CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

A vendor take-back mortgage is a type of mortgage in which the seller offers to lend funds to the buyer to help facilitate the purchase of the property. The take-back mortgage often represents a secondary lien on the property, as most buyers will have a primary source of funding other than the seller. A vendor take-back mortgage is ______ .
A. an indirect private debt investment.
B. an indirect public debt investment.
C. a direct private debt investment.
Explanation: In most cases, the take-back mortgage is offered at a rate below market value. This makes the option more attractive for the buyer, which can translate into a fast sale for the seller because another source of financing is being offered. Take-back mortgages often allow buyers to purchase property valued above their traditional financing limits.

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