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Real Estate Principles Real Estate: An Introduction To The Profession

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84 views

Real Estate Principles Real Estate: An Introduction To The Profession

Uploaded by

denden007
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Real Estate Principles

Ninth Edition

Real Estate:
An Introduction to the Profession
Ninth Edition

By Charles J. Jacobus
South-Western Publishing©2002

South-Western Publishing©2002
Chapter 11
_______________________________________

Lending Practices

South-Western Publishing©2002
Loans

• Term loan – interest payments only until due.


• Amortized loan – regular equal payments for
life of loan including both principal & interest.
• Balloon loan – any loan that has a final
payment larger than any of the previous.
• Partially amortized loan – series of amortized
payments with a balloon payment at maturity.

South-Western Publishing©2002
Repaying a 6-year, $1,000 Loan

South-Western Publishing©2002
Carrying 9% Interest per Year
on the Loan

South-Western Publishing©2002
Balance Owed During Each
Year of the Loan

South-Western Publishing©2002
Amortization Table: Monthly
Payment per $1,000 of Loan

South-Western Publishing©2002
Balance Owing on a $1,000
Amortized Loan

South-Western Publishing©2002
Loan-to-Value

• 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%

South-Western Publishing©2002
Equity – the difference between the value of
the property and outstanding debt.
Points – one percent of the loan amount.
Origination fee – fee lender charges for
making loan usually stated in terms of a
percentage of loan amount.
Discount points – lender’s charge to raise the
return on the loan usually stated as a
percentage of the loan amount.

South-Western Publishing©2002
VA and FHA in Comparison
FHA VA

Insures loans Guarantees loans


UFMIP Funding fee
Anyone qualified Veterans only
Rate negotiable Rate negotiable
Points Points
3-5% down No down payment
97-95% L-T-V 100% L-T-V

South-Western Publishing©2002
VA and FHA Similarities
• Owner-occupied
• 1-4 family dwellings
• Refinancing allowed
• Assumption allowed (with approval)

South-Western Publishing©2002
Key Terms
• Amortized loan • Loan-to-value ratio
• Balloon loan • Maturity
• Conventional loans • PITI
• Equity • Point
• FHA • Principal
• Impound account • UFMIP
• Loan origination fee • VA

South-Western Publishing©2002

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