Finance
In Massachusetts, 'hard money' loans are typically characterized by:
AVery low interest rates from government-sponsored lenders
BShort terms, high interest rates, and asset-based (property value) underwriting, used by investors who cannot qualify for conventional financing✓ Correct
CGovernment backing similar to FHA
D20% maximum LTV
Explanation
Hard money loans are short-term, high-interest-rate loans made by private lenders based primarily on the property's value (asset-based), not the borrower's creditworthiness. They are common in real estate investment and fix-and-flip transactions.
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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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
Math Concepts
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