Ch 8 p pt presentationca7

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Ch 8 p pt presentationca7

  1. 1. Loan Terms and Note PaymentsChapter 81
  2. 2. Interest• Simple Interest—paid only on the amount of principal still owed.• Term Loan—requires payments of interest only with the entire principal being repaid at a specified time.• Amortization—payments include portions for both principal and interest.• Distribution of Principal and Interest2
  3. 3. Variations in Payments and Interest Rates• Graduated-Payment Mortgage (GPM)• Adjustable-Rate Mortgage (ARM) – Adjustment periods – Initial rate – Note rate – Qualifying rate – Index – Margin – Interest rate caps – Payment caps3
  4. 4. Innovative Payment Plans• The 15-Year Mortgage• Reverse Annuity Mortgage (RAM)• Fannie Mae Senior Housing Program• Fannie Mae’s Two-Step Mortgage Plan4
  5. 5. Variations in Formats• Open-end mortgage• Construction mortgage• Blanket mortgage• Release clauses• Leasehold mortgage• Package mortgage• Manufactured home mortgages• Purchase-money mortgage• Hard-money mortgage (equity mortgage)• Bridge loan• Wraparound encumbrance (Wrap)• Mortgage participation5
  6. 6. Tax-Deferred Mortgage Lending• Installment sales• Option to buy• Lease with option of buy• Exchanges—Internal Revenue Code Section 10316

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