Finance
In Montana, a 'participation mortgage' differs from a standard mortgage in that the lender receives:
AA lower interest rate in exchange for a longer term
BA share of the property's income or appreciation in addition to interest payments✓ Correct
CThe right to occupy the property during the loan term
DGovernment backing for the loan in exchange for lower rates
Explanation
A participation mortgage allows the lender to receive a portion of the property's income (income participation) and/or appreciation (equity participation) in addition to regular interest payments, creating a shared investment arrangement with the borrower.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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