Finance
In New Mexico, the term 'private money lender' typically refers to:
AAny state-chartered bank
BAn individual or non-institutional entity that provides real estate financing, often on flexible terms with higher rates✓ Correct
CA credit union
DA government loan program
Explanation
Private money lenders are individuals or groups (not banks or credit unions) who provide real estate financing. They often offer faster approvals and more flexible terms but at higher interest rates than institutional lenders.
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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.
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.
Math Concepts
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