Finance
A bridge loan in Utah real estate is typically used when:
AA buyer needs funds to bridge the gap between their income and required down payment
BA buyer needs short-term financing to purchase a new home before their current home sells✓ Correct
CA lender bridges two separate properties into one loan
DA developer needs long-term construction financing
Explanation
A bridge loan provides short-term financing to allow a buyer to purchase a new home before their existing home sells. The bridge loan is typically secured by the buyer's current home and repaid when that home sells.
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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.
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.
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.
Math Concepts
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