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Types of Financing

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Chapter 18

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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

Interest rate Margin Adjustment period Interest rate cap Payment cap Negative amortization Disclosures

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What to look for?

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

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More Financing Methods

Reverse Mortgage Construction Loan / Interim Loan Blended-Rate Loan Equity Mortgage

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Affordable Housing Loans Underwriting standards are modified to

recognize different forms of credit responsibility.

Consumer education. Low down payment.

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More Financing Methods

Conventional Loan (97%) The Nehemiah Program

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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.

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Wraparound Mortgage

BuyerSeller$20,000

Debt$60,000

Debt

1st Lender

(Includes wrapped$20,000)

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Financing Techniques Subordination Contract for Deed Option Creative Financing Rental Land Leases

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Investing in Mortgages Individuals can invest in mortgages Individuals can purchase junior mortgages Higher yields available Risk as to repayment & difficult to convert to

cash before maturity

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Key Terms ARM Affordable Housing

Loan Blanket mortgage Construction loan Equity sharing

GPM Negative amortization Option Package mortgage Reverse mortgage Seller Financing Wraparound mortgage

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