Finance
A 'bridge loan' used in New York real estate is:
AA long-term, fixed-rate mortgage for first-time homebuyers
BA short-term loan used to bridge the gap when a buyer needs to close on a new property before the sale of their existing property is complete✓ Correct
CA government-backed loan for properties in underserved communities
DA loan used to finance construction of a bridge structure
Explanation
A bridge loan is a short-term, high-interest loan that provides interim financing to a borrower who needs to purchase a new property before their existing property has sold and the proceeds are available. It is 'bridges' the gap between the two transactions.
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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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
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.
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