Chap10Notes

Chap10Notes - Residential Mortgage Loans A mortgage is a...

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1 Residential Mortgage Loans A mortgage is a loan secured by the collateral of a particular real estate property, which obliges the borrower ( the mortgagor ) to make a predetermined series of payments to the lender. A mortgage gives the lender (the mortgagee) the right to foreclose on the loan if the borrower (the mortgagor) defaults. Residential Mortgages are used for properties such as houses, condominiums, and apartments; Nonresidential Mortgages are used for commercial or income producing properties such as apartment buildings, office buildings, shopping centers, etc. Residential Mortgage Loans (continued) Conventional Mortgage is a mortgage where the lender makes the loan based on the credit worthiness of the borrower and on the collateral for the mortgage. The M ortgage Originator; include commercial banks, or thrift institutions, or mortgage bankers and brokers. The primary factors considered for whether a loan is made include: LTV (Loan to Value) = Loan Amount / Property's Market Value. PTI (Payment to Income) = Monthly Mortgage & Real Estate Tax Payments / Monthly Income. c Prime Loan is a loan made to a borrower with a high credit quality. c Subprime Loan is a loan that is originated where the borrower is of lower credit quality or where the loan is not a first lien on the property. Mortgage Insurance
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Chap10Notes - Residential Mortgage Loans A mortgage is a...

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