REAL 4000 Lecture Notes - Lecture 3: Demand Letter, Unfair Competition, Mortgage Loan
22 Apr 2017
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Document Summary
Chapter 9 re finance: the laws and contracts. Key components of the note: what is the interest rate and how is it computed, fixed-rate mortgage: Interest rate is stated and does not change during the life of the loan: adjustable-rate mortgage: Fixed-rate issues: what is the interest rate, stated in the documentation, what is the compounding period, most mortgage loans employ monthly compounding in which the monthly interest rate is 1/12th of the annual rate. Adjustable-rate issues: how is the initial rate calculated, the annual rate of interest is calculated as the sum of an index rate plus a margin. Index rate: a market-determined rate that is beyond the control of either the borrower of the lender, common index rates, us treasury constant maturity rate (cmt, thrift institution cost of funds index (cofi, libor. Loan payments: almost always monthly, payments can be, fully amortizing.
