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Types of Financing

Chapter 13. Types of Financing. In This Chapter. You will look at the almost endless array of mortgage rates and accompanying fees used in today’s finance market. Adjustable Rate Mortgage. ARM. What to look for?. Interest rate Margin Adjustment period Interest rate cap Payment cap

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Types of Financing

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  1. Chapter 13 Types of Financing

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

  3. Adjustable Rate Mortgage ARM What to look for? • Interest rate • Margin • Adjustment period • Interest rate cap • Payment cap • Negative amortization • Disclosures

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

  5. More Financing Methods • Reverse Mortgage • Construction Loan / Interim Loan • Blended-Rate Loan • Equity Mortgage

  6. Affordable Housing Loans • Underwriting standards are modified to recognize different forms of credit responsibility. • Consumer education. • Low down payment.

  7. More Financing Methods • Conventional Loan (97%) • The Nehemiah Program

  8. 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.

  9. 1st Lender Seller Buyer $20,000Debt $60,000Debt (Includes wrapped $20,000) Wraparound Mortgage

  10. Financing Techniques • Subordination • Contract for Deed • Option • Creative Financing • Rental • Land Leases

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

  12. 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

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