Real estate principles_powerpoint_for_chapter_11
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Transcript of Real estate principles_powerpoint_for_chapter_11
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Chapter 11: Lending Practices
oTerm loan – interest payments only until due.
oAmortized loan – regular equal payments for life of loan including both principal & interest.
oBalloon loan – any loan that has a final payment larger than any of the previous.
oPartially amortized loan – series of amortized payments with a balloon payment at maturity.
Loans
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Repaying a 6-year, $1,000 Loan
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Repaying a 6 year $1,000 amortizedloan 9% Interest per Year
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Balance Owed Each Year of the Loan
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Amortization Table: Monthly Payment per $1,000 of Loan
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Balance Owing on a $1,000 Amortized Loan
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Budget MortgageBalloon LoanPartially Amortized LoanEarlier PayoffBiweekly payments
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LOAN AMORTIZATION
• The relationship between the amount the lender is willing to loan and the market value of the property.
• Market value = $100,000 Loan = $80,000What is the loan-to-value ratio?
80%
Loan-to-Value
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EquityLoan PointsOrigination feeDiscount points
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LOAN TERMINOLOGY
Insures loansUFMIP
Anyone qualifiedRate negotiable
Points3.5% down96.5% L-T-V
Guarantees loansFunding fee
Veterans onlyRate negotiable
PointsNo down payment
100% L-T-V
FHA VA
VA / FHA Comparison
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• Owner occupied• 1-4 family dwellings• Refinancing allowed• Assumption allowed•with approval
VA / FHA Similarities
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VA http://www.homeloans.va.gov/
FHA https://entp.hud.gov/idapp/html/hicostlook.cfm
Conv http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=Abo
ut+Fannie+Mae&s=Loan+Limits
Loan Limits Info
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Private Mortgage InsurancePMI ConvUFMIP FHAVA Loan GuaranteeInsures lenders against losses
Mortgage Insurance
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A federal agency under the U.S. Department of Agriculture.
Like the FHA, it came into existence due to the financial crises of the 1930s.
The RHSA offers programs to help purchase or operate farms.
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RURAL HOUSING SERVICES ADMINISTRATION
VA Amortized loan
Balloon loanConventional
loansEquityFHAImpound or
reserve accountLoan origination
fee
Loan-to-value ratio
MaturityPITI paymentPMIPointPrincipalUFMIP
Key Terms
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