RE-160 Lecture Notes - Lecture 22: Deficiency Judgment, Home Equity Line Of Credit, Refinancing
18 Dec 2020
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Requires the payment of interest for a stated period of time with the principal due at the end of the term. Amortizing loans require equal periodic payments composed of interest and principal, reducing the balance owing to zero over the loan term. A form of reset mortgage where the interest rate changes more than once. Annual and lifetime rate caps limit the amount of interest rate change. Initial interest rates are usually less than interest rates for similar term fixed-rate mortgages. Paying off an existing loan with the proceeds from a new loan on the same property (usually at a lower fixed interest rate). The mortgagor sets a payment cap, or maximum amount for payments, but the difference between the payment made and the full payment amount is added to the remaining mortgage balance. ,000, 30 years, 9%, monthly payments payment = ,207 per month. Refinance ,820 after 5 years, 7% interest. 25 year loan, payment = ,016 per month.
