Financial Services _Çô Client Services RFC121 Lecture Notes - Lecture 7: Refinancing, Lump Sum, Negative Amortization
5 Jun 2018
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Learning Objective # 4
Obtain mortgage financing.
STEP 4:
Obtaining Financing
▪ The application process;
• Meet to review application and provide proof and other
documentation of employment
• Lender obtains credit report and verifies information
• Mortgage is approved / denied
▪ Based on borrower’s credit and financial history
▪ Evaluation of home
▪ Maximum amount for which you qualify
Evaluating Interest / Payment Options
▪ Fixed Rate Mortgages
▪ Lock interest rate in for specific term
▪ Amortization – the reduction of a loan balance through payments
made over a period of time
▪ Effective 2011 the maximum amortization is 30 years and can
borrow 90% of home’s value
▪ Closed – borrower pays penalty for pre-payment
▪ Open – mortgage paid off at any time without penalty
▪ Compounded semi-annually
▪ Paid monthly, weekly or biweekly
Evaluating Interest / Payment Options
▪ Variable Rate Mortgage
▪ Home loan with an interest rate than can change during the
mortgage term due to changes in market interest rates
▪ Rate cap – limit on increases / decreases
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