What does "capital" refer to in the context of a mortgage?

What does "capital" refer to in the context of a mortgage?

• A. Monthly mortgage payment
• B. Funds needed for down payment and closing costs
• C. Your credit score
• D. The total loan amount

Answer: (B)

In the context of a mortgage, "capital" refers to the funds that are required for the down payment and closing costs. When purchasing a home, buyers need to provide a certain percentage of the purchase price as a down payment, which is typically a substantial upfront cost. Additionally, closing costs, which include fees and expenses required to complete the mortgage transaction, also need to be covered by the buyer. Thus, "capital" is crucial as it represents the initial investment that the buyer must provide to secure the loan and finalize the home purchase. This upfront financial commitment demonstrates the buyer's financial readiness and helps lenders assess their ability to manage the mortgage. Other aspects, such as monthly mortgage payments or the total loan amount, while important to the overall mortgage process, do not specifically define the term "capital" in this context.

In the context of a mortgage, "capital" refers to the funds that are required for the down payment and closing costs. When purchasing a home, buyers need to provide a certain percentage of the purchase price as a down payment, which is typically a substantial upfront cost. Additionally, closing costs, which include fees and expenses required to complete the mortgage transaction, also need to be covered by the buyer.

Thus, "capital" is crucial as it represents the initial investment that the buyer must provide to secure the loan and finalize the home purchase. This upfront financial commitment demonstrates the buyer's financial readiness and helps lenders assess their ability to manage the mortgage. Other aspects, such as monthly mortgage payments or the total loan amount, while important to the overall mortgage process, do not specifically define the term "capital" in this context.