Finance
In South Dakota, a hard money loan is characterized by:
AThe lowest available interest rate with no fees
BAsset-based lending with high interest rates and fees, typically used for short-term investment financing✓ Correct
CLoans made exclusively by the state government
DLoans that require no documentation of income
Explanation
Hard money loans are short-term, asset-based loans from private lenders at higher interest rates and fees, often used by real estate investors for quick property acquisitions or fix-and-flip projects.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
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
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