The document provides an overview of various financing options including:
- Fixed rate mortgages which have interest rates that do not change over the loan term.
- Adjustable rate mortgages (ARMs) where the interest rate is adjusted periodically based on an index. Common ARMs include 3/1, 5/1, and 7/1 loans.
- Buydowns which offer a temporarily lower interest rate for the first few years of a fixed rate loan.
- Conventional, FHA, and VA financing programs each with their own benefits, requirements, and limitations.
So which mortgage is the right one for you? Wait for it…it depends! You know life is too complex for an easy rule of thumb. You should seek the advice of a qualified financial planner who does this kind of scenario all the time. The second thing you could do is give us a call..
https://rb.gy/n89u77
Describe interest rate fundamentals, the term structure of interest rates, and risk premiums. Discuss the general features,
yields, prices, ratings, popular types, and international issues of
corporate bonds. Review the legal aspects of bond financing and bond cost.
So which mortgage is the right one for you? Wait for it…it depends! You know life is too complex for an easy rule of thumb. You should seek the advice of a qualified financial planner who does this kind of scenario all the time. The second thing you could do is give us a call..
https://rb.gy/n89u77
Describe interest rate fundamentals, the term structure of interest rates, and risk premiums. Discuss the general features,
yields, prices, ratings, popular types, and international issues of
corporate bonds. Review the legal aspects of bond financing and bond cost.
Maturity Risk Premium is basically the extra return that an investor demands or gets for bearing the maturity risk. We can say, longer the maturity of a financial instrument, the more is the maturity risk premium it offers.
To know more about it, click on the link given below:
https://efinancemanagement.com/investment-decisions/maturity-risk-premium-meaning-need-and-calculation
Fixed Income securities- Analysis and Valuation. Very useful for CFA and FRM level 1 preparation candidates. For a more detailed understanding, you can watch the webinar video on this topic. The link for the webinar video on this topic is https://www.youtube.com/watch?v=r9j6Bu3aUNI
Interest-rate risk substantially affect the values of the assets and liabilities of most corporations and is often a dominant factor affecting the values of pension funds, banks and many other financial intermediaries.
Interest rate risk management what regulators want in 2015 7.15.2015Craig Taggart MBA
Areas covered in this section
Why Interest Rate Risk (IRR) should not be ignored
• Forward Rate Agreements (FRA’s) Forwards, Futures
• Swaps, Options
Why Bank Regulators continue to have a poor handle on interest rate risk
• Interest Rate Caps, floors, Collars
• LIBOR and UBS & Barclays rigging rates
• How should Financial Institutions determine which IRR vendor models are appropriate?
IRR Measurement methodologies are institutions
Jimmy Vercellino, an experienced professional with mortgage lender First Choice Loan Services, works hard to provide a personalized home loan process for you. Options include FHA and VA loans, fixed / adjustable rate mortgages, Jumbo loans and more. Visit http://phxhomeloan.com
First Choice Loan Services Inc.
7600 E. Doubletree Ranch Road #200
Scottsdale, AZ 85258
480-800-8387
jimmy@phxhomeloan.com
Learn the best bets for finding commercial real estate financing in the current economic climate from top banking executives. Find out what historical trends can aid lending decisions and how trends in job growth, rail traffic, housing, and commercial real estate fundamentals impact banks and other lenders. Also learn how finance issues such as CMBS, cap rates, lending trends, and mortgage delinquencies affect the commercial real estate market.
Having an understanding of all of the ways that fundraising can happen for startups will help anyone who wants to participate in any aspect of the ecosystem. This class will cover all aspects of early stage financing, including debt instruments, equity financing, angel financing, crowd-sourced funding, and venture capital.
This is part of Wasabi Ventures Academy Startup Foundations:
http://academy.wasabiventures.com
Maturity Risk Premium is basically the extra return that an investor demands or gets for bearing the maturity risk. We can say, longer the maturity of a financial instrument, the more is the maturity risk premium it offers.
To know more about it, click on the link given below:
https://efinancemanagement.com/investment-decisions/maturity-risk-premium-meaning-need-and-calculation
Fixed Income securities- Analysis and Valuation. Very useful for CFA and FRM level 1 preparation candidates. For a more detailed understanding, you can watch the webinar video on this topic. The link for the webinar video on this topic is https://www.youtube.com/watch?v=r9j6Bu3aUNI
Interest-rate risk substantially affect the values of the assets and liabilities of most corporations and is often a dominant factor affecting the values of pension funds, banks and many other financial intermediaries.
