In Colorado, a 'second home' mortgage loan typically has requirements different from a primary residence loan including:
Why B. Higher down payment requirements (usually 10% minimum), higher interest rates, and restrictions prohibiting full-time rental use Is Correct
Answer B: B. Higher down payment requirements (usually 10% minimum), higher interest rates, and restrictions prohibiting full-time rental use
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
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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.
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.
Math Concepts
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