2. Interest
• Simple Interest—paid only on the amount of principal still
owed.
• Term Loan—requires payments of interest only with the
entire principal being repaid at a specified time.
• Amortization—payments include portions for both principal
and interest.
• Distribution of Principal and Interest
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3. Variations in Payments and Interest
Rates
• Graduated-Payment Mortgage (GPM)
• Adjustable-Rate Mortgage (ARM)
– Adjustment periods
– Initial rate
– Note rate
– Qualifying rate
– Index
– Margin
– Interest rate caps
– Payment caps
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4. Innovative Payment Plans
• The 15-Year Mortgage
• Reverse Annuity Mortgage (RAM)
• Fannie Mae Senior Housing Program
• Fannie Mae’s Two-Step Mortgage Plan
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