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CHAPTER 13 buying a home and mortgage financing.docx

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FIN 502
Steve Joyce

CHAPTER 13 buying a home and mortgage financingMORTGAGE FINANCINGMortgage financing traditional way of borrowing money to purchase a homeHome mortgage real estate loan with equal monthly paymentsMortgage transfer of an interest in property to a creditor as security for payment of a debt with a right of redemption by the borrower upon repayment of the debt o Right of redemption title of ownership of the home is actually conveyed to the bank and what you have is a right to reclaim clear title to the home upon full repayment of the debt o Equity of redemption right to reclaim title from the lender o First mortgage mortgage where the conveyance of title o Second mortgage the right to a further equity of redemption which can again be mortgagedConsists of using the equity of redemption as security or collateral for a loan o There can be successive mortgages of equities of redemption following the first mortgage and the borrower retains at all times an equity of redemption in the last mortgage given Basic concepts and terminology o Principle amount of money that is being borrowed o Interest price paid by the borrower to the lender for the use of the lenders money o Amortization gradual retirement of a debt by means of partial payments of the principal at regular intervals o Amortization period time period required to require completely a debt through scheduled repayments of principle o Blended payments method of repayment of a debt where the periodic repayments are constant and each payment includes interest and repayment of par
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