Lecture 14_MORTGAGE

Lecture 14_MORTGAGE - Lecture 14 Mortgages L14 Xiaoding Liu...

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Lecture 14 Mortgages L14 Xiaoding Liu 1 FIN4243 Fall 2009
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Mortgage A loan that is collateralized with a specific piece of real property, either residential or commercial The borrower must make a series of mortgage payments over the life of the loan The lender has the right to foreclose or lay claim against the real estate in the event of loan default L14 Xiaoding Liu 2 FIN4243 Fall 2009
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Mortgage The original lender is called the mortgage originator Thrifts, commercial banks, and mortgage bankers Charge a servicing fee (fixed percentage of the outstanding mortgage balance) When a mortgage originator intends to sell the mortgage, it will obtain a commitment from the potential investor GSEs and several private companies buy mortgages L14 Xiaoding Liu 3 FIN4243 Fall 2009
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Mortgage Payment-to-income ratio Ratio of monthly payments to monthly income Lower the PTI, the greater the likelihood that the applicant will be able to meet monthly payments Loan-to-value ratio
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Lecture 14_MORTGAGE - Lecture 14 Mortgages L14 Xiaoding Liu...

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