real estate finance - full book (500 pgs)

Com 7 3 real estate finance locate the term of the

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Unformatted text preview: % interest with monthly payments to include both principal and interest on a fully amortized basis. Monthly payments of $116.35 (from amortization table or financial calculator) will be made for 60 months or 5 years, at which time the loan and interest will be fully paid. Dynasty School (www.dynastySchool.com) 7-1 REAL ESTATE FINANCE monthly payment months paid principal & interest principal total interest paid $116.35 $6,981 -$5.000 $1,981 Interest is calculated from month to month on the unpaid principal balance (simple interest). Loan Term – The length of the loan can vary, typically from 3 to 30 years. For the same amount of money, the longer the term of the amortization, the smaller the amount of each periodic payment, although terms beyond 30-years provide very little reduction in payments. Many borrowers now are opting for 15–year amortization periods–a plan which greatly reduces total interest costs. Example Compare the results of a $150,000 loan amortized over 30– and 15–year periods at the same 10% interest rate. Term 30 years 15 years Monthly Payment $1,316.36 $1,611.91 Total of Payments $473,889 $290,143 Total Interest $323,889 $140,143 PARTIALLY AMORTIZED Also referred to as a “balloon payment” loan. Monthly payments cover interest and some of the principal, but are not large enough to repay all of the principal during the term of the loan. Balloon Payment – In a partially amortized loan, the last payment calls for all the remaining principal balance due (balloon payment). The California Real Estate law, where applicable, defines a balloon payment as one “greater than twice the amount of the smallest installment.” Interest – Interest is computed on the unpaid balance. 7-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 7: LOAN PAYMENTS & SECONDARY MARKETS STRAIGHT NOTE Also refereed to as “interest only.” Only the interest is paid during the life of the note. The entire principal...
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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.

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