Finance (alternative)
Under Regulation Z, which Maryland transaction requires a 3-business-day right of rescission?
AA purchase money mortgage on a primary residence
BA cash-out refinance of a primary residence✓ Correct
CA commercial mortgage
DA purchase of a second home
Explanation
The right of rescission under Regulation Z applies to refinances and home equity loans secured by the borrower's primary residence — NOT to purchase money mortgages, second homes, or investment properties.
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Key Terms to Know
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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Math Concepts
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