In Colorado, a 'loan modification' differs from a 'refinance' in that:
Why B. A loan modification changes the terms of an existing loan with the same lender (often to avoid foreclosure), while a refinance replaces the existing loan with a new one Is Correct
Answer B: B. A loan modification changes the terms of an existing loan with the same lender (often to avoid foreclosure), while a refinance replaces the existing loan with a new one
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.
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Key Terms to Know
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
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.
AmortizationThe 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.
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