Finance
In New York, a 'purchase money mortgage' is one where:
AThe buyer pays all cash
BThe seller provides financing to the buyer for the purchase price or part of it✓ Correct
CThe mortgage is used to purchase investment property
DThe lender is a federally chartered bank
Explanation
A purchase money mortgage (PMM) is financing provided by the seller to the buyer as part of the purchase transaction. The seller 'takes back' a mortgage for all or part of the sale price.
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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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