Finance
In Louisiana, a 'hard money loan' is characterized by:
AA loan from a family member
BA short-term, asset-based loan from a private lender at a higher interest rate, typically used for investment or distressed properties that don't qualify for conventional financing✓ Correct
CA loan with the lowest possible interest rate
DA government-backed loan program
Explanation
Hard money loans are short-term, high-interest loans from private investors or companies, secured primarily by the property's value rather than the borrower's creditworthiness. They are commonly used for fix-and-flip projects or when conventional financing is unavailable.
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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.
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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