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2) Trust Deed
3) Installment Sale Contract (Land Contract)
used to evidence the basic obligation or debt, the promise to pay back the money.
Mortgagor = borrower
Mortgagee = lender
Mortgagor retains full legal title to property
Trustor = Borrower
Trustee = Holder of limited Title
Beneficiary = Lender
Installment Sales Contract (Land Contract)
Vendor = seller = holder of legal title
vendee = buyer = holder of equitable title
Principal payment not made during term of the loan. Involve more interest payment than installment loan.
A) Fully Amortized
B) Partially Amortized
Liquidation of financial obligation on an installment basic.
-Unpaid principal balance due
Monthly payment not adequate to cover interest due on loan.
Interest rate will be affect by
Negotiable instruments are all of the following except:
Holder in Due Course
Innocent 3rd party
Real Estate (home) loan are calculated on:
-Interest charged on a decreasing balance
VRM (Vary) or ARM (Adjustable) variable interest:
rate can be increased or decreased
Interest Rate named in note
rate actually paid
(Including nominal rate + discount rate)
discount rate = prepaid interest
Maximum interest rate or Renegotiable rate Mortgage by Federal Law
Buyer is liable, seller is relieved of any liability
Seller remains liable, buyer accepts no liability. Buyer takes over payment while loan remains in seller's name.
Alienation/due on sale clause
Not assumable. Permits lender to demand full payment of loan upon transfer of title.
-no prepayment penalty
-lender would not likely to enforce when deflation occurs
unpaid loan principal sum is due.
Lienholder's priority steps back
Allows future loan to have priority.
Or More Clause
accelerated payoff without prepayment penalty.
Open End Loan
permits borrower to borrow additional money without rewritting the mortgage.
record of consistent payments on the loan.
current unpaid principal balance
no government insured
to borrow the maximum as you can to get the loan
Factors influencing real estate market
2) Land use control
3) Economic inflation affects outstanding balance of Loan
: benefits the trustor(Owner)
If Prices decrease:
value of money increase
1 point =
1/8 yield or 0.25%