Finance
A Wisconsin seller agrees to 'take back' a second mortgage from the buyer to help with the down payment. This is known as:
ASeller financing or a purchase money mortgage✓ Correct
BA wraparound mortgage
CA bridge loan
DAn assumption
Explanation
When a seller provides financing to the buyer (a portion of the purchase price as a loan), it is called seller financing or a purchase money mortgage. The seller holds the note and mortgage as the lender.
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Key Terms to Know
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.
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.
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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