Lesson 3:
Installment Credit
Handout 6
Lecture Notes: Purchasing that Dream House
Qualifying for a Home Mortgage
Mortgage acceptance is based on your credit record
Amount of money is based on income, down payment, & interest rates
Types of Home Mortgages
Fixed-Rate Mortgages
- Conventional 15, 20, 25, 30 year – same payment
- FHA/VA – available for special populations
- “Balloon” – fixed for 3-10 years, then balance is due
Adjustable-Rate Mortgages
- Traditional ARM – payments vary with interest rates
- Graduated-payment – fixed a year at a time - payments begin small and increase with time
- Growing-equity – payment increase applies to principal
Other Financing Methods
Second mortgage/home equity loan – borrowing against the equity in your house
Reverse mortgage – bank buys a home you own by making payments
Refinancing – taking out a new “cheap” mortgage to pay off an old “expensive” mortgage
Handouts:
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5 | 6 |
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