REAL 1820 Lecture Notes - Lecture 12: Down Payment, The Monthly, Prime Rate
28 Nov 2015
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4 types: conventional vs. high ratio. 5 rates: fixed vs. variable. Some concepts: a mortgage is a loan used to purchase a property. The property being purchased serves as security or collateral for the mortgage. The process is called foreclosure: down payment: upfront cash payments. Purchase price = down payment + mortgage amount. No longer than 35 years: term: amortization period is long. Term is shorter: from 6 month to 5 years. Lending value could be different than purchase price. Usually lending value < purchase price. Lenders are use lending value as the basis to decide the mortgage amount. This can be because if there was a bidding war on the house, you may have overpaid for the property. They use their lending value to calculate the mortgage price, as opposed to the purchase price. Conventional vs. high ratio mortgages. Loan- to- value ratio (lvr) = mortgage loan/lending value.
