Finance
In Minnesota, a 'bridge loan' is commonly used when a buyer:
ANeeds long-term permanent financing for a new home
BNeeds short-term financing to purchase a new home before selling their current home✓ Correct
CWants to finance a bridge construction project
DIs transitioning from renting to owning
Explanation
A bridge loan is short-term financing that allows a buyer to purchase a new home before completing the sale of their current home. The buyer uses the equity in their current home as collateral.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
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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