A Colorado property owner wants to do a 'cash-out refinance.' This means they:
Why Refinance for a higher loan amount than needed to pay off the existing mortgage, receiving the difference in cash Is Correct
Answer B: Refinance for a higher loan amount than needed to pay off the existing mortgage, receiving the difference in cash
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.
Key Finance Terms in This Question
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Key Terms to Know
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
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.
Math Concepts
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