Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
|
Five Vital Features of a Mortgage
|
Remaining balance (at any point in time)
Lender’s yield (internal rate of return-IRR) Borrower’s effective borrowing cost (EBC) Present value of the loan payments |
|
|
Third Party Expenses
|
MTLAS:
Mortgage insurance premium Taxes on loan Lenders title insurance Appraisal Survey *These are expenses incurred by borrowers but not paid to lender EBC > IRR |
|
|
Lender's yield rate
|
Lender's expected IRR On loan
implicit interest rate based on ACTUAL cash loaned out and ACTUAL payments received by lender |
|
|
When borrower's move soon what should they do?
|
NOT pay discount points.
|
|
|
When borrower's want to keep loan outstanding for long period of time what should they do?
|
Pay the discount points because they want to BUY DOWN the contract interest rate
|
|
|
Interest-only mortgage
|
Seldom with home loans (at least until recently)
Often with income property loans |
|
|
Partially amortized mortgage
|
Maturity is shorter than amortization period
Results in “balloon” payment |
