Option-adjusted spread (OAS) is the yield spread which has to be added to a benchmark yield
curve to discount a security's payments to match its market price, using a dynamic pricing model
that accounts for embedded options. OAS is
Secondary Mortgages and
Calculations with 2 Loans
What is a Secondary
What is the key difference between this mortgage and a
Do 2nds have higher or lower IntRt? Higher,
because they are 2nd in priority.
Do 2nds have longer or s
Interest Rates and Risk
What is an interest rate?
Interest rates consist of what main
components: I= Risk free rate + risk premium
The cost of borrowing
money. Cost to borrower. Yield to the lender.
The Real Risk-free rate
What does rfr mean?
Various Topics Related to
Beneficial Financing and
Types of Beneficial Mortgages
Seller Closing Costs
Mortgage Buydowns (Below-market Interest
Seller Paid Closing Costs
What does this mean?
Real Estate Financing: Notes
What is the difference between the
majority of our mortgages?
Long-term mortgage bank loans for 15-20 years and you make
payments for those years
Balloon note mortgage (Bank loan) loan for 10 years. You
Legal Concepts Related to
Real Estate Finance
What is real estate?
The land and its attachments
The rights you get with real estate.
Stuff we can move, couches and
Why are these terms important in r
Effective Cost of Borrowing
Effective Cost of a Mortgage
What is the difference between a contract
interest rate and the effective cost of the
Contract interest rate
Effective cost (Annual percentage rate)
The cost right out of the pocket. Includes
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Spring 2008 F1 436 Name
lst Exam Real Estate Finance
Instructions: This exam is divided into 3 parts, multiple-choice questions, true-false
questions. and problems and essays. Answer all questions as directed.
Chapter 4 In class exercises:
Exercise 1. Dependency requirements:
A. For each of the 2 scenarios below, determine whether each person in the household (outside
the taxpayer(s) identified) qualifies as a dependent. Be able to explain your answer.
Mortgage Backed Securities
GNMA - a federal government agency
FNMA and FHLMC - government sponsored
enterprises. Fannie and Freddie
Pass-throughs collaterialized by pools of home
Cash Flows of a pass-through:
Introduction to Mortgage
Loans and Calculations
Fixed-Rate Mortgage Computation
Formula for calculating mortgage payment:
1 (1 /(1 r ) )
Formula for calculating outstanding loan
1 (1 /(1 r ) )