Finance
A 'bridge loan' in real estate is a short-term loan used to:
AFinance the construction of a bridge on the property
BBridge the gap between the purchase of a new home and the sale of the buyer's current home✓ Correct
CRefinance an existing mortgage at a lower rate
DFund renovation of a commercial property
Explanation
A bridge loan provides short-term financing that allows a buyer to purchase a new home before selling their existing one. It uses equity from the current home as collateral and is typically repaid when the old home sells.
People Also Study
Related Rhode Island Questions
- A VA loan benefit allows eligible veterans to purchase a home with:Finance
- A home is listed for $260,000 and sells for $248,000. The total commission is 6%, split 50/50 between listing and buyer's broker. If the listing agent earns 55% of their broker's half, what does the listing agent earn?Real Estate Math
- A Rhode Island homeowner purchased their home for $275,000 and is selling it for $365,000. What is the gross profit?Real Estate Math
- In Rhode Island, what is a 'home equity loan' and how does it differ from a HELOC?Finance
- A Rhode Island homeowner sells their home for $410,000. After paying a 5.5% commission and $4,200 in other closing costs, what are the seller's net proceeds?Real Estate Math
- A Rhode Island purchase and sale agreement includes a home inspection contingency. If the inspection reveals significant defects and the buyer provides timely written notice, the buyer may:Contracts
- A home equity line of credit (HELOC) in Rhode Island allows a homeowner to:Finance
- In a deed of trust state, what happens when a borrower defaults on their mortgage loan?Finance
Key Terms to Know
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.
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.
Math Concepts
Study This Topic
Practice More Rhode Island Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Rhode Island Quiz →