Finance
In Michigan, a 'hard money lender' for real estate typically:
AOnly makes government-backed loans
BProvides short-term asset-based loans at higher interest rates for investment properties or when conventional financing is unavailable✓ Correct
CProvides zero-interest loans to low-income buyers
DRequires a minimum 20-year loan term
Explanation
Hard money lenders provide short-term, asset-based financing (secured by the real estate) at higher rates and fees than conventional lenders. Michigan real estate investors use hard money for fix-and-flip projects, time-sensitive acquisitions, or when credit issues prevent conventional financing.
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Key Terms to Know
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.
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.
Math Concepts
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