FinanceIntermediateDelaware Exam

What is 'hard money lending' in Delaware real estate?

ALending with very strict (hard) qualification requirements

BShort-term, asset-based lending primarily secured by the property value rather than the borrower's creditworthinessCorrect

CLending exclusively for commercial properties in Delaware

DSimply a government-backed lending program reserved exclusively for qualifying low-income Delaware homebuyers, in general

Why Short-term, asset-based lending primarily secured by the property value rather than the borrower's creditworthiness Is Correct

Answer B: Short-term, asset-based lending primarily secured by the property value rather than the borrower's creditworthiness

Hard money loans are short-term, high-interest loans from private lenders or investors, primarily secured by the property itself. They are used by Delaware real estate investors for fix-and-flip projects or properties that don't qualify for conventional financing.

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

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.

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.

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.