Chapter 8 - Mortgage Markets

Termthelongerthetermthehigherthe interestrate 3

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Unformatted text preview: Mortgage interest rates 1. Market rates – determined by supply and demand forces 2. Term – the longer the term, the higher the interest rate 3. Discounts points – interest payment made at the beginning. Interest rate tend to lower with discount points Loan terms Loan terms ► Collateral – real estate used as a security to back the loan ► Down payments – between 5% to 20% ► Private mortgage insurance – to protect the lender when the market value of the property is lower than the outstanding balance at the time of default ► Borrower qualification – monthly payment cannot exceed 33% of gross monthly income,..etc. Mortgage loan amortization Mortgage loan amortization Refer to table 3 ► Determine the monthly payments of a mortgage loan Types of mortgage loans Types of mortgage loans ► Refer to the textbook...
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