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Unformatted text preview: ves, pension funds, etc. It is invested in mortgages either directly or indirectly. Direct – Savings are invested in mortgages directly by the saver or through a loan broker. This method accounts for a substantial portion of all mortgages and trust deeds in the United States. Indirect – Savings deposits are invested in the mortgage market through an intermediary such as a bank, savings and loan, insurance company, REIT, or other syndication. Usually the saver is not aware of the investment since the main concern is safety and interest rate. 2-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 2. THE MONEY MARKET
INFLUENCES ON SUPPLY
Money and credit flow throughout the economy of this country. Money which is not used by the people or institutions possessing it for their daily living and operating expenses is put aside for future use. Competition for Supply – Where surplus money goes greatly depends upon who is willing to pay the most for its use. Those needing the money will bid for its use. According to the law of supply and demand, it will go to the highest bidder. Effect on Mortgage Funds – How much money goes into the mortgage market depends on the interest offered for the use of the money and the total supply of money available. Traditionally, when money is “tight” the real estate market loses it to other users of money (markets) as they will bid higher interest based on use for a shorter term. DEMAND FOR MORTGAGE MONEY
Sources of demand for loan funds include all aspects of the real estate market, such as construction, sale and purchase for personal use or for investment, and refinancing. NEW CONSTRUCTION
Construction involves major up–front costs which are not repaid until the project is completed and sold or put into use. For this reason, construction financing is almost always necessary, whatever the structure of the project. A contractor generally builds according to 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