real estate finance - full book (500 pgs)

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Unformatted text preview: and the amount of money left over. This residual should be at least 50% of adjusted gross, though under some circumstances it can be less. This is merely a guide, since Cal–Vet looks closely at the balance of funds left over to determine if they are sufficient to support the family. FNMA AND FHLMC How do the Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) influence the qualification process? First, they affect the purchasing of qualifying loans. While borrowers do not deal directly with either FNMA or FHLMC, these two agencies vitally affect the process of qualifying loan applicants. This is due to the secondary markets in which these agencies operate. As discussed in earlier chapter, conventional lenders sell loans in the secondary market, where Fannie Mae and Freddie Mac are by far the biggest buyers. Second, they foster uniformity. Loans sold to either FNMA or FHLMC must comply with the qualifying ratios of the purchasing agency. Consequently there is greater standardization and uniformity in qualifying borrowers if lenders expect to sell any of 13-30 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 13: QUALIFYING THE BORROWER their loans to either of the “big players.” Any conventional loan sold to these agencies, for example, cannot exceed $300,700 for a one–unit dwelling, fixed–rate loan. Hence most lenders will limit their loans secured by houses to $300,700. Of course this figure is subject to periodic changes, usually upward as house prices go up. CREDIT CHECK In addition to the verification of the borrowers income, employment, assets, and liabilities, the lenders will be interested in the past credit history of the borrower. As with employment and income the lender will check the credit history of the borrower and/or co–borrower for a minimum of 2 years As with many other aspects of the real estate transaction, there is a federal law that affects the investigation of a borrowers...
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