Finance
In South Carolina, a 'purchase money mortgage' is created when:
AThe buyer purchases the home with cash
BThe seller provides financing directly to the buyer as part of the sale✓ Correct
CThe buyer uses an FHA loan
DThe lender provides a construction loan
Explanation
A purchase money mortgage is created when the seller provides financing directly to the buyer as part of the sales transaction. The buyer signs a note and deed of trust in favor of the seller.
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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.
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