FinanceIntermediateCalifornia Exam

A 'bridge loan' is used for:

AFinancing commercial bridge construction, under standard California mortgage lending practice

BShort-term financing to bridge the gap between selling one home and purchasing anotherCorrect

CLong-term financing for investment properties, as typically calculated in residential loan underwriting

DRefinancing a home at a lower interest rate, consistent with conventional financing terms

Why Short-term financing to bridge the gap between selling one home and purchasing another Is Correct

Answer B: Short-term financing to bridge the gap between selling one home and purchasing another

A bridge loan is a short-term loan that helps homeowners 'bridge' the financial gap when they need to buy a new home before their current home has sold. It uses equity in the current home as collateral.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

People Also Study

Key Terms to Know

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

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 Points

Prepaid 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

Interest Rate Equity Calculation

Study This Topic

Real Estate Finance Guide

Practice More California Real Estate Questions

1,500+ questions covering all exam topics. Start free — no signup required.

Take the Free California Quiz →