Thomson/South-Western©2008 Chapter 13 Types of Financing _______________________________________

Thomson/South-Western©2008 Adjustable Rate Mortgage Interest rate Margin Adjustment period Interest rate cap Payment cap Negative amortization Disclosures What to look for?

Thomson/South-Western©2008 Other Financing Graduated Payment Mortgage Equity Sharing “Rich Uncle” Loan Package Mortgage

Thomson/South-Western©2008 More Financing Blanket mortgage Reverse Mortgage Construction Loan / Interim Loan Blended-Rate Loan Equity Mortgage Asset Integrated Mortgage

Thomson/South-Western©2008 Affordable Housing Loans Underwriting standards are modified to recognize different forms of credit responsibility. Prepurchase home buyer education. Low down payment.

Thomson/South-Western©2008 Comparison of Conventional Mortgage to AIM

Thomson/South-Western©2008 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.

Thomson/South-Western©2008 Wraparound Mortgage BuyerSeller $20,000 Debt $60,000 Debt 1 st Lender (Includes wrapped $20,000)

Thomson/South-Western©2008 Mortgage Subordination Contract for Deed Option Creative Financing Rental Land Leases

Thomson/South-Western©2008 Investing in Mortgages Individuals can invest in mortgages Individuals can purchase junior mortgages Higher yields available

Thomson/South-Western©2008 Key Terms ARM Asset intergrated mortgage Affordable Housing Loan Blanket mortgage Construction loan Equity sharing GPM Negative amortization Option Package mortgage Reverse mortgage Seller Financing Wraparound mortgage