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homework4 - actual limit to its mortgage amount A...

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Mitch McMichael AEM 4230 Contemporary Topics in Applied Finance Thursday, October 3, 2010 Homework 4 1. The monthly mortgage payment is $700 2. Year Interest Principal Balance 1 2,498.89 133.82 99, 866.18 2 9,960.87 569.89 99,296.28 3 9,901.29 629.57 98,666.72 4 9,835.37 695.49 97,971.23 5 9,762.54 768.32 97,202.91 3. The two factors are the PTI ratio and the LTV ratio 4. A FICO is used to evaluate how risky a person is in receiving a loan. The higher the score the more likely the person is to pay back the loan in due time. 5. A teaser rate is a low introductory interest rate used to attract new customers to your business and service. 6. A conforming mortgage is underwritten by Freddie Mac and Fannie Mae, and they have lower interest rates, as well as lower down payments. They have an
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Unformatted text preview: actual limit to its mortgage amount A non-conforming mortgage is just the opposite, it does not follow the guidelines set by Freddie Mac and Fannie Mae therefore having a dollar amount over the purchasing limit. 7. One type of mortgage insurance is PMI, which is private mortgage insurance, and a second type is called FHA which is run by the government 8. They can do one of three things, keep it, sell it, or use it as collateral. 9. Mortgage pass through security is a security consisting of a pool of residential mortgage loans 10. The disadvantage of a third party guarantee is that all the mortgages within the pool will have to pay out an additional fee on their perspective mortgages....
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