Finance
A Connecticut 'bridge loan' is used to:
AFinance the construction of a bridge
BProvide short-term financing to bridge the gap between purchasing a new home and selling an existing home✓ Correct
CRefinance an existing mortgage
DFund commercial development projects
Explanation
A bridge loan is short-term financing that allows a homeowner to purchase a new property before selling their current home, using the current home's equity as collateral. It is typically repaid when the old home sells.
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Key Terms to Know
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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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