Interest rate risk management what regulators want in 2015 7.15.2015Craig Taggart MBA
Areas covered in this section
Why Interest Rate Risk (IRR) should not be ignored
• Forward Rate Agreements (FRA’s) Forwards, Futures
• Swaps, Options
Why Bank Regulators continue to have a poor handle on interest rate risk
• Interest Rate Caps, floors, Collars
• LIBOR and UBS & Barclays rigging rates
• How should Financial Institutions determine which IRR vendor models are appropriate?
IRR Measurement methodologies are institutions
Jimmy Vercellino, an experienced professional with mortgage lender First Choice Loan Services, works hard to provide a personalized home loan process for you. Options include FHA and VA loans, fixed / adjustable rate mortgages, Jumbo loans and more. Visit http://phxhomeloan.com
First Choice Loan Services Inc.
7600 E. Doubletree Ranch Road #200
Scottsdale, AZ 85258
480-800-8387
jimmy@phxhomeloan.com
Learn the best bets for finding commercial real estate financing in the current economic climate from top banking executives. Find out what historical trends can aid lending decisions and how trends in job growth, rail traffic, housing, and commercial real estate fundamentals impact banks and other lenders. Also learn how finance issues such as CMBS, cap rates, lending trends, and mortgage delinquencies affect the commercial real estate market.
Having an understanding of all of the ways that fundraising can happen for startups will help anyone who wants to participate in any aspect of the ecosystem. This class will cover all aspects of early stage financing, including debt instruments, equity financing, angel financing, crowd-sourced funding, and venture capital.
This is part of Wasabi Ventures Academy Startup Foundations:
http://academy.wasabiventures.com
Startup Financing Introduction - Australia 2014 General AssemblyLeslie Barry
Startup Financing introduction for a Product Management course at General Assembly in Melbourne, Australia. A high level snapshot of the startup ecosystem, some lessons learned and a snapshot of the startup financing options available as at October 2014. I cover Startup Stages, Funding Models & Books to get you started.
this is our presentation on the starting stages to for planning to prepare to go for startup funding / small business loans / invoice loans / factoring etc etc
Xcelerate Financial specializes in providing CFO services to startups and high growth organizations. This presentation reviews some basics around fundraising and the role a startup CFO plays.
Fundraising tips for startups from the "Venture Capital Point of view". From getting that initial meeting with VCs to pitching and closing a deal, everything you need to know compressed into one easy to digest resource.
Bootstrap, Angel or Venture: Determining the Right Financing Strategy for You...Judy Loehr
This presentation was shared at Dreamforce 2016 to help early-stage cloud business application startup teams understand how investors will evaluate their markets so they can plan the right financing strategy from the beginning.
Check out a little story about Mark' vacation in Vietnam. Lots of tips and great overview of major sites in Nha Trang and Ho Chi Min. Made entirely on the iPad in 4 hours.
How do you successfully pitch your business to investors? As an entrepreneur and venture capitalist, I've been on both sides of the funding process. Here are 7 myths of startup financing -- and the truths you should follow.
Most simply, bonds represent debt obligations – and therefore are a form of borrowing. If a company issues a bond, the money they receive in return is a loan, and must be repaid over time. Just like the mortgage on a home or a credit card payment, the repayment of the loan also entails periodic interest to be paid to the lenders. The buyers of bonds, then, are essentially lenders. For example, if you have ever bought a government savings bond, you became a lender to the federal government. Put differently, bonds are IOUs.
The volatility in today’s financial markets is making it impossible to know where to invest and grow your money without the fear of losing your lifetime savings. Historic low interest rates are making is difficult to provide the income needed by investing in safer investments such as CDs and annuities. Investing a portion of your overall portfolio in fixed income investments should be considered as a solution to reducing volatility and providing needed income.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
4. Financing
101
• Monthly mortgage
payment is made up of
three parts, called PITI
– Principle: Amount that
goes towards the actual
loan amount
– Interest: Amount that
goes toward the Interest
– Taxes & Insurance:
Amount that goes into an
escrow account that pays
for other things
Mortgage Payments
5. Financing
101
Taxes and Insurance
• Held in an escrow accounts used to pay:
–
–
–
–
Property taxes
Homeowners insurance
Hazard insurance
Mortgage Insurance
• Amount may change yearly
6. Financing
101
Interest Rates
• When a customer buys a home, his/her interest
rate is typically floating.
