Carlos is purchasing a condominium in Buffalo and wants to understand the difference between his mortgage and the financing structure of the cooperative apartment his friend purchased. Which statement best explains the fundamental difference?
Correct Answer
A) Condominium mortgages are secured by real property while cooperative loans are secured by personal property
The fundamental difference is in the collateral securing the loan. Condominium mortgages are secured by real property (the unit and proportional interest in common elements) through a deed, while cooperative share loans are secured by personal property (shares in the corporation and proprietary lease).
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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