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Chapter 9 Advanced Financing Techniques1 New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006.

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Presentation on theme: "Chapter 9 Advanced Financing Techniques1 New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006."— Presentation transcript:

1 Chapter 9 Advanced Financing Techniques1 New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006

2 Chapter 9 Advanced Financing Techniques2 Chapter 9 Advanced Financing Techniques

3 Chapter 9 Advanced Financing Techniques3 Chapter 9 Key Terms  Bridge loan/gap financing  Graduated payment mortgage  Home equity loan  Loan-to-value ratio  Open-end mortgage  Package mortgage  Pledge account mortgage  PITI  Purchase money mortgage  Reverse annuity mortgage  Shared appreciation mortgage  Underwriting  Wraparound mortgage

4 Chapter 9 Advanced Financing Techniques4 Special types of mortgages Special Mortgages Graduated payment Pledged account Reverse annuity Package Shared appreciation

5 Chapter 9 Advanced Financing Techniques5 Junior Financing Home equity loan Gap financing Open-end mortgage

6 Chapter 9 Advanced Financing Techniques6 Lender’s Criteria for Granting a Loan o Investment quality of the property o Loan-to-value ratio o Borrower’s ability to repay loan

7 Chapter 9 Advanced Financing Techniques7 Loan-to-Value Ratio Ratio of loan amount to property value Loan ÷value = ratio Example: Loan = $144,000 Value = $160,000 144,000 = 90% 160,000

8 Chapter 9 Advanced Financing Techniques8 Qualifying Ratios Monthly Housing Expense Total Obligations Fixed rate conventional loan 28%36% Adjustable rate Conventional loan 28 %36% FHA loans 29%41% VA loansNone 41%

9 Chapter 9 Advanced Financing Techniques9 Monthly Mortgage Payment P = Principal I = Interest T = Taxes I = Insurance

10 Chapter 9 Advanced Financing Techniques10 Mortgage Loan Origination Loan Approval Underwriting- Documentation review Loan processing- Application review Uniform Residential Loan Application Form

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