Finance
In Florida, a 'purchase money mortgage' is one where:
AThe buyer obtains financing from a conventional bank only
BThe seller accepts a mortgage from the buyer as part of the purchase price✓ Correct
CThe buyer uses cash from a sale of another property
DThe lender provides funds specifically for the purchase of consumer goods
Explanation
A purchase money mortgage (PMM) is created when the seller accepts a mortgage from the buyer as partial payment of the purchase price. The seller essentially acts as the lender.
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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.
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.
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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