It is a loan that allows a lender or other party to share in the appreciated value when the home is sold.
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A. B. C. D.A
The correct answer is A. Shared appreciation mortgage.
A shared appreciation mortgage (SAM) is a type of mortgage in which the lender or another party receives a percentage of the appreciated value of the property when it is sold or refinanced. With a SAM, the borrower receives a lower interest rate or a smaller down payment requirement in exchange for agreeing to share a portion of the home's future appreciation with the lender.
The shared appreciation feature allows the lender to share in the potential increase in the property's value over the life of the loan. This type of mortgage may be attractive to borrowers who are willing to share in the potential upside of homeownership in exchange for lower borrowing costs.
A shared appreciation mortgage may be structured in a variety of ways. For example, the lender may receive a percentage of the appreciation at the time of sale, or they may receive a percentage of the appreciated value over a certain period of time. Some SAMs may have a cap on the amount that the lender can receive in appreciation, while others may not.
SAMs are not widely available in the market, and they are typically offered by specialized lenders. They may be used by borrowers who are looking for alternative financing options, or by lenders who are looking for ways to manage their risk exposure.
In summary, a shared appreciation mortgage is a type of loan that allows a lender or another party to share in the appreciated value of a property when it is sold or refinanced. This type of mortgage may be attractive to borrowers who are willing to share in the potential upside of homeownership in exchange for lower borrowing costs.