Finance
In New Mexico, a 'purchase money mortgage' refers to:
AAny loan used for investment properties
BA mortgage loan used to finance the purchase of the property being mortgaged (as opposed to a refinance)✓ Correct
CA government-backed loan program
DA commercial real estate loan only
Explanation
A purchase money mortgage is a loan used specifically to finance the purchase of property. It can be from a third-party lender or from the seller (seller financing).
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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.
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.
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.
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