Finance
An assumable mortgage allows the buyer to:
ABorrow more than the purchase price
BTake over the seller's existing loan with its original terms✓ Correct
CAvoid a down payment
DObtain a lower appraisal threshold
Explanation
An assumable mortgage lets the buyer take over the seller's existing loan, potentially at a favorable interest rate, subject to lender approval and qualification.
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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.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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