Finance
In New Mexico, a 'swing loan' or 'gap loan' is designed to:
AFinance long-term commercial construction
BTemporarily bridge the gap between selling one property and purchasing another✓ Correct
CProvide revolving credit for property improvements
DFinance agricultural land purchases
Explanation
A swing (bridge) loan provides short-term financing to cover the gap between a property purchase and the proceeds from selling another property, allowing buyers to proceed with their new home before their old one closes.
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Key Terms to Know
Amortization
The 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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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