Financing 101 lessons would be appreciated by your team lender. Provide some tools and information on your website for buyers to more intelligently navigate the real estate market.
Title: Parts of the Modern Adjustable Rate Mortgage
- Life Cap: This is the ceiling that the note rate cannot exceed over the life of the loan.
- Index Rate: The rate to which the interest rate on an adjustable rate loan is tied. One of the more popular indexes used is the one-year U. S. Treasury bill.
- Points and Costs: The amount of money they will charge you or add to the loan amount. This is really just a way to increase the yield to the lending institution.
- Amortization: A period of time in which gradual repayment of debt occurs by means of systematic payments of principle and/or interest. At the end of the time period, the balance is zero.
- Convertibility Option: An option that allows you to convert to a pre-determined or market-fixed rate at a specified time.
- Prepayment Option: An option to prepay any portion or a predetermined portion of the principal prior to its due date without penalty.
- Deferred Amortization: Increasing principal balances derived from the underpayment of interest.
- Payment Cap Option: The capping of a payment amount when interest rates have increased that raises the payment amount above a pre-determined limit.
- Margin: The amount added to the index rate that represents the lender’s cost of doing business.
- Interest Rate Cap per Adjustment: The maximum amount a borrower’s interest rate may increase or decrease at time of adjustment.
Our book Fast Lane Buyer Systems includes numerous forms, letters, and checklists to share with your buyers on your website. This, in turn, shows your sellers how hard you work in finding the right buyer for their home.
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