Jordan and Priya want to buy a $360,000 owner-occupied duplex in the city. They have limited cash for a down payment, are not veterans, and the property is not in a rural area. Which loan type is the best fit?
Correct Answer
A) An FHA-insured loan that can be used for an owner-occupied 1-4 unit property
An FHA-insured loan is the best fit because FHA financing is designed for approved private-lender loans with low down payments and can be used on owner-occupied properties containing one to four units. The couple is not relying on military eligibility, and the property is not rural, so FHA matches the facts better than VA or USDA.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
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