Evening star., 1934-11-02

payments as they fall due without
being obliged to cut down on other
essential living expenses. Generally
the payments for interest, insurance
premium and amortization combined
should not amount to sum substan-
TALLY larger than the borrower could
afford to pay for rent II he did not
own the property. For 1t must be re-
the cost of maintenance and insurance
and taxes on his property-items which
as a renter he would not be required
to pay.
2. The loan must be for not more
than $4,000.
3. The loan may be for as much as
80 per cent Of the appraised value Of
the property, although the prospective
purchaser Of Q home should be pre-
pared to borrow less than this. If pos
sible. Moreover, the purchase price
or the appraised value must represent
the real value Of the property.
Loan for 20 Years
1. The loan may run for as long as
20 years and must be fully amortized.
That Is, the borrower must contract
to make regular periodic payments. In
addition to the other charges, which
will accumulate ct compound interest
into . sum sufncient to pay OF the
mortgage by the time it falls due.
5. Interest rates, service charges
and premium for mortgage insurance
under Title II at present are fixed In
the following classiflcations and rates:
.. Financing without change Of
lender, bona fide sale or resale of
property existing on June ~, 1894,
interest rate not to exceed 5 per cent
per annum, no service charge allowed
and mortgage insurance premium
one-half Of l per cent per annum.
b. Loan to borrower for financing
acquisition by him Of property con-
structed after June 27 1884. interest
rate not to exceed per cent per an
mum, service charge one-half Of l
per cent per annum and mortgage
insurance premium one-half Of ! per
cent Per annum.
c. Refunding Of present indebted
ness, without change Of borrower or
lender. on property existing on June
n. 1884, interest rate not to exceed
5h per cent per annum. no service
charge and mortgage insurance pre-
MUM I per cent per annum.
d. Ref1nding Of present indebted
ness, with change Of lender. on prop
erty existing on June ~. 1894, In
terest rate not to exceed 5112 per cent
per annum, service charge one-haf
Of per cent per annum and mort
gage insurance premium per cent
per annum.
Charged on Face Value.
8. Mortgage insurance premiums
will be charged on the original face
value Of the mortgage. These will be
collected ct the same rate until the
mortgage Is fully paid OF. Mean
while, however, the premiums viii
accumulate at compound interest and
substantially all that Is not required
to pay insurance losses and expenses
Of administration will be returned In
the form of . credit on the principal
Of the mortgage, which will result In
complete payment Of the debt before
it finally falls due.
2. On . 20-year s per cent mort
gage. the payments ON principal re-
quired to 1iquidate it when due would
begin at the rate Of 8 per cent per
year on the original amount bor-
rowed. Interest and principal pay
ments combined would amount to
8 per cent . year on the original
amount borrowed throughout the life
Of the mortgage-that Is, for approx
mately 20 years-at the end Of which
period the loan would be completely
paid Of. This combined rate Of 8
per cent results from the fact that
as interest payments decrease. because
the amount Of the loan outstanding
Is being reduced year by year, prin-
cipal payments are increased by an
equivalent amount. In addition
would be the mortgage insurance
premium, Of one-half Of per cent
Or per cent Per aunum, depending
upon whether the mortgage was for
new financing or for . ref,lnding
operation.
Q. No mortgage will be eligible for
insurance with respect to which there
remains, or Is In the contemplation
Of the mortgagor, any secondary liens
upon the property at the time Of the
execution Of such mortgage; 1t being
required that IN every instance the
mortgagor shall have, at the time
Of the issuance Of the insurance, an
equity Of not less than 20 per cent
In the mortgaged property.
Points Of Difference.
Any borrower who wishes to check
the advantages Of this plan over mort
gage money obtainable under other
conditions need only consider . few
salient points Of difference. Under
PREVIOUSLY existing conditions, he
would probably be unable to borrow
more than so per cent Of the Appraised
value Of the property on . first mort
gage ct say or Z per cent per annum.
II obliged 10 borrow altogether as
much ~ rs or 20 per cent, he would
have to give second mortgage, on
which he would Be likely to pay very
high charges. in the form Of discounts,
commission etc. In addition to In
terest. Moreover. 10th the frst and
second mortgages would probably be
for Q short term, 50 that when the