This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
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...
View Full Document
- Spring '08