please respond to. cj. with. 200. words
Chapters 9 & 10 discussion
BRE-126, Real Estate Finance
Charlie
3/09/24
Textbook Author: Walt Huber
Chapters 9 & 10
Overview
In chapter 9, it talks about conventional financing, where it gets into all about conventional loans, how they work and what they are. There also is chapter 10 that discuss the alternative financing types such as buydowns, (ARMs), (GPMs), and (GEMs). Both chapters seems interesting and a lot to learn, especially chapter 10 that carries a lot of information.
Key Concept from Chapter 9
The conventional real estate loans are involved long term-fixed rate repayment plans. “A long term, fixed rate real estate loan is one that is repaid over 15-30 years at an unchanging rate of interest”. (page. 227). There are types of loans that are conventional like an amortized loans and the 15 year fixed rate mortgage loans.
Key Concept from Chapter 10
One of the main key points in chapters is a buydown and there are buydown plans which is a way to lower a purchaser’s monthly payments as an aid to qualify for a loan. (Pg. 256). A buydown is also the easiest and most agreeable way to make the expensive loans less expensive. A buydown is a form of the alternative loan form which is adjustable rate mortgage.
Key Concept from Chapter 10
To discuss more on adjustable rate mortgages which is (ARM’s). It is the widely popular acceptable form of alternate financing which shifts the risk of interest rate fluctuations to the borrower, lenders then usually charge a lower rate for the ARM than a fixed-rate loan. (Pg.260). Another key concept in this chapter is growth equity mortgage (GEMs). GEMs determine annual payment adjustments, builds up equity quickly, the payments become predictable, there is no negative amortization, and reduces the interest costs.
Summary
To conclude on this discussion, both chapters are heavily informative. I learned many key concepts like GEMs, ARMs abbreviation concepts and what is a buydown and discount points in chapter 10 which has a lot of key information there. Also, what I learned in chapter 9 as well such as the all the types of conventional loans like the 15-30 year loans and fixed-rate mortgage loans and all about it. Many key concepts I learned there as well.
