1. © OnCourse Learning Chapter 11 : Lending Practices

2. o Term loan – interest payments only until due. o Amortized loan – regular equal payments for life of loan including both principal & interest. o Balloon loan – any loan that has a final payment larger than any of the previous. o Partially amortized loan – series of amortized payments with a balloon payment at maturity. Loans © OnCourse Learning

3. Repaying a 6-year, $1,000 Loan © OnCourse Learning

4. Repaying a 6 year $1,000 amortized loan 9% Interest per Year © OnCourse Learning

5. Balance Owed Each Year of the Loan © OnCourse Learning

6. Amortization Table: Monthly Payment per $1,000 of Loan © OnCourse Learning

7. Balance Owing on a $1,000 Amortized Loan © OnCourse Learning

8.  Budget Mortgage  Balloon Loan  Partially Amortized Loan  Earlier Payoff  Biweekly payments © OnCourse Learning LOAN AMORTIZATION

9. The relationship between the amount the lender is willing to loan and the market value of the property. Market value = $100,000 Loan = $80,000 What is the loan-to-value ratio? 80% Loan-to-Value © OnCourse Learning

10.  Equity  Loan Points  Origination fee  Discount points © OnCourse Learning LOAN TERMINOLOGY

11. Insures loans UFMIP Anyone qualified Rate negotiable Points 3.5% down 96.5% L-T-V Guarantees loans Funding fee Veterans only Rate negotiable Points No down payment 100% L-T-V FHA VA VA / FHA Comparison © OnCourse Learning

12. Owner occupied 1-4 family dwellings Refinancing allowed Assumption allowed with approval VA / FHA Similarities © OnCourse Learning

13.  VA  http://www.homeloans.va.gov/ http://www.homeloans.va.gov/  FHA  https://entp.hud.gov/idapp/html/hicostlook.cfm https://entp.hud.gov/idapp/html/hicostlook.cfm  Conv  http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About+Fan nie+Mae&s=Loan+Limits http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About+Fan nie+Mae&s=Loan+Limits Loan Limits Info © OnCourse Learning

14.  Private Mortgage Insurance  PMI Conv  UFMIP FHA  VA Loan Guarantee  Insures lenders against losses Mortgage Insurance © OnCourse Learning

15.  A federal agency under the U.S. Department of Agriculture.  Like the FHA, it came into existence due to the financial crises of the 1930s.  The RHSA offers programs to help purchase or operate farms. © OnCourse Learning RURAL HOUSING SERVICES ADMINISTRATION

16.  VA Amortized loan  Balloon loan  Conventional loans  Equity  FHA  Impound or reserve account  Loan origination fee  Loan-to-value ratio  Maturity  PITI payment  PMI  Point  Principal  UFMIP Key Terms © OnCourse Learning