– The rate can move up or down until the customer
has locked-in an interest rate.
• A customer can typically lock in to a rate
between 30 and 60 days of settlement.
– Locks beyond 60 days may be
available
7. Financing
101
Understanding Interest Rates
• Short Term Rates:
Short term banking
rates are used for
auto loans, personal
loans and credit
cards. These rates
are controlled by the
Federal Reserve.
• Long Term Rates:
Long Term Interest
rates are used for
mortgages. Mortgage
rates are affected by
bond prices on Wall
Street.
8. Financing
101
How are Mortgage Rates
Determined?
• Secondary Marketing determines rates daily
based on the bond market activity each morning
• Many economic factors effect bond pricing:
– Housing Starts
– Consumer Confidence
– Unemployment
9. Financing
101
Extended Locks
• Rate Locks
– A customer will typically lock their rate 30-60 prior to
closing
• Some programs have extended lock options
– Customer may be able to have rate protection for up
to 220 days
• Lock availability depends on the specific Loan program
• May require an upfront fee
• May be credited back at closing
– Float Down: may be offered as an option where the
customer can relock at a lower rate prior to closing.
• Usually only available ONE time
• Availability depends on program
13. Financing
101
Fixed Rate Loans:
• Definition: A fixed rate mortgage is one that
has a rate of interest that does not change.
• Principal and interest payments will always be
the same.
• Most conservative, most secure and most
stable type of mortgage.
• Amortization: The loan amount is reduced
regularly by scheduled monthly payments over
the course of the loan (usually 15 or 30 year)
14. Financing
101
Fixed Rate Loans
• 30 Year Fixed Rate: Fixed Rate loan amortized
over 30 years. The most popular program in
mortgage
• Features & Benefits:
– Provides customer with peace of mind and stability of
knowing the interest rate will never change.
– As customer’s income increases, their payment will
remain the same. This will allow them to become
increasingly comfortable with their monthly investment.
– They can take advantage of currently attractive interest
rates and not have the expense and hassle of
refinancing in the future.
15. Financing
101
30 Year Fixed Rate
30 Year Fixed
8
Interest Rate
7
6
5
Year 1
5.5%
Year 30
5.5%
4
3
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year
10-30
18. Financing
101
Buydowns
• Definition:
– Fixed Rate loan where additional funds (a subsidy) are paid at
settlement
– Allows the borrower to pay a reduced payment at the beginning of
the mortgage.
• Most common type: 2/1 Buydown
– Interest rate is lowered 2% below the fixed rate for the 1st year
and 1% below the fixed rate for the 2nd year
– Interest rate will then be fixed for years 3-30.
• Cost
– Actual cost is calculated on a payment – to – payment basis
– The average cost is 2.5%
– This “subsidy” can be paid by the seller, buyer and in some
cases, the lender.
20. Financing
101
Buydowns
• Features and Benefits:
– Offers the stability of the 30 year Fixed rate
– Allows customer to ease into new Mortgage
Payment
– Ideal for a customers who are:
• Anticipating future pay increases (i.e., medical
students, recent grads, etc.)
• Expenses ending in the next year or two (i.e.,
car payment, childcare, child support, tuition,
etc.)
– Excellent for short term buyers (less than 5 years)
• This will give the customer the benefit of a
lower average interest rate for the period of
time they plan to live in the home
23. Financing
101
Adjustable Rate Mortgage
Definition: Adjustable Rate Mortgage (ARM)
A loan in which the interest rate adjusts at established
intervals over the life of the loan. The rate can increase
or decrease depending on the market conditions at the
time of the adjustment.
ARM loans are tied to:
1. An established index, usually a published rate
(i.e. Treasury Securities, LIBOR, etc.)
2. A margin - a fixed number that is set by
the investor
24. Financing
101
Adjustable Rate Mortgages
• Caps are set by the investor and limit the change when
the rate adjusts.
