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RE NATIONAL - FINANCING 10%
Terms in this set (4)
Points (Prepaid Interest)
A charge by the lending institution to borrow money to cover lender expenses or to increase the yield on the loan. Based on the loan amount, paid along with closing costs. Buyer is charged (can be negotiated) one point (1%) of the loan amount.
Sometimes loans that are being sold to an investor might be lower than the investor mandates. When this occurs the lender charges _______ to the borrower to increase the yield and make the loan more attractive and profitable to the investor. A discount point is 1% of the loan amount.
Discount points can be negotiated between the parties and is tax deductible.
Loan to Value (LTV) Ratio
When a buyer purchases property they pledge the property as security for the loan. Despite the pledge the lender wants a margin of security as to the value of the home compared to the amount of money being borrowed.
Loan amount / Appraised value
PMI (Private Mortgage Insurance)
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