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Unformatted text preview: because of the savings in interest costs and faster loan payoff. For borrowers who do not wish to enter into a formal biweekly agreement–that is, for those who do not wish to tie themselves down to a binding commitment every two weeks–but who still want to reduce interest costs, there are solutions. For example, the borrower can accomplish similar results, though with a slightly longer payoff period, by making a 13th payment toward principal reduction each year. Or the borrower could increase each regular installment by 1/12 of the principal amount of the payment. Of course, these prepayments can be accomplished only if they are not prohibited under the terms of the promissory note. If the borrower makes the 13th monthly payment, he/she must make sure the lender is aware of its purpose–principal reduction only. INTERNET WEB LINKS
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9-52 Bureau of Economic Bureau of Labor Statistics US Census Bureau Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS
www.eia.doe.gov www.federalreserve.gov www.homes.com www.homeseekers.com www.homestore.com www.realtors.com www.irs.gov Energy Information Administration Federal Reserve Homebuyers website Homebuyers website Homebuyers website Homebuyers website Internal Revenue Services CHAPTER QUIZ
1. Adjustable rate mortgages offered by various lenders at any given time may differ in: A. B. C. D. 2. Interest Rate caps The index used The adjustment period All of the above Reasons for using alternative financing do not normally include: A B C D Low interest rates and high availability of money California's heavy dependency on out–of–state mortgage funds Tight money market A buyer who is unable to qualify for traditional financing 3. Negative amortization means: A B C D The loan is never amortized The loan balance decreases with each monthly payment The loan balance does not change with each money payment The...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10