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© 2012 Cengage Learning

Types of FinancingChapter 13

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In This Chapter

You will look at the almost endless array of mortgage rates and accompanying fees used in today’s finance market.

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Adjustable Rate Mortgage

Interest rate Margin Adjustment period Interest rate cap Payment cap Negative amortization Disclosures

What to look for?

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Other Financing Methods Graduated Payment Mortgage Equity Sharing “Rich Uncle” Financing Package Mortgage Blanket Mortgage

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More Financing Methods

Reverse Mortgage Construction Loan / Interim Loan Blended-Rate Loan Equity Mortgage

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Affordable Housing Loans Underwriting standards are modified to

recognize different forms of credit responsibility.

Consumer education. Low down payment.

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More Financing Methods

Conventional Loan (97%) The Nehemiah Program

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Seller Financing The current owner of the property agrees to

accept part of the purchase price in the form of a loan (promissory note and mortgage or deed of trust) also becoming the lender in the transaction.

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Wraparound Mortgage

BuyerSeller$20,000

Debt$60,000

Debt

1st Lender

(Includes wrapped$20,000)

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Financing Techniques Subordination Contract for Deed Option Creative Financing Rental Land Leases

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Investing in Mortgages Individuals can invest in mortgages Individuals can purchase junior mortgages Higher yields available

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Key Terms ARM Affordable Housing

Loan Asset Blanket

mortgage Construction loan Equity sharing

GPM Negative amortization Option Package mortgage Reverse mortgage Seller Financing Wraparound mortgage