Real Estate Finance review for NYS real estate exam
Types of Mortgages
a loan secured by real property through the use of a mortgage note
a mortgage loan with the interest rate on the note periodically adjusted
backed loans that usually require a lower down payment and may sometimes have a lower interest rate
Reverse Annuity Mortgage
lender makes periodic payments to the borrower using the borrower’s equity in the home as satisfaction of mortgage
a mortgage which does not amortize over the term of the note, thus leaving a balance due at maturity
used to fund the purchase of more than one piece of real property
a method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items
Shared Equity Mortgage
Joint ownership of real estate by both lenders and property dwellers
The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property
10/1 ARM - fixed 10 yrs/adjust every yr
ARM best suited for people who move; fixed overall is better
a loan fee equal to 1% of the mortgage amt
Private Mortgage Insurance (PMI)
insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan
a line of credit extended to a homeowner that uses the borrower's home as collateral
on a loan, claiming a rate of interest greater than that permitted by law
-high interest rates & closing costs
-geared towards unqualified buyers
Other Things to Remember
LTV is based on the appraised value or contract price, whichever is less
Housing expense ratio (PITI) = front-end ratio (shouldn't be greater than 33%)
Need to be at least 62 yrs old for reverse annuity loan
Fixed rate mortgage offers the least amount of risk and is preferred among long term homeowners
FHA Mortgage is best suited for first time home buyers who lack the funds for a large down payment
Banks look for appraisal and title in a property
What type of mortgage is often recommended for buyers seeking to live in the house for only a short period of time?
adjustable rate mortgage
If Michael wants the lowest starting interest rate, what ARM should he get?
Which ARM has the closest starting interest rate to a 30 yr fixed mortgage?
What is the typical annual cap on ARM?
What valuation method does a lender typically use when determining the value of a property?
What parameters do appraisers typically use to determine the value of a property using sales comparison approach?
Properties w/in 1 mile radius, sold w/in the last 6 months
What are known as the limits to the interest rate on an ARM?