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Understanding Adjustable Rate Mortgages and Alternative Financing Options Explained

This chapter delves into the various types of financing available for home purchases, focusing on Adjustable Rate Mortgages (ARMs) and their key features like interest rates, margins, and payment caps. It also explores alternative financing options such as Graduated Payment Mortgages, Equity Sharing, Reverse Mortgages, and more. Learn about the implications of negative amortization, the importance of disclosures, and compare conventional mortgages to alternative methods like seller financing. Whether you're a first-time buyer or an investor, this guide provides essential insights into flexible financing solutions.

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Understanding Adjustable Rate Mortgages and Alternative Financing Options Explained

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Presentation Transcript

  1. Chapter 14________________Types of Financing

  2. Adjustable Rate Mortgage • Interest rate • Margin • Adjustment period • Interest rate cap • Payment cap • Negative amortization • Disclosures What to look for? ARM

  3. Other Financing • Graduated Payment Mortgage • Equity Sharing • “Rich Uncle” Loan • Package Mortgage

  4. Other Financing (continued) • Blanket Mortgage • Reverse Mortgage • Interim Loan • Construction Loan • Blended-Rate Loan • Equity Loan

  5. Affordable Housing Loans • Underwriting standards are modified to recognize different forms of credit responsibility. • Pre-purchase home buyer education. • Low down payment.

  6. Comparison of Conventional Mortgage to AIM

  7. Seller Financing • The current owner of the property agrees to accept part of the purchase price in the form of a loan (promissory note and mortgage or deed of trust) also becoming the lender in the transaction.

  8. 1st Lender Seller Buyer $20,000Debt $60,000Debt (Includes wrapped $20,000) Wraparound Mortgage

  9. Financing • Subordination • Contract for Deed • Option • Rental • Creative

  10. Key Terms • ARM • Affordable housing loan • Blanket mortgage • Construction loan • Equity sharing • GPM • Negative amortization • Option • Package mortgage • RAM • Seller financing • Wraparound mortgage

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