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AZK RE L-12 C-14 Financing 2

  1. Types of Loans (6)
    • 1) Straight Loan
    • 2) Amortized  loan
    • 3) Adjustable rate mortgage (ARM)
    • 4) Growing Equity Mortgage                        
    • 5) Balloon Payment Loan
    • 6) Reverse
  2. Straight Loan
    or
    • - type of Loan #1
    • - or Term Loan
    • - or interest-only loan
    • - divides the loan into two amounts to be paid off separately
    •     1) periodic payments interest-only
    •     2) payment of the principal
  3. Amortized loan
    or
    • - type of Loan #2
    • - or Direct Reduction Loan
    • - partially pays of both principal and interest
  4. ARM
    • - type of Loan #3
    • - Adjustable Rate Mortgage
    • - rate fluctuates (фла'ктдюэйтс) based on specific economic indicator
    • - allows Negative Amortization
  5. Components of ARM (3)
    • ARM - Adjustable Rate Mortgage 
    • 1) Index
    • 2) Margin
    • 3) Rate Cups
  6. Index
    • - component of ARM #1
    • - is an economic indicator that is used to adjust the interest rate
  7. Interest Rate (formula)
    • - represents the lender’s cost of doing business
    • - Interest Rate = Index + Premium (Margin)
  8. Margin (formula)
    • - component of ARM #2
    • - difference between the Interest Rate and the Index
    •     - Margin = Interest Rate - Index

    • - Interest Rate represents the lender’s cost of doing business
    • - Interest Rate = Index + Premium (Margin)
  9. Rate Cups
    • - component of ARM #3
    • - limit of the interest rate may change
  10. Types of Rate Caps
    • 1) Periodic
    •     - limit of the interest rate may increase over at stated term (1 year)
    • 2) Life-Of-The-Loan
    •     - or Aggregate (совокупность)
    •     - limit of the interest rate may increase over the entire life of the loan
  11. Payment Cup
    • - w/i Rate Cups
    • - protects the mortgagor from unaffordable payments
    • - set a maximum amount of payment
    •     - but difference between payment made and full payment amount will be added
  12. Negative Amortization
    • - w/i Rate Cups
    • - amount of the loan actually increases (instead of decreasing)
    • - borrower owning more than the property is worth (under water-
  13. Growing Equity Mortgage
    or
    • - type of Loan #4
    • - or rapid-pay off mortgage
    • - uses fixed interest rate
    • - but payments of principal are increased according to an index or schedule
    • - used when the borrower’s income is expected to keep pace with the increasing loan payments
    • - loan is paid off more quickly (earlier)
  14. Mortgage Amortization Triangle
    • 1) Month Interest = Principal Balance x Annual Interest Rate ÷ 12
    • 2) Amount paid toward principal = Monthly Payment – Month Interest
    • 3) New Principal Balance = Principal Balance – Amount paid toward principal
  15. Balloon Payment Loan
    • - type of Loan #5
    • - the enlarged last payment of the loan if periodic payments are not enough to fully pay off the principal
  16. Partially Amortized Loan
    • - some of the principal has been paid
    • - some of the principal still owned at the end of the term (paid using Balloon Payment Loan)
  17. Reverse Mortgage
    • - type of Loan #6
    • - for homeowner aged 62 or older
    • - allows to borrow money against the equity built up in the home
    •     - borrower is charged a fix rate of interest
    •     - no payments are due until property is sold or borrow defaults, moves of dies
  18. Methods of Foreclosure (3)
    • 1) Judicial Foreclosure (CT)
    •     - sold by court order
    • 2) Non-Judicial Foreclosure (Some States)
    •     - sold by lender (mortgagee/trustee) w/o going to court
    • 3) Strict Foreclosure (CT)
    •     - NO SALE, court awards full legal title to the lender
  19. Judicial Foreclosure
    • - 1st Method of Foreclosure
    • - allowed in CT
    • - allows the property to be sold by court order after the mortgager has given sufficient public notice
  20. Non-Judicial Foreclosure
    • - 2nd Method of Foreclosure
    • - allowed in some states
    • - when security instrument contains a Power of Sale Clause
    • - by Power of Sale Clause borrower pre-authorizes lender (mortgagee/trustee) to sale the property w/o going to court first
  21. Strict Foreclosure
    • - 3rd Method of Foreclosure
    • - allowed in CT
    • - NO SALE
    • - court establishes a deadline for the balance to be paid in full
    • - if borrower does not pay court awards full legal title to the lender
  22. Deed in Lieu of Foreclosure
    • - friendly foreclosure
    • - carried out by Mutual Agreement rather than by Lawsuit
  23. Equitable Right of Redemption
    - chance to redeem the property after default but before the foreclosure
  24. Statutory Right of Redemption
    - allows period in which to redeem real estate after the sale
  25. Deed to Purchaser at Sale
    - successful bidder receives a deed to the real estate
  26. Certificate of Sale
    - given to the highest bidder
  27. Deficiency Judgment
    - personal judgement against the borrower for the unpaid balance after foreclosure sale
  28. Short sale
    - when sales price is less than the amount outstanding on the seller’s mortgage dept
  29. Which loan is paid off more quickly (earlier)?
    • Growing Equity Mortgage
    • Rapid-pay off mortgage
  30. Term Loan
    or
    • - or Straight Loan 
    • - or interest-only loan
    • - divides the loan into two amounts to be paid off separately
    •     1) periodic payments interest-only
    •     2) payment of the principal
  31. Direct Reduction Loan
    or
    • - or Amortized loan
    • - partially pays of both principal and interest
  32. Aggregate 
    or
    • - or Life-Of-The-Loan
    • - type of Rate Cups component of ARM
    • - limits the amount of the rate may increase over the entire life of the loan
  33. Rapid-pay off mortgage
    or
    • - or Growing Equity Mortgage
    • - component of ARM #4
    • - uses fixed interest rate
    • - but payments of principal are increased according to an index or schedule
    • - used when the borrower’s income is expected to keep pace with the increasing loan payments
    • - loan is paid off more quickly (earlier)
  34. Power of Sale Clause
    • - under Non-Judicial Foreclosure
    • - by Power of Sale Clause borrower pre-authorizes lender (mortgagee/trustee) to sale the property w/o going to court first
  35. Life-Of-The-Loan
    or
    • - or Aggregate
    • - type of Rate Cups component of ARM
    • - limits the amount of the rate may increase over the entire life of the loan
Author
flashsmilenet
ID
347732
Card Set
AZK RE L-12 C-14 Financing 2
Description
AZK RE L-12 C-14 Financing 2
Updated

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