Finance
A Pennsylvania commercial real estate 'recourse' loan means:
AThe lender can only foreclose on the property if the borrower defaults
BThe lender has recourse to the borrower's personal assets beyond the collateral property✓ Correct
CThe loan can be refinanced at the borrower's option
DThe loan rate adjusts at the lender's discretion
Explanation
A recourse loan gives the lender the right to pursue the borrower's personal assets if foreclosure proceeds are insufficient to satisfy the debt. Non-recourse loans limit the lender to the collateral property only.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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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