real estate finance - full book (500 pgs)

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Unformatted text preview: mpound the account. The down–payment requirement for conventional loans usually exceeds the amount required for either FHA or DVA loans. The benefit for conventional financing is that many more lenders are available to fund these loans, and the loan amount is greater; which allows the borrower a wider range of properties to purchase. The maximum amount a person or family may spend for the monthly payment on housing is 28 percent of the total gross stable monthly income. The monthly payment will include the following: payments for principal and interest, the amount needed to pay for private mortgage insurance if required, an escrow amount collected monthly to cover Dynasty School (www.dynastySchool.com) 13-23 REAL ESTATE FINANCE the taxes and insurance on the property, and sufficient funds to pay any other fees that may affect title to the property. Such additional fees could be homeowners association fees or special assessments levied by a taxing authority for streets or curbs and gutters. Many lenders will allow a higher monthly payment ratio if it can be shown that the borrower and the co–borrower can devote more income to the cost of housing or if the property is constructed to be energy efficient. According to Freddie Mac's, Sellers and Servicers Guide, Section 2308, higher monthly payment ratios may be appropriate if the following conditions are met: (i) (ii) (iii) (iv) (v) (vi) energy efficient property which reduces energy costs; demonstrated ability of Borrower to devote a greater portion of income to basic needs, such as housing: demonstrated ability of Borrower to maintain a good credit history, accumulate savings and maintain a debt–free position; a larger down payment on the purchase of the property; Borrower's potential for increased earnings based on education, job training or time employed or practiced in his/her profession: and Borrower's net worth being substantial enough to evidence ability to repay the mortgage regardless of income. When the loan–to–value ratio exceeds 80% debt service qualification ratios may be subjected to stricter underwri...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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