Agencies that help Mortgage Liquidity
Several agencies assist the mortgage market by infusion of capital and by guarantees of repayment of mortgages.
Federal Housing Administration (FHA) - made possible purchases of real estate at low interest rates and with low down payments.
Government National Mortgage Association (Ginnie Mae) - created by the U.S. government in 1968, makes possible trading in mortgages by investors by guaranteeing mortgage-backed Securities.
Federal National Mortgage Association (Fannie Mae) - is a private corporation, chartered by the U.S. government, that bolsters the supply of funds for home mortgages by buying mortgages from banks, insurance companies, and savings and loans.
The Veterans Affairs Department (VA) - also guarantees home loans, but specifically for Veterans of the armed forces. However, these loans are assumable and you don't have to be a veteran to assume a VA loan.
Real Estate Glossary
Terminology varies depedning who you talk to. The file below is a comprehensive glossary of real esate terms as defined by HUD (Housing and Urbad Development)
Cap Rate Vs. IRR
Sizing up a potential real estate investment is no easy task and there are a number of things investors must consider before closing a deal. Two of the most common factors investors use are the cap rate and the IRR or internal rate of return. There are some similarities between the two but it’s propably more important to understand the differences, exactly what they measure and the advantages and limitations of each. Click here for the complete article.
Comparing Investment Returns
IRR, ROI, NPV, GRM ....OhMy!
Definitions and formulas for each of these on this page ...
Common mistake when evaluating an IRR
Many investors forget that there is an implicit assumption in the IRR calculation that cash flow from the subject investment has to be reinvested at the same rate as the calculated IRR. This is particularly important when one finds an investment that has returns that are verydifferent than what he or she typically earns. Therefore if a potential investment shows a calculated IRR of 21%, that figure is accurate only if all future cash flows from said investment are reinvested at 21%. Probably not a good assumption. But if you do have a 21% portfolio, I want in!
Like Kind Exchange
The document below explains the IRS rules you need to follw to execute a tax deferrd exchange. This enables us to sell a property and defer capital gains tax by 'exchanging' it with another property of equal or higher value.
(Comming soon - Summary of the rules)
Mortgage Calcs
Ever wanted to know how financial instrittuions come up with their numbers, but were afraid to ask? These documents below will tell you more than you ever wanted to know about loan calculations.
DENBAR UNIVERSITY
Technical Information about our Industry
No Fluff. Just the facts
Ending the confusion between CAP rate and IRR
Evaluation Terms
This page lists acronyms of frequently used calculations that investors and lenders use to financially evaluate a real estate investment.
Evaluation Terminology and Calcs
I wrote these documents many years ago when I was working on a mortgage originations system. The first one called 'mortgage handout' is a handout for a high level presentation about the basics of loan calculations. But if you really want to get into the mathemathical details you will want to read the mortgage calculation library document.