Property Ownership
In Colorado, a 'leasehold mortgage' is a loan secured by:
AA. The fee simple interest in the land
BB. The tenant's leasehold interest in the property (their right to use the property under the lease)✓ Correct
CC. The landlord's equity
DD. The improvements only, not the land
Explanation
A leasehold mortgage uses the borrower's leasehold interest (their rights under a long-term lease) as collateral for a loan. This is common when a developer builds improvements on leased land (such as a ground lease).
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Key Terms to Know
Fee Simple
The highest and most complete form of property ownership — absolute ownership with the right to use, sell, or pass the property to heirs.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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