real estate finance - full book (500 pgs)

A home equity line is a form of revolving credit in

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Unformatted text preview: sual demand influences. Assumability – FHA–insured and VA–guaranteed assumable loans, if written at favorable interest rates, should not be refinanced. On the other hand, old high– interest rate FHA and VA loans should be refinanced for lower rates. COSTS OF REFINANCING ORIGINATION FEE Points – Most lenders increase their yields on mortgage loans by charging loan origination fees described as “points.” One “point” is one percent of the face amount of the loan For refinancing loans, these points are deductible for federal income tax purposes only over the life of the loan. A one point fee on our $100,000 loan would be $1,000. Insurance – For VA–guaranteed, FHA–insured or PMI insured loans there will be either a servicing fee or an insurance fee to guarantee or insure the lender against loss in the event of default. Application Fee – Many lenders will require an initial application fee which may include an appraisal fee. These fees may not be refundable even if the lender declines the loan. All the details about the loan should be learned by the prospective borrower before submitting an application with a loan fee to a lender. Credit Report – Nearly all lenders pass along to prospective borrowers not only the actual cost of a credit report, but also a fee for processing and evaluating. Dynasty School (www.dynastySchool.com) 15-5 REAL ESTATE FINANCE Title Insurance – Most lenders will require a new ALTA extended coverage policy of tide insurance to insure the lender's interest in the property. The premium for a policy issued by the same company which issued the previous lender's policy may be negotiated at a lower or discounted rate. Attorney Fees – Some lenders pass along to borrowers a fee to cover the lender's attorney fees which may be encountered in connection with administering the loan. Prepaid Interest – If a loan escrow is to close in the middle of a month, say July 16, and the first mortgage payment is to be due on September 1, the end of the first full month...
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