Finance
What is a 'hard money loan' in Illinois real estate?
AA conventional bank mortgage with strict qualification requirements
BA short-term, high-interest loan from private lenders based primarily on property value (collateral) rather than borrower creditworthiness✓ Correct
CA government-backed loan with rigid repayment terms
DA loan with penalties for early repayment
Explanation
Hard money loans are short-term financing from private investors or companies based primarily on the property's value as collateral, rather than the borrower's credit score or income. They feature higher interest rates (8-15%+) and fees, shorter terms (6-24 months), and faster approval.
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Key Terms to Know
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.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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