Finance
What is 'seller financing' (owner financing) and when might it be used in Kansas?
AThe seller takes out a loan to help the buyer purchase
BThe seller acts as lender, accepting installment payments from the buyer, often secured by a promissory note and mortgage✓ Correct
CFinancing provided by the seller's real estate agent
DA state program where the government subsidizes seller's mortgage
Explanation
Seller financing is when the seller provides all or part of the financing directly to the buyer. It is used when conventional financing is unavailable, interest rates are high, or when the seller wants installment income.
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Key Terms to Know
Promissory Note
A written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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