march 2

march 2 - Adjustable rate mortgage loan (ARM)-popular in...

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3/2 Defeasance clause -Assures borrower they will get unencumbered rights when debt is satisfied -lien removed when borrower makes last payment -release deed -reconveyed legal title in title theory states, -Prevents lender from foreclosing on borrower as long as they’re not in default -property could increase in value, and lender could foreclose and resell at market value -Defeasance clause created around 1940 Graduated payment mortgage -used for low and moderate income families -created by HUD -provides mtgs to low income people that carry low payments in early years, and the payments increase as years go by -see notes for example -loan balance increases in early years -risk for lenders -property could decrease in value and the borrower could just walk away from the property -will trash your credit and you will be taxed on the difference -100,000 debt, property valued at 70,000, taxed on 30,000 difference -seen as income
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Unformatted text preview: Adjustable rate mortgage loan (ARM)-popular in late 70s, early 80s, times with high interest rates-transfer all interest rate risk to borrower-lender can justify making loans at below market rate-see notes for example-contains an annual cap and a lifetime cap-annual cap- limit as to how much interest rate can go up per year-lifetime cap- limit as to how much the interest rate can go up during the life of the loan-good for when interest rates are high, or you do not plan to live on the property for very long Reverse annual mortgage loan (RAM)-lender pays property owner-used when people own property with a lot of equity-people who have lived on property a long time, and have paid off mortgage-ex.- see notes-life expectancy tables used to determine length of payments-lender repaid upon sale of property Wrap around mortgage loan-used to preserve or keep below market interest rate-see notes for example...
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march 2 - Adjustable rate mortgage loan (ARM)-popular in...

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