Transcript Document

Real Estate Principles
Ninth Edition
Real Estate:
An Introduction to the Profession
Ninth Edition
By Charles J. Jacobus
South-Western Publishing©2002
South-Western Publishing©2002
Chapter 12
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The Loan and the Consumer
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APR
• Annual percentage rate combines the interest
rate with the other costs of the loan into a
single figure that shows the true annual cost of
the loan.
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Regulation Z
• Requires lender to show the borrower the cost
of the credit.
• Requirements include:
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Amount financed
Finance charge
Annual percentage rate
Total payments
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Right to Rescission
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Borrower’s right to cancel a credit transaction.
Three business days after signing to back out.
Includes Saturdays
Does not apply to credit used for the
acquisition or initial construction of your
principal dwelling.
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Triggering Items and Disclosures
Mention these
Triggers disclosure
• Down payment
• Any payment
• Number of payments
• Period of payments
• Amount of any finance charge,
or statement: no charge for
credit
• Cash price or the amount
of the loan
• Down payment (or none)
• Number, amount,
frequency of payments
• Annual percentage rate (APR)
• Deferred payment price
or total payments
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Loan Process
Lenders Qualify:
• Borrower
• Property
• Title
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Redlining
• Refusing to make loans in certain areas.
No
Loans!
$
$
$
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Credit Report
• Provides lender with independent means of
checking borrower’s credit history.
• Fair Credit Reporting Act – consumer right to
their file at credit bureau.
• Credit Scoring – method used today to
evaluate credit risk.
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Key terms
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APR
Credit report
Fair credit reporting act
Finance charge
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Liquid asset
Redlining
Regulation Z
Truth-in-Lending act
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