real estate finance - full book (500 pgs)

They may even be insured by fha title i if the money

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Unformatted text preview: y index, but the same documents are available for use with an ARM based on a 3 – or 5–year Treasury index. As the title indicates, these documents may also be used with a graduated payment mortgage, thus allowing the borrower to convert the GPM to a fixed–rate mortgage. These documents outline the steps to be followed to convert an ARM or GPM to a fixed–rate mortgage, as well as how the fixed rate of interest will be calculated. The other option available to the lender is the use of an FHLMC convertible ARM note. This note is similar to the ARM notes reviewed in the previous section. There is one major difference: paragraph 5, Conversion to Fixed Interest Rate. Section A indicates on which change date the borrower will be allowed to convert. This could be the first or the first, second, and third or any change dates specified in this section. Section B states how the fixed rate will be established. Finally, in Section C, borrowers are advised that, if they should convert, they will have to sign a document as evidence of the modification of the note. Form 9-1: Adjustable Rate Rider (Conversion Option) 9-30 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS Dynasty School (www.dynastySchool.com) 9-31 REAL ESTATE FINANCE 9-32 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS Dynasty School (www.dynastySchool.com) 9-33 REAL ESTATE FINANCE FIXED TO ARM CONVERSIONS A wide variety of ARM loans are offered with fixed to ARM convertible features. They may come with labels like 1/1 ARM, 3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM, and so on. The first number represents the number of years the rate is fixed, and the second designates how often the rate may adjust there after. For the 5/1 ARM, for instance, the rate is fixed for five years, and then converts...
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