– Two caps (i.e. caps of 2/6):
First cap – maximum rate change per adjustment
Second cap - maximum rate change over the life of the loan
– Three caps (i.e. caps of 5/2/5):
First cap – maximum rate change for first adjustment
Second cap - maximum rate change per adjustment
Third cap - maximum rate change over the life of the loan
25. Financing
101
Frequently Used Indexes
• All adjustable rate mortgages (3/1, 5/1, etc.)
use an index to calculate future interest rates
and payments
– Fully Indexed Rate: combination of the
margin and the current index
• Two of the most common are:
– LIBOR – London Inter Bank Offered Rate.
– US Treasury Securities
26. Financing
101
Type of ARM
ARMs
3/1
Fixed rate for
how many years?
3
5/1
5
7/1
7
10/1
10
After fixed
period, adjusts
how often?
Once a year for
the rest of the
life of the loan.
27. Financing
101
How does the Interest Rate on
an ARM adjust?
1. Add the index and margin together to determine the fully
indexed rate.
2. Compare that rate with the current rate.
3. Review the caps for any limitations in the change.
Example:
New Rate:
3/1 ARM, Caps of 2/5
Fully Indexed Rate = Margin + Index
Fully Indexed Rate = 2% + 5%
Fully Indexed Rate =
7%
Starting Rate 4%
Margin 2%
Current Index is 5%
What is the new rate?
Caps = Cannot increase more than
2% per year, so new rate is 6%
28. Financing
101
Features of ARMs
• Initial rate on an ARM is typically lower than a fixed
rate mortgage
• Ideal for short-term buyers (plan to be in their homes
for only 3 – 10 years)
– Reduced interest rate for the period of time they
plan to live in the home
• May save them a substantial amount of money in the
long run.
– The loan is re-amortized when the interest rate is adjusted.
– May free up monthly income to use toward other investments
Drawbacks:
• Rates could rise at the time of adjustment
• Stigma from Interest Only ARMs in the past
29. Financing
101
ARM Chart
8
Year 9
8%
Year 10-30
8%
Interest Rates
7
Year 8
7%
6
Year 7
6%
5
Year 6
5%
4
Year 1
4%
Year 2
4%
Year 3
4%
Year 4
4%
Year 5
4%
3
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Year 10-30
9
31. Financing
101
Benefits of All Three
Benefits
Program
Features
Fixed Rate
3
2-1 Buydown
5
Adjustable Rate
Mortgage (ARM)
7
Once a year for
the rest of the
life of the loan.
34. Financing
101
Conventional Financing
• Refers to any mortgage that is not insured or
guaranteed by a government agency
• Depending on the Loan To Value (LTV), the
conventional loan may require Private Mortgage
Insurance (PMI)
35. Financing
101
Conventional Financing
• Conforming
– A loan that conforms to normal investor
guidelines.
– Usually required to be under $417,000
• Non Conforming (Jumbo)
– Outside the normal investor guidelines
– Usually over $417,000
– Prompts a higher interest rate than Conforming
36. Financing
101
Conventional Benefits and
Drawbacks
• Benefits:
– More programs usually available
– No prepayment penalty
– Financing for primary, secondary and
investment residency
– PMI only required when LTV is over 80%
– Ratios: Front End 28% Back End 36%
• Drawbacks:
– Most rigid ratio and credit score requirements
– Highest down payment usually required
37. Financing
101
FHA Financing
• Government loan where the Federal Housing
Administration (FHA) provides insurance
protection to private mortgage lenders
• FHA mortgages are subject to both an upfront
Mortgage Insurance Premium (MIP) and an
annual (paid monthly) premium
38. Financing
101
FHA Benefits and Drawbacks
• Benefits:
–
–
–
–
–
–
Minimal down payment requirement (3.5%)
More flexible credit and income standards
Fully assumable with lender approval
6% seller contributions allowed
Non-occupant co-borrowers allowed
Most lenient ratios: Front End 31% Back End 43%
• Drawbacks:
– Can only be used on Primary residences
– Mortgage Insurance Required (life of the loan)
– Upfront Premium
39. Financing
101
VA Financing
• Congress created VA Loans to help veterans buy homes
with a minimal amount of cash required
• VA Entitlement: portion of the approved mortgage
amount the VA will guaranty the lender against default of
the borrower
– Entitlement amount is listed on the back of the
Certificate of Eligibility issued by the VA to the
veteran
• Funding Fee: VA charges a fee from 1.25%-3.30% of
the mortgage amount based on LTV and prior usage of
VA Entitlement
– Paid at settlement by either the veteran borrower or
the seller
– Can be rolled into the mortgage amount
40. Financing
101
VA Benefits and Drawbacks
• Benefits:
–
–
–
–
Little or no down payment required
Flexible qualifying ratios
Seller can pay up to 4%
Back End Ratio: 41%
• Drawbacks:
–
–
–
–
Funding Fee
May only be available to a certain amount
Can only have one VA loan at a time
Co-borrower can only be veteran’s spouse or
another veteran
Welcome to Financing 101. The objective of this course is to explain some primary concepts of mortgage banking and specifically our business at NVR Mortgage. By the end of this course you should have some basic fundamentals to help you become a successful employee. As is the case with anything, you will want to practice and review these throughout your employment.
