Finance
In West Virginia, a purchase money mortgage is best defined as:
AAny mortgage used to buy real estate
BA mortgage given by the buyer to the seller as part of the purchase price✓ Correct
CA mortgage with a below-market interest rate
DA government-backed mortgage for low-income buyers
Explanation
A purchase money mortgage is a mortgage given by the buyer directly to the seller as part of the purchase price — essentially seller financing. The seller holds the mortgage rather than a third-party lender.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
Math Concepts
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