investors for quick acquisitions, fix-and-flip projects, or situations where conventional financing is unavailable.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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