This example shows how a 30 year fixed rate behaves. The numbers on the vertical axis show the interest rate.Animation Order:Click 1: Year 1 appearsClick 2: Year 10-30 appears, showing that the rate stays the sameClick 3: The line appears showing the relationshipYou can see from this chart that the rate doesn’t change throughout the entire life of the loan.
True or False:We offer a fixed loan term of 15, 20 or 30 years? TrueDuring the fixed loan term the interest rate will change only once? False – never changesThis program is the most risk adverse? True
Now that we have discussed Fixed rate loans, we are going to shift gears and discuss loan buydowns.
Animation Order:Click 1: Year 1 appearsClick 2: Year 2 appearsClick 3: Year 3 appearsClick 4: Year 30 appears, showing that the rate stays the sameClick 5: The line appears showing the relationshipYou can see how the rate of the buydown appears on this chart. You can see that the rate increases 1% in each year for the first 2 years. In Year 3, it then stays the same for the life of the loan.
Read notes. Caps will determine the floor (lowest) and the ceiling (highest) rate.
Typically the higher the ARM, the higher the cost. 5/1 ARM is by far the most common ARM product with our customers today.
This is a 5/1 ARM with 1/4 Caps. It is fixed at 4% for five years. Then on year six it starts adjusting annually. The cap shows it cannot increase by more than 1% per year with a lifetime max of 4%.With the Cap that is set on this, this is the worst possible outcome in terms of rates.Click 1: Year 1-5 appearsClick 2: Year 6 appearsClick 3: Year 7 appearsClick 4: Year 8 appearsClick 5: Year 9 appears.Ask where will the rate be in year 10? Explain about the Cap and remind them that it cannot exceed 4% for the life of the loan, so it will stay fixed at 8% (4% more than the initial 4%) for the rest of the loanClick 6: Year 10-30 appearsClick 7: Year 30 appears, showing that the rate stays the sameClick 8: The line appears showing the relationship.
The interest rate on an ARM will adjust once over the life of the loan? False – it will adjust multiple times based on the term and caps.If someone is on a set fixed income an ARM would be too risky for them? True – they would not want to take the risk of the payment increasing.An ARM could be a great option for a doctor just coming out of medical school? True – their income will most likely increase substantially in the next few years. The initial payment would be lower while they are making less and have debt from school. However, their pay increase should coincide with the possible rate increase and be affordable.
This chart is very good at showing the adjustment payments of the 3 different types of programs, fixed, buydowns, and ARM’s. Remember our job is to educate and explain. This allows the customer to make a well informed decision on which loan type to get.
Conventional Financing is something that is not insured or guaranteed by a government agency. They are usually considered to be “standard” loans within the industry.Usually PMI is required on loans with a LTV over 80%.
There are two types of conventional loans, conforming and non-conforming.Aconforming loan is usually one that meets “normal” investor guidelines. Usually this is under $417,000, but this amountmay vary by area or have additional criteria such as LTV, credit score, or other borrower-specific requirements. A nonconformingloan is also referred to as a “Jumbo” loan. This is a loan that is either over the specified loan amount (again, usually $417,000 but can vary by area) or does not meet the additional specified criteria. Nonconforming Loans usually have higher interest rates than conforming loans because they are deemed to be more risky for the investor.
The main benefit for conventional is that is usually offers the best rate. Unfortunately, it is usually also the most restrictive in terms of borrower qualification requirements, such as credit score, ratios, etc.Other benefits include no prepayment penalty, so borrowers can pay off their loan early if they desire.Conventional loans can be used on primary residences, secondary residences and investment properties. There may be different requirements for secondary or investment properties, though, so pay attention to the lender profile.Gifts are allowed. Documentation requirements will vary based on program and borrower criteria. At least 5% of the down payment must be from the borrower’s own funds, though.Private Mortgage Insurance is only required when the LTV is over 80%. When it is required, it is also not required for the life of the loan. Once the loan value gets to 80% LTV, the mortgage insurance does not need to be paid anymore.The front end ratio (which indicates the percent of an individual's income used to make mortgage payment) should be no less than 28%. The back end ratio (which is the percent of the housing expense based on all of the borrower’s debts) should be no more than 36%. These are the standard ratios and may change based on specific program or lender guidelines.Some other points to note is that seller contribution can be up to 3% on loans with an LTV over 90%, and 6% on loans with an LTV of 90% or less. Some of the main drawbacks of a conventional loan is that it tends to have the most rigid qualification requirements.
The Monthly Insurance Premium is paid up front at time of settlement. The amount that is paid depends on the length of the loan, the Loan To Value and whether or not the Loan Amount is considered “high”. The amount can be anywhere from 1.25% to 1.75%. There is also an additional monthly charge that is charged every month for the life of the loan. This is in addition to the Principle and Interest of the actual loan.
The main benefit of FHA is the lesser requirements for credit scores, income requirements and down payment minimum. This is usually a popular option for first time home buyers, who may not have a lot of funds to put towards closing. The minimum requirement for FHA is only 3.5%.Another benefit of an FHA loan is that it can be assumed by another party. This means that if the house is sold, the buyer can elect to take over the payments at the same rate which the seller originally obtained the loan, provided they qualify.There is no prepayment penalty (on any current NVR product) and gifts are allowed. Always make sure to check the specific loan and lender guidelines for documentation and gift requirements. Non-occupant co-borrowers are allowed, meaning that a borrower can have their parents or another party on the loan to help with qualifying. The ratios are less strict than those required for conventional loans. The standards are usually a front end ratio (again, this is the percent of the housing payment against the borrower’s monthly income) of 31%, and a back end ratio (the housing payment as a percent of total monthly debts) of 43%. Again, these are the standards, so these may change based on specific program or lender guidelines.<<Add about Drawback>>Upfront premium, which can be paid at Settlement or financed in.
The VA loan was created specifically for veterans to obtain housing without having a lot of cash on hand. It is one of the few programs that does not require a down payment. The Department of Veterans Affairs will actually list the VA Entitlement amount which is the portion of the approved mortgage amount that the VA will guaranty the lender against default of the borrower. This is listed on the back of the Certificate of Eligibility, which the document that shows the eligible and status of a Veteran.However, there are certainly eligibility requirements that someone is required to meet in order to be eligible for a VA loan. Additionally, there is a funding fee that is charged by the Veterans Administration. This is usually between 1.25% and 3.30%. The funding fee amount, however, can be rolled into mortgage amount or paid at settlement. If a veteran has an eligible disability, the funding fee may be waived.
The main benefit to a VA loan is that there is little (if any) down payment required. The required credit score, income limits and ratios are also more flexible than a conventional loan. The seller can pay any or all settlement costs and discount points, as well as buy down subsidies, prepaids, and debt payoffs that do not exceed the 4% Seller Contribution Limit. There is no prepayment penalty on a VA loan (on any current NVR products).Gifts are allowed for down payments and closing costs, but always make sure to check about documentation requirements. The ratios for VA are also less strict than those required for conventional loans. The standards are usually a back end ratio (the housing payment as a percent of total monthly debts) of 41%. Again, however, these are the standards, so these may change based on specific program or lender guidelines.Some of the drawbacks of a VA loan are the funding fee. It also may not be available over a certain Loan Amount – usually $417,000. It may be available in a “jumbo” now, but this limit varies by location. Additionally, a veteran can only have one VA loan